More insight into Zumiez coming into Canada

June 24, 2010

Here is more info via Shop Eat Surf:

I followed up on the Zumiez expanding into Canada news by talking with the Zumiez CFO and West 49 CEO.

We broke the story yesterday that Zumiez is looking for real estate in Vancouver as part of a larger expansion plan for the country. Zumiez’s push north could impact Canadian mall-based retailer West 49.

Zumiez CFO Trevor Lang told me Zumiez is expanding to Canada because it believes it has a special niche in retail with a unique merchandising approach that currently doesn’t exist there.

Zumiez gets a lot of business from Canada in its border stores in Washington, Minnesota and New York, he said. The company believes that is more a reflection of its stores and merchandise than of favorable foreign exchange rates.

About 2% of Zumiez’s e-commerce sales are from Canadian customers as well.

The company is looking to open its first store in Vancouver in 2011, and will expand east from there, Trevor said.

I asked if Zumiez will buy product direct from vendors or go through Canadian distributors, which makes the goods more expensive.

Zumiez is working with its vendors now on the issue, and with the vast majority it will likely be able to order direct, he said.

Where it can’t, Zumiez will weigh the cost of buying it direct in the U.S. and paying duty costs vs. buying from Canadian distributors. Zumiez will pick the most cost effective method, he said.

West 49 reaction

West 49 CEO Sam Baio told me his company has been preparing for Zumiez entry into Canada for a long time.

“We feel that we are battle tested,” he said. “And competition is good for everyone, including the consumer.”

However, Sam said he expects U.S. suppliers to treat Zumiez just like every other Canadian retailer, meaning it should have to buy goods from Canadian distributors rather than direct from vendors. Sam believes it would be unfair for Zumiez to get a cost advantage by being allowed to circumvent distributors when other Canadian retailers can’t.

“There should be no preferential treatment by U.S. suppliers,” he said. “It has to be a level playing field. If that’s the case, I say, ‘Bring it on.’ “

If Zumiez is allowed to buy direct from vendors in most cases, West 49 “will expect exactly the same treatment by U.S. suppliers,” he said. “That opens the door for us.”

(Click here to read a previous interview with Sam about the distributor issue in Canada.)

West 49 has been operating in the Canadian market for 15 years, a market Sam describes as “very competitive.”

“I think we are ready,” Sam said. “We have a pretty competitive group of people here. We’re looking forward to the competition.”

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