BUSINESS WATCH

A new way of minding the store

The shrewd owner of the aged Ogilvy’s in Montreal pays the piper—and calls an exciting and successful tune

Peter C. Newman November 14 1988
BUSINESS WATCH

A new way of minding the store

The shrewd owner of the aged Ogilvy’s in Montreal pays the piper—and calls an exciting and successful tune

Peter C. Newman November 14 1988

A new way of minding the store

BUSINESS WATCH

PETER C. NEWMAN

One of the paradoxical legacies of René Lévesque’s unsuccessful flirtations with separatism has been a new generation of Quebec entrepreneurs whose nationalist feelings have found alternate expression in business—starting new ones and turning upside down some of Quebec’s more established institutions. The best example of the latter was the purchase by Daniel Fournier three years ago of Ogilvy’s, the drab downtown Montreal department store that had catered almost exclusively to the mavens of Westmount.

Fournier, 34, who knew nothing about retailing, put in as Ogilvy’s president a McGill law graduate named William Tresham, 33, who knew even less, and together they started a merchandising revolution. They poured $12 million into renovating the store, founded in 1866 and run for generations by the Nesbitt family, then they leased 75 per cent—every department except ladies’ fashions, accessories, gifts and cosmetics—to outside retailers at the upper end of the market. The tenants poured in another $6 million creating their individual displays.

The once-lacldustre store has been turned into a luxury vertical shopping mall with spectacular results. Sales have tripled since the Fournier/Tresham takeover, and they have successfully widened the store’s clientele to include chic young French-Canadians and wealthy tourists looking for specialty items. Even Ogilvy’s book department, Montreal’s best since Louis Melzack left town, has just been leased to Nicholas Hoare, a local book connoisseur. “Our biggest advantage,” said Tresham, “is that with no retailing background, we didn’t know what couldn’t be done—and so we tried it anyway.” The formula has worked so well that leasing arrangements are being completed this month to acquire the Daly Building in Ottawa, which will be the site of Ogilvy’s first Canadian branch. Chicago and Pittsburgh are also being scouted. Daniel Fournier, the driving force behind the

The shrewd owner of the aged Ogilvy’s in Montreal pays the piper—and calls an exciting and successful tune

project, is at the same time attempting to complete negotiations for the purchase of one of Montreal’s most luxurious hotels, the RitzCarlton. Montreal-born Fournier graduated from Princeton (where he was a star receiver on the college football team), went to Oxford on a Rhodes Scholarship and later played professionally with the Ottawa Rough Riders. After working briefly for Lome Webster’s Prenor Group and Jonathan Wener’s real estate operation, he formed his own venture capital company, Equidev Inc., and found a financial godfather in Pierre Shooner’s $1.2-billion Les Coopérants insurance firm. With Shooner’s backing, he completed the successful transformation of Montreal’s former Windsor Hotel into luxury office space, bought four regional shopping centres, then bought Ogilvy’s.

“We came cold to department stores and were told they were dinosaurs,” Fournier told me recently. “Since I always like to do the opposite of what everybody thinks, I travelled the world studying what other department stores had done. I found that few had any sense of style or audience, forgetting that successful retailing involves good theatre, especially great inside displays.” Realizing that it had been the rise of boutiques that had doomed so

many department stores, Fournier decided to turn his store into a collection of high-ticket franchises. They in turn got the advantage of high customer traffic plus access to Ogilvy’s considerable credit card lists.

One of the most unusual arrangements was with Aquascutum, the British raincoat manufacturer who went into Ogilvy’s directly, bypassing their usual wholesale route. “They did more business in the first two months than they had usually done in Montreal during a year, and now they’re falling all over themselves,” said Fournier. “They’re confused because they’ve been selling through wholesalers for 150 years and now they’re selling directly, and it’s working so well that they’re reassessing their whole approach.”

William Tresham, who is in charge of the store’s day-to-day operations, has an interesting theory about customers: “I don’t think it works anymore to describe them in strictly demographic terms. Instead, I use cyclographics, which is not ageor incomeor geography-based, but tries to measure the quality of your customers. We find that most people who walk through our front doors are less interested in price than in good service and care a great deal about the fine atmosphere to shop in.

“For example, the architects wanted to place our new escalator in the middle of the main floor, just like every other department store, because it forms a little race track that forces customers to look at the merchandise. We said to hell with that, people have praised the openness of the street floor and we’re not going to interfere with it. We’ll put the damn escalator in a back corner. The main point about our overall approach is that there is, by definition, an entrepreneurial spirit in selfowned boutiques. They know their products and are in direct contact with their customers.”

“We keep kicking ourselves,” says Fournier, “because anybody could copy what we’re doing if we keep talking about it. But nobody does. For one of the major department store chains to change would mean admitting that someone else can do it better—and nothing insults them more. We hope eventually to repeat the Ogilvy’s pattern in 10 or 20 North American markets by buying old department stores and converting them. The same formula would probably work for lowand mediumpriced goods, and that too may be a future expansion route.”

One hoary tradition of the old Ogilvy’s was that, at the stroke of noon, a Scottish bagpiper begins a 15-minute journey from the top floor to the basement, wheezing some appropriate ditty like Cock of the North. Fournier and Tresham were wondering whether to keep the Highlander when they got into the last stage of negotiations with the Bank of Montreal, which was financing the purchase. The loans officer, a feisty Scotsman, jokingly mentioned that an assurance the piper stay be part of the deal. Fournier agreed—and every midday the wail of the Highlands drifts across the shopping floors. But the store that piper Arthur Dixon marches through these days is very different.