Prada on sale – at The Bay?

Here's news that would quicken the pulse of Canadian shopaholics: The Bay is taking a run at off-price competitors like Winners by increasing 'opportunity buy' offerings to its customers.

Here’s news that would quicken the pulse of Canadian shopaholics: The Bay is taking a run at off-price competitors like Winners by increasing ‘opportunity buy’ offerings to its customers.

Gord Sonnenberg, VP marketing for The Bay, says these special buys are consistent with its ‘More Than You Came For’ positioning, from Toronto agency Padulo Integrated. It is also part of the chain’s ‘everyday-value pricing’ focus, he says, which encompasses both private labels – among them eight brands picked up from New York-based Federated Department Stores last fall – and high-end fashion.

‘Without naming names, there are chains that have thrived on opportunity buys,’ he says. ‘We feel as we move to a greater everyday-value pricing format that these deal buys are a great opportunity for us to drive some extra traffic into stores.

‘After all, we deal with these vendors day-in and day-out so why shouldn’t we take advantage and make [special buys] available to our customers before someone else does?’

John Williams of Toronto retail consultancy J.C. Williams Group, suggests consumers are hungry for off-price and that The Bay likely saw Winners eating some of its lunch. He believes tight margins, higher expenses and a tradition of too many sales and discounts has taken a toll on The Bay and its main competitor Sears. Both department stores are now in a transition phase, he explains, where they have to get out of the ‘sale, sale, sale’ mentality without abandoning value altogether.

‘It’s a battle for market share. The vast majority of people have their heads in the value camp, so [The Bay] has to be there, responding to consumer interest. The Bay cut back on sales, and business has fallen off a bit, but I’m assuming their gross margins and expenses improved enough to offset the risk they took in doing so. It was a good decision.’ In fact, The Bay’s comparable store sales were down 3.8% for the fourth quarter of 2002.

Still, David Howell, VP of research firm NPD Group Canada, Toronto, points out that the only growth in the women’s apparel market came from 35- to 55-year-olds in the latter part of 2002; thus The Bay’s shift in targeting an older demographic was a smart move. Having said that though, according to NPD numbers, The Bay’s market share for women’s apparel dropped from 6.8% in 2001 to 6.6% in 2002, while Winners increased its share from 2.8% to 3.2%.

In terms of the off-price initiative, Howell believes there is a very strong chance that suppliers will go to The Bay first with unsold merchandise, because of the chain’s purchasing power. That in turn could choke off a portion of the supply going to Winners. At press time, a spokesperson at Winners was unavailable for comment.

Off-price merchandise will only account for about 10% of The Bay’s sales, according to Sonnenberg. While he says this is not something new – because the chain has always featured ‘special buys’ – the difference is that the store is pursuing more of them than it has in the past.

In-store, there is no separate section for off-price goods but rather they will be integrated with regular merchandise and tagged with ‘special buy’ signage. While there won’t be any major advertising, Sonnenberg says these specials may be featured in flyers or print advertising. Primarily though, they are added-value surprises for Bay shoppers.

Wendy Evans, president of Toronto-based retail consultancy Evans and Company, has been impressed by The Bay’s advertising, its positioning to target women 35 to 54, and the introduction of exclusive fashion labels. As for the off-price strategy, she says it’s too early to tell.

‘Typically the biggest problem for department stores is they have the name brands that are sold everywhere else so it just becomes discount price wars. Exclusivity is very important, so that they won’t be undersold.’

For his part, Jim Dollery, director of client and creative services for Toronto-based FutureBrand Canada, says the off-price move shouldn’t damage The Bay’s image, as long as it doesn’t take the idea too far.

‘[The Bay] can’t switch gears to go down to the level of Winners. It’s an established, well-known, retail brand that’s been around [nearly 333 years].’