A woman in a face mask exits Le Chateau at Guildford Town Centre in Surrey, B.C., Friday, Dec. 4, 2020. The clothing store is going out of business amid the global COVID-19 pandemic. THE CANADIAN PRESS/Marissa Tiel

A woman in a face mask exits Le Chateau at Guildford Town Centre in Surrey, B.C., Friday, Dec. 4, 2020. The clothing store is going out of business amid the global COVID-19 pandemic. THE CANADIAN PRESS/Marissa Tiel

Pandemic shutdowns the last straw for some Canadian retailers, push others to brink

Some retail chains went into 2020 already saddled with massive debt and too many stores

For some, fashion retailer Le Chateau Inc. was the edgy store of their youth and 1990s clubwear. Others recall a place of prom dresses, business apparel and accessories.

“It was a trendsetting store,” says Toronto resident Tara Greene. “As a teen, it was a very cool and exciting place to shop.”

After six decades in operation, the Montreal-based clothing company joined the ranks of dozens of big-name retailers that have buckled under the weight of pandemic restrictions, filing for court protection in October and liquidating stores.

It’s been a year of unrelenting pain in retail, with widespread economic shutdowns toppling cornerstones of Canada’s retail industry just as easily as small operations.

And experts warn there are more casualties to come, as the second wave of cases forces further restrictions — decimating cash flow and exposing broader underlying problems.

Some retail chains went into 2020 already saddled with massive debt, too many stores and a track record of underperformance.

“The sector has been in a bit of turmoil even before the pandemic,” says Ramesh Venkat, director of the David Sobey Centre for Innovation in Retailing and Services at Saint Mary’s University in Halifax.

“Retailers that started the year in financially bad shape just couldn’t survive. They didn’t have the financial resources to make it through these hard times.”

Retail analysts say many also lacked a strong e-commerce presence and failed to keep up with shifting consumer behaviour.

“Some just aren’t appealing to the next generation of shoppers,” says John Archer, chief development officer with the Toronto retail consultancy firm Three Sixty Collective.

“The Gen Zeds are different than millennials and some stores like Forever 21 realized even before the pandemic they weren’t cutting it for the new generation.”

Then the pandemic hit, compelling many retailers to close or drastically curtail hours and customer capacity.

The shutdown sent overall retail sales into free fall, plummeting 30 per cent in April compared with a year earlier, Statistics Canada reported.

Clothing and shoe stores were hardest hit, down a staggering 87 per cent and 79 per cent, respectively, compared with April 2019.

The mounting toll of restrictions — on top of the existing problems hounding retail — was too much for some.

READ MORE: Clothing retailer Le Chateau plans to close its doors, files for CCAA protection

Household names like footwear empire Aldo Group, outdoor recreation outfit Mountain Equipment Co-operative and clothing retailer Reitmans (Canada) Ltd. have all filed for creditor protection since the start of the pandemic.

So have Comark Holdings with clothing brands Ricki’s, Cleo and Bootlegger, Groupe Dynamite with brands Garage and Dynamite, and Ann Canada Inc. with women’s clothing brands Ann Taylor and LOFT.

While some stores will disappear, experts say others are using creditor protection to step back from a risky retail environment and restructure after years of poor results.

Reitmans, for example, had seen its share price steadily decline for more than decade when the pandemic struck.

The Montreal-based company filed for creditor protection in May and began restructuring, liquidating its Addition Elle and Thyme Maternity stores to focus on its three remaining brands — Reitmans, Penningtons and RW & CO.

Indeed, some of companies filing for creditor protection could come back “leaner and meaner,” Archer says.

“If they were on the ropes already, they may have taken advantage of legal protection to take a breather and work with their suppliers and landlords and figure out how many stores they need.”

Still, Canada’s retail landscape is expected to lose thousands of stores as a result of restructuring and bankruptcies, putting many retail workers out of a job.

The first quarter of the year is a notoriously slow period for many retailers, and experts say without a robust holiday sales period it will be difficult for some to stay in business through the winter months.

“There are some companies that are obviously not thriving already, so with any sort of blip on the radar they are definitely going to have some issues,” says Anwar White, a lecturer with the Bensadoun School of Retail Management at McGill University.

But he says the insolvencies brought on by the pandemic are part of a normal economic cycle that has just been accelerated and compressed into a shorter time frame.

“I’m not thinking about this as a doom and gloom situation,” White says. “This experience has forced retailers to really digitally evolve in lightspeed ways and do things completely differently than they’ve done before.”

Yet unlike usual economic cycles, the current uncertainty plaguing the retail industry hinges in part on the length and scale of store closures.

Retail analyst Bruce Winder says he expects the new year, and a potentially worsening second wave of the pandemic, will usher in more bankruptcies.

But he says the number of insolvencies could be offset by federal aid, including the wage and rent subsidies.

“You’re going to see a number of companies propped up by government subsidies that probably without them would have been in (creditor protection) a long time ago,” Winder says.

“These sort of zombie companies are operating with maybe 10 or 20 per cent of their normal revenues but they’re still in business because the government is propping them up.”

Brett Bundale, The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

CoronaviruseconomyRetail

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Pindie Dhaliwal, one of the organizers for the Surrey Challo protest for Indian farmers. She says organizers were told by Surrey RCMP that the event was not allowed due to COVID-19. Organizers ended up moving the protest to Strawberry Hill at the last minute. (Photo: Lauren Collins)
Indian farmers rally moves as organizers say Surrey RCMP told them they couldn’t gather

Protest originally planned in Cloverdale, moved to Strawberry Hill

The City of Surrey is currently working through the initial phase for a park that’ll be built at 72 Avenue and 191 Street in Clayton. (Image via City of Surrey)
New park to be built in Clayton Heights

City of Surrey asking for feedback from Clayton residents

Fraser Health has declared a COVID-19 outbreak at a Surrey high-intensity rehabilitation unit, Laurel Place. On Dec. 22, 2020, Fraser Health said four patients and two staff members have tested positive for the virus. (Image: Google Street View)
Fraser Health says COVID-19 outbreak over at Laurel Place in Surrey

Health authority declared outbreak over Jan. 16

(Photo by Kevin Hill)
40 cases linked to Surrey Memorial Hospital COVID-19 outbreak

Fraser Health says two death are associated with the outbreak

Surrey Council Chambers. (File photo)
Surrey city councillors complain not enough public input in committees

City has gone ‘exactly the opposite direction,’ Councillor Brenda Locke charges

Justin Kripps of Summerland and his team have competed in Olympic action and World Cup competitions in bobsleigh. (Jason Ransom-Canadian Olympic Comittee).
QUIZ: Are you ready for some winter sports?

It’s cold outside, but there are plenty of recreation opportunities in the winter months

(Phil McLachlan - Capital News)
‘Targeted’ shooting in Coquitlam leaves woman in hospital

The woman suffered non-life threatening injuries in what police believe to be a targeted shooting Saturday morning

sdf
Another Mission student arrested for assault, in 2nd case of in-school violence this week

RCMP notified of local Instagram page with videos (now deleted) showing student assaults, bullying

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

A unique-looking deer has been visiting a Nanoose Bay property with its mother. (Frieda Van der Ree photo)
A deer with 3 ears? Unique animal routinely visits B.C. property

Experts say interesting look may be result of an injury rather than an odd birth defect

Standardized foundation skills assessment tests in B.C. schools will be going ahead later than usual, from Feb. 16 to March 12 for students in Grades 4 and 7. (Black Press Media file photo)
B.C. teachers say COVID-affected school year perfect time to end standardized tests

Foundational skills testing of Grade 4 and 7 students planned for February ad March

Sooke’s Jim Bottomley is among a handful of futurists based in Canada. “I want to help people understand the future of humanity.” (Aaron Guillen - Sooke News Mirror)
No crystal ball: B.C. man reveals how he makes his living predicting the future

63-year-old has worked analytical magic for politicians, car brands, and cosmetic companies

Terry David Mulligan. (Submitted photo)
Podcast: Interview with longtime actor/broadcaster and B.C. resident Terry David Mulligan

Podcast: Talk includes TDM’s RCMP career, radio, TV, wine, Janis Joplin and much more

Seasonal influenza vaccine is administered starting each fall in B.C. and around the world. (Langley Advance Times)
After 30,000 tests, influenza virtually nowhere to be found in B.C.

COVID-19 precautions have eliminated seasonal infection

Most Read