The Bay vs. Holts: the Bay’s scheme to steal the fashion crown from Holts
The sensible shoes and twin–sets are gone, replaced by stilettos and crystal-encrusted gowns. There’s valet parking and personal shoppers, and they’re serving champagne up on three. It’s all part of the Bay’s scheme to win the loyalty of society shopaholics—and steal the fashion crown from Holts
One evening last March, Toronto’s stylish set put on their best frocks and headed to a retail baptism. Sarah Jessica Parker, celebrity high priestess of fashion, was in town to launch the Halston Heritage label at The Bay. The party, which reportedly cost over $200,000, was meant to establish Canada’s oldest department store as a major player in high-end womenswear. If retailers can be born again, this was The Bay’s moment to lean back and dip its head into the holy water.
Fashion media and socialites were ushered into the Queen Street flagship store and up the escalator to sip champagne on the third floor. That’s where The Room is located. The upscale designer dress salon was renovated a year ago for approximately $4.4 million in a high modernist style by the designers Yabu Pushelberg. The result is a treasure trove of conversation piece baubles, heels, flirty cocktail dresses and gowns by some of the most prestigious designers in the business. It’s the beating heart of the new Bay.
The Halston invitation promised a chance to meet Parker for some chit-chat and a casual photo op. The stable of thoroughbred clothes horses in attendance that night included Wendy Melvin, the executive headhunter; Simona Shnaider, the wife of the billionaire steel magnate Alex Shnaider; and socialites Stacey Kimel and Catherine Nugent (who wore an original custom-made Halston suit). The dapper designer Wayne Clark rubbed shoulders with then-MTV Canada host Jessi Cruickshank, who bopped in wearing a Halston onesie. An immaculately coiffed Laureen Harper was toured around by Jeanne Beker. The in-store event was followed by a dinner at One Restaurant at the Hazelton Hotel for executives and VIPs. A Studio 54–themed after party was held for 700 slightly less important guests, who danced and drank the night away on a custom-constructed light-up dance floor at the nightclub This Is London.
If you believe what you read on Twitter, this campaign to seduce the city’s most sought-after shoppers worked. During the event, Flare editor-in-chief Lisa Tant tweeted that Toronto’s socialites and Canada’s first lady were “breathless” in the company of Parker. Cruickshank overshared about nearly “wetting” herself with excitement. Another party guest compared the vibe in the room to “a bunch of eight-year-old girls waiting to meet Barbie.”
Earlier that night, before Parker arrived in a pair of four-inch silver Ferragamo heels, The Bay’s president and CEO, Bonnie Brooks, had some last-minute business to attend to. A female security guard wearing a poly-blend outfit was stationed at the party’s entrance and looked as frumpy as, well, a Hudson’s Bay security guard. Taking one look at the guard, Brooks instructed an office minion, “Get her out of here.” The order, like all of Brooks’ wishes, was immediately carried out. Such gaffes are small compared to what Brooks faces on her mission to remake the dowdy institution into a major fashion player. She can banish all the badly dressed people she wants, but will The Bay ever be seen as the most glamorous department store in Toronto? Not if the current holder of that title has anything to say about it.
Not since The Bay flogged beaver pelts has the company set its sights so high
The Bay is enormous. It’s Canada’s original big box chain, with 92 outlets from coast to coast, and it thought big from the beginning. Famously founded in the mid–17th century as a string of British-run trading posts (King Charles II signed the Royal Charter granting the company land and trading rights), the Hudson’s Bay Company didn’t branch into department store retail until 1913, when it launched its original six outlets in Western Canada. The first stores were modelled after Harrods in London—sprawling, diverse, one-stop shopping emporiums. They carried everything from stockings to liquor to tinned fish.
Holt Renfrew, The Bay’s main competitor for fashion shoppers, is small and chic—the little black dress of department store chains, with only nine outlets across Canada. Founded in 1837 (the same year as Tiffany and Hermès), it began as a hat store in Quebec City and for several decades served as the official furrier to the royal family. Holts hit its stride by bringing Christian Dior’s New Look to Canada in 1947. Exclusive accounts with other major European fashion houses soon followed, and Holts was established in its modern role as the country’s major high-end fashion retailer.
The two stores catered to a different clientele, and both prospered until the ’80s, when chains began knocking off designer clothes for less, and lower end retailers such as Walmart and Winners offered previously unheard of bargain basement markdowns. It was the era that killed off Eaton’s. The Bay, trying to be all things to all people, was also hit hard. As one Bay executive explains it, “The decline was a quarter century in the making. First there was the rise of cheap goods, then little specialty stores come in and take chunks of your business, and before you know it they’re chewing into your consumer base. We didn’t really keep a fashionable sensibility.”
This all changed in 2008, when Richard Baker, an American real estate baron, acquired HBC. Baker also owns the U.S. chain Lord and Taylor and ran the defunct Fortunoff. Industry experts speculated that he was interested in HBC primarily because of its real estate (his company owns 20 million square feet of retail property, leasing to such discounters as Walmart and Target), but he proclaimed he was serious about reviving The Bay.
His first major move was to hire Brooks as the store’s president. The brigadier general in the war between The Bay and Holts is a 50-something blonde whose drive is as legendary as her shoe collection. Brooks got her start as a stylist at the women’s clothing store Fairweather, where she rose to head of marketing. She was hired by Holts in 1980 as vice-president of marketing and was appointed the company’s executive vice-president by the incoming owner, Galen Weston Sr., six years later. Before her move to The Bay, she was president of Hong Kong’s Lane Crawford Joyce Group, a collection of 500 stores in nine Asian countries. She whipped that company into shape during her 11-year tenure, bringing in high-fashion North American and European brands.
Brooks speaks in a kind of ecstatic business lingo and on a whim changed the titles of all The Bay’s senior executive staff to “Chief Adventurers”—a cutesy tribute to the company’s swashbuckling past. Her managerial approach is hands-on and focused on the store’s fashion products. “One of the traps that retailers fall into is just doing it the way it’s been done in history,” she told me.
In Brooks’ first months at The Bay, Baker pumped $100 million into the chain, a portion of it into renovating the flagship location. “The Queen Street store is on fire,” Brooks enthuses of her pilot project. She lists a plethora of recent developments: a radically improved third-floor womenswear department, an expanded array of designer shoes, the new Lacoste and Coach shops on the lower levels, and more space for lingerie. Not since the 1700s, when The Bay flogged beaver pelts to the hat-making trade, had the company set its sights so high.
Charity ball mainstays received vip cards to The Bay’s new platinum suite
Brooks has done her homework. She enlisted Bain and Company, the U.S.-based consulting firm that counts Schwab, De Beers and Dell among its clients, to do market research, and Bain interviewed 7,000 Canadian shoppers, producing a document that Brooks calls “the most robust piece of research on what people are looking for in the past 10 years.” Based on the findings, she dropped a staggering 850 lines (including Liz Claiborne and Bill Blass) and added a carefully selected 250. She then embarked on the refurbishment of The Room and hired a small team of buyers, including The Room’s creative director, Nicholas Mellamphy, the founder of the shuttered Yorkville boutique Hazel, to help her assemble a stable of killer brands to fill it.
Brooks’ strategy—boosted by a well-received Olympic collection—did not involve selling more stuff to more people but less stuff to the right people in the right markets. She was going after an urbane, fashion-savvy shopper—the kind of woman who usually doesn’t shop at The Bay unless she’s sending her personal assistant to buy a new toaster. The kind of woman, in other words, who shops at Holts.
Like so many people in Toronto’s fashion retail scene, Nicholas Mellamphy learned the business at Holts, working as a salesperson in the Vancouver store. He then returned to his hometown of Toronto and did stints at Club Monaco and Gucci before launching his own short-lived boutique. Many of the same labels Mellamphy sold at Hazel—including Erdem, Balmain, Proenza Schouler and Giambattista Valli—are now sold at The Room.
His fashion prowess is matched by his vast social connections. He’s a fixture on the cocktail circuit in his signature velvet smoking jackets and floppy bow ties, and also the long-time partner of National Post gossip columnist Shinan Govani. It’s a fruitful relationship: Govani name-drops The Room, its designers, parties and customers and even Mellamphy in his column without bothering to mention his personal connection. Together they make up one of the most entertaining bon vivant couples in the city, charming jaded society doyennes with their love of fashion and arch cattiness. Mellamphy and Govani don’t just rub elbows with Toronto’s jet set at parties; they dine with them and weekend at their Muskoka cottages, too.
“There’s a trust that builds up with your client base,” says Mellamphy. “I’m photographed in the papers with all these ladies. The designers, the customers, they’ve become my friends.”
“Nicholas actively courts customers and designers in a way that Holts just isn’t in the habit of doing,” says one insider. His efforts seem to be paying off.
When The Room opened, such charity ball mainstays as Suzanne Rogers, Stacey Kimel, Sylvia Mantella, Vonna Bitove, Simona Shnaider and Bronwyn Cosgrave were given VIP cards to access the Platinum Suite, a private changing area behind The Room. The serenely furnished, pearl-toned space includes a chill-out lounge and a kitchen stocked with champagne and nibblies. The day I visited the suite, Wendy Melvin was perched on a pedestal in front of a three-panel mirror as two personal attendants pinned a cascading black Andrew Gn evening gown (with a four-figure price tag) in place. The Platinum Suite and the recently introduced valet parking at the Queen Street store represent a direct assault on Holts’ client base.
The Bay’s real battleground for market share, however, lies in the area beside The Room, called the White Space. It’s there The Bay displays such designers as Diesel, Sonia Rykiel, Juicy Couture, Nomia and Surface to Air. Think of it as the $300 jeans zone. The low end of luxe is where the real money is. Diffusion lines, what the fashion industry calls the second-tier of designer labels, offer a piece of glamour without the heavy price tag.
The trick, of course, is to get Suzanne Rogers and Stacey Kimel in the door without seeming too exclusive for the savvy young professionals and soccer moms who want to treat themselves. Accessibility—something that Holts has long struggled with—is the key to expanding market share.
To combat its rarefied reputation, Holts recently introduced a team of super-friendly greeters in pillbox hats and added a burger to the café menu. “Old luxury was unaffordable and for the few,” Barbara Atkins, fashion director at Holts, told me. “In the past decade, we’ve seen how everyone wants in on luxury. The average consumer became the aspirational consumer. And because of that we’ve had a look at our price point.” Translation: Holts is selling cheaper stuff. So as The Bay nudges itself upward, Holts has responded by shifting downward. The result? Label wars.
A department store is only as good as its labels. In order to steal Holts’ customers, you first need to woo its designers, and Brooks and her buyers set about to do just that. It was an exercise in overcoming The Bay’s reputation: the retailer had a long history of not properly representing its brands, buying too much low-quality stock and letting it languish in forgotten corners of its cavernous outlets. Mellamphy went on an international buying spree to Paris, Milan, New York and London, wined and dined both established and emerging labels abroad and at home, and gave dozens of tours of The Room.
There are no official rules governing labels’ loyalty to their retailers. Most designers I spoke to said stores generally ask a new label to sign an exclusivity contract in the beginning and then ease off after a couple of years, once the brand becomes established. According to Atkins, decisions on whether to drop or keep a designer who is flirting with the competition are made on a case-by-case basis. “We sit down with them and say, ‘Where are you selling?’ ” she says. “And they have to be honest with us.” Designers with a loyal client base, such as Lida Baday and Wayne Clark, now appear at both The Room and Holts, while up-and-coming designers complain of ultimatums and cancelled orders if they dare to cross the street. “Holts’ position with many labels has been very George W. Bush,” says one insider. “Basically they’re saying to vendors, ‘You’re either with us or against us.’ ”
The designer Alexander Wang was pursued by The Bay but chose to stay with Holts. In exchange for his loyalty, Wang was recently fêted at a lavish in-store appearance and party. Christie Smythe and Andrea Lenczner, of the Toronto-based womenswear label Smythe, were also approached by The Bay. “It all happened quite organically,” Lenczner recalls. “A former Holts buyer who’d moved over to The Bay reached out to us to gauge our interest.” The pair, whose line of iconic nipped-in blazers is also carried at TNT, Canopy Blue and Andrew’s in Toronto, opted not to test their relationship with the city’s toniest department store because, at this point, they don’t need to. “Even if Holts said, ‘You’re free to go,’ we wouldn’t because we don’t want to over-saturate the market,” Lenczner says.
The Bay did manage to win a few notable labels from Holts. Jason Wu, made famous for designing the gown Michelle Obama wore to her husband’s inaugural ball, had been carried by Holts but is now at The Bay.
Mark Fast, the avant-garde knitwear designer, was carried exclusively at Holts but felt his collection wasn’t given enough respect. For one thing, it wasn’t moving.
“Our clothes are Lycra and knit, so they don’t really have a lot of hanger appeal,” says Amanda May, Fast’s managing director. “They need to be hand sold, so we’re very, very selective about who we retail with.” Members of Fast’s staff visited Holts unannounced and found that some salespeople had never heard of his label. Fast decided it was time to try his luck with The Bay. At last spring’s International Fashion Week, Fast and May met up with Mellamphy for cocktails at Paris’s Hemingway Bar and toasted the beginning of a beautiful retail relationship: Fast’s premium line would be carried exclusively at The Bay. Mellamphy is even willing to gamble that there’s an appetite in Toronto for ostentatious outfits like Fast’s Swarovski crystal–encrusted evening dresses, which sell for $4,300. “The Russians and Nicholas are the only ones who buy them,” says May.
Holts doesn’t admit to feeling threatened, but the company is in battle mode. Last January, Caryn Lerner, Holts’ long-time president, was suddenly replaced by Mark Derbyshire, the upbeat head of human resources. Lerner was unpopular with staff, and the Bloor store in particular was suffering from the prolonged recession and the apocalyptic sidewalk and street construction at its front door. It was time for a new leader.
Derbyshire previously served as a marketing exec at Canadian Tire, has a PhD in organizational behaviour and is obsessed with customer service. “Everything comes down to our relationships,” he told me. “We sell style, we sell fashion, but ultimately it’s based on what our customer wants.”
While Brooks was focusing on market research and product, Derbyshire walked the floor, watched people shop and invited key customers out for one-on-one dinners—all in an effort to get to know the well-heeled men and women who spend their hard-earned (or smoothly inherited) dollars at Holts. Personalized service is the current mantra, from the lavish VIP shopping suites (the inspiration for The Room’s version) to the delivery service, used mostly by Rosedale wives who love clothes but hate to shop. Derbyshire recently hired the former Tatler retail editor and socialite Vanessa Mulroney (daughter-in-law to Brian) just to help maintain relationships by taking high-profile customers out to lunch. Says one such customer, “He wants to bring the warm fuzzies back to Holts.”
Holts has responded by appealing to the mass market. The result is label wars
Some fashion observers say Toronto is becoming a more sophisticated market and can support two major fashion department stores. Others question whether The Room is making money at all. One Bay employee confided that despite the astronomical amount of money devoted to the Halston launch, the label hasn’t sold well. On an average Saturday, she says, “You could shoot a cannon through The Room, whereas at Holts you’d think they were giving the stuff away.”
Both retailers are private companies and claim to be doing well. Holts says womenswear sales are up 12 per cent at the Bloor location. The Bay won’t divulge numbers but claims it has “experienced significantly improved profits and sales.”
Holts still has The Bay beat when it comes to glamour—the deciding factor for serious fashion buyers. The Room itself is glamorous, but it’s located inside a store that also sells washing machines and men’s long johns. “Whenever I decide to go pick something up at The Room, I have to psych myself up for days,” one fashion stylist told me. “First you have to navigate the entire Bay, and only when you get to the third floor and you dust off all the Jones New York can you breathe a sigh of relief and have a new experience.” This kind of snobbery has always worked in Holts’ favour. The Bay may be installing a new Coach boutique and offering valet parking, but let’s face it: there’s no spa, no fancy café, no Chanel and no Prada. Holts has Toronto’s mink mile on its doorstep; The Bay’s flagship has the scruffy flora and fauna of the Yonge Street strip.
Brooks is said to be desperate to get her hands on more money to implement her vision beyond the Queen Street location. Plans for several other Rooms at urban outlets like Vancouver’s are in the works, as is a full top-to-bottom reno of the Queen store, which will cost untold millions. If, as is rumoured, the company goes public within the next year, she just might get her wish.
No store has really challenged Holts since Creeds closed its doors in 1990. For the first time in a long time, Toronto’s toniest department store is sitting up and taking notice. At the end of this past August, the lanky figure of Galen Weston Sr. was spotted slouching his way through the racks of The Room. When a sales clerk asked him if he needed any help, he smiled and said his wife, Hilary, had sent him. “She said I had to come.”