8 Retailers At Risk Of Disappearing From Canada

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It seems hardly a month goes by these days without announcements of layoffs or dismal earnings at Canadian retailers. Canada's economy is humming along (though job numbers could be better) so why are so many retailers closing stores like it's the middle of a recession?

There's no one simple answer. There are many factors coming together to create a perfect storm for Canada's retail industry. Here are some of the major ones:

— Online retail. Canada lags many other developed countries when it comes to buying and selling online, but online sales are eating into brick-and-mortar stores' sales all the same. Bookstores are particularly vulnerable to the Amazon juggernaut, but electronics retailers are also suffering from "showrooming" — customers coming in to the store to check out a product, then buying it cheaper online.

— The American invasion. Numerous U.S. retailers are pushing into the Canadian market these days, led famously by Target. But others, such as Marshalls, J. Crew and Nordstrom, are either already here or about to arrive. That's putting pressure on the retailers already here. As a recent HuffPost special report showed, native Canadian retailers are fading from the country's malls.

— The wealth gap. A recent CIBC report suggested that low-end retailers like Dollarama and high-end retailers like Saks are going to be the winners in Canadian retail going forward. The report notes that incomes at the high end have been growing twice as fast as incomes at the low end in recent years. That means the rich have more money to shop and the middle class are increasingly searching for bargains. The losers in the equation are those who focus on middle-income earners — stores such as Target and Sears.

Amidst all this, many Canadian retailers have already folded. Tabi, for instance, shut down in 2011, and Zellers largely disappeared in 2012 (though a location actually opened in Ottawa earlier this year).

Others are also at risk. Here are eight chains that could soon disappear from the Canadian retail scene:

  • Target Canada
    Canadian Press
    You were probably expecting to see this one on the list, so we put it first. Target has so far lost $1.5 billion on its foray into Canada, largely on consumers’ disappointment in its Canadian pricing and complaints about empty shelves. Many retail analysts are urging the company to bail on the Great White North and focus on its home market, the U.S., but Target says it’s in Canada for the long haul. We shall see.
  • Jacob
    Canadian Press
    A few months ago it looked like Jacob was already gone, with the Quebec-based fashion boutique filing for bankruptcy and announcing plans to close all 92 stores. But a Quebec court has given the retailer until later this month to come up with a plan to save some of its stores.
  • Sears Canada
    Canadian Press
    The Canadian division of Sears has been bleeding money and has tried to stanch it by selling off leases to some of its highest-profile locations, not to mention layoffs by the thousands. But those moves didn’t stop the retailer from doubling its losses in the most recent quarter. The chain’s Chicago-based parent company is mulling selling the Canadian division. But in this era of big box department stores struggling against online retailers, it’s hard to see who would buy Sears Canada.
  • Reitmans
    Canadian Press
    Montreal-based Reitmans said a few years back it wasn’t worried about Target’s arrival in Canada -- it had survived Walmart and The Gap, after all. Two years later, the retailer that owns numerous fashion chains, including Smart Set, Addition Elle, RW & Co. and Penningtons, is shrinking. The company last year opened 25 new stores, but closed 58. that still leaves it with 878 stores. Profits for the 2013 fiscal year shrank by nearly 60 per cent.
  • Chapters Indigo
    vasta via Flickr
    If you've stepped into an Indigo recently, you can be forgiven for wondering whether the retailer still sells books. With e-books and online book retailers putting big-box bookstores under pressure, Indigo is busily diversifying its product offerings to include "lifestyle items" such as candles and gifts, but will it work? Indigo is growing its online sales by the double digits, but they still only account for some 10 per cent of total sales. The U.S. big box bookstore Borders closed a few years back. The idea that Canada's last remaining big box book chain could follow seems less unthinkable with every passing day.
  • Aeropostale Canada
    JeepersMedia via Flickr
    Aeropostale was a growing brand in Canada until about 2012, opening an average of nine new stores per year. But last year it began shrinking, and now has 51 stores in Canada, down from 58. The chain appears to be suffering from a potentially fatal problem: Teens don't think it's cool anymore.
  • Best Buy Canada
    JeepersMedia via Flickr
    Layoffs at Best Buy Canada and its sister chain Future Shop have numbered in the thousands over the past few years. The CEO of the Minnesota-based company described Canada this spring as a "very, very soft" market for electronics. Best Buy doesn't break out numbers for Canada, but its international division (Canada, Mexico, China) saw sales plunge 10.5 per cent in the first quarter, with same-store sales down 5.8 per cent. The chain is one of the most prominent victims of "showrooming" -- customers coming in to check out products, then buying them at lower prices from an online competitor.
  • Le Chateau
    bargainmoose via Flickr
    Le Chateau is shrinking. The chain opened one store last year, and closed seven. It now has 228 retail locations, down from 243 in 2011. The company's shares were trading at $15 as recently as 2010; they are now hovering around $1.50.

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