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:
— 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 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.
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.
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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.
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.
This article exists as part of the online archive for HuffPost Canada.
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