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Retailer Simons crashes Canada, one door at a time

Peter Simons plans to expand his Quebec-based retailer to other cities besides Edmonton but knows it’s a slow, deliberate process.

JASON FRANSON/The Globe and Mail

La Maison Simons Inc. had been nestled in Quebec City for 159 years before fifth generation leader Peter Simons successfully expanded the retailer across the province.

But opening stores all the way to Vancouver is proving trickier for the president of the family-controlled business.

Simons is searching for prime locations in Toronto, Calgary, and Vancouver as a new wave of foreign chains chases the most attractive retail spaces. And the privately held company can't tap into the markets to finance its heavy investments amid rising borrowing costs.

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The retail institution well known in Quebec for its unique mix of cheap-chic private labels and pricier designer lines must make a name for itself west of the Ottawa River. Outside its home province, it operates only one store, at the West Edmonton Mall.

"We are trying to build a national specialty department store brand, and no one has done this in Canada for a long time. It is very expensive," Mr. Simons said on Wednesday as he was inaugurating his company's ninth store at the Galeries d'Anjou in the east end of Montreal.

Simons is making some progress on store locations, but is expecting more. After lengthy negotiations, Simons struck a deal with Cadillac Fairview Corp. to open a 100,000 square feet store at the Rideau Centre when the Ottawa shopping mall expands. The opening is scheduled in the fall of 2016, Mr. Simons said.

Simons is also hoping to land at Toronto's Yorkdale Shopping Centre and at Mississauga's Square One Shopping Centre. Both are managed and partly owned by the Oxford Properties Group.

In June, Oxford bought back the leases of each of those mall's Sears Canada stores, opening up prime space for new developments.

"We are in discussions: I would like to work with Oxford on a number of properties across the country," Mr. Simons said. "I hope it will happen in the next four weeks." He said that Simons will "move on" if a deal can't be reached soon. Oxford Properties declined to comment on the negotiations.

"We have other things to work on," the 49-year-old executive added, pointing to a Vancouver store that could also be unveiled within the next month.

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How Simons, a long-time Bank of Montreal client, will finance this rapid expansion remains unclear, however.

The company spared little expense when it opened its West Edmonton Mall store, whose innovative design, bright colours and funky fitting rooms earned it the retail store of the year award from Chain Store Age.

The Quebec retailer spent "over $40-million" on the store, compared with the $25-million it normally invests on a new store such as the one in Anjou.

And while Mr. Simons senses "that the repeat customer base is building," the West Edmonton store still has to meet its first year sales target of $600 to $800 per square foot.

"This was a very expensive architectural project. I am very proud of it. But it has to make sense."

While Mr. Simons believes that his company could open three to four stores in the Toronto area alone, he readily admits that the retailer can't go forward with all its projects at the same time. "There is a limit to the number of stores a company our size can build," he said, which is two per year at the most.

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Even so, Simons still has no plans of going public, he said. "As you grow, it becomes more difficult [to remain private]. But we are willing to make the sacrifices needed to maintain some sort of freedom and the ability to make unique choices."

One such choice was Simons's recent decision to increase the salaries of all of its store employees by "over 20 per cent" so that they will continue to offer the "exceptional service" by which the retailer believes it differentiates itself.

"This is a very big commitment by the shareholders of the company. This is not a gamble, but I am ready to bet on the people we have," Mr. Simons said.

"We are stretching ourselves out to make choices that I think only a private Canadian company can make. What we did probably would not have flown at the board level of a large public corporation," he added.

But at the same time, Mr. Simons recognizes the 173-year-old retailer might have to finance its growth with an initial public offering down the road. "I would like to stay private, but will that always be possible? I can't say."

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About the Author
Chief Quebec correspondent

Sophie Cousineau is The Globe and Mail’s chief Quebec correspondent. She has been working as a journalist for more than 20 years, and was La Presse’s business columnist prior to joining the Globe in 2012. Ms. Cousineau earned a master’s degree in journalism from the University of Illinois and a bachelor’s degree in economics and political science from McGill University. More

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