It’s the wrong season.
At least, that’s what my antenna is saying.
And it makes me think we’re actually on the sharp cliff edge of something that’s been developing for years.
I’ve been a business reporter and business editor in the past — and not only that, but I’ve been on the senior management team of a newspaper, so I’m familiar with the retail cycle.
January and February are a dead zone for many retailers, a time when they retrench, plan and sometimes simply hang on. In the spring, things start to pick up, but often — unless you’re selling products designed for summer — Labour Day through to Christmas is the meat-and-potatoes of the selling year. It’s where the money’s made and you hold on for it, hoping — even if your business is in hard shape — that you’ll make enough money to pull through another year.
Businesses that give up the ghost often do it in January, when the writing’s on the wall and the busiest season hasn’t delivered.
Not this year.
I wasn’t surprised to see the Atlantic-based Wicker Emporium hit the fiscal wall, having been to some of its often-empty stores recently. Its business model simply wasn’t working. Bankruptcy records show it had $5.4 million in liabilities and just $720,000 in assets when it shut down.
But then, not long after, came Bowring and Bombay & Co.
The two home décor chains are run by the same owner, Fluid Brands Inc., and went into creditor protection earlier this month, owing $50 million to creditors. Between the two, they have 81 stores — 43 under the Bombay brand, and another 38 under the Bowring label. Some stores are open while the company puts together a formal proposal for creditors.
Businesses that give up the ghost often do it in January, when the writing’s on the wall and the busiest season hasn’t delivered. Not this year.
Once again, it’s not strange that businesses close or seek financial protection — it happens. Markets and customers change. What’s different is that they’re driven to make this kind of involved financial move right in the middle of their busiest make-or-break time of the year.
There’s also the closure of 31 RONA and Lowe’s stores. They’re not closing until further into the new year, but, with head office announcing the closure now, they certainly aren’t waiting for any kind of Christmas sales bump, either. (Hardware might not be where you’d expect bumper sales at Christmas.)
So, what’s happening?
Well, debt costs are rising, and that’s one added burden. Another strain is the continued expansion of the Amazons and Wayfairs of the world, internet sellers shouldering their way into the home furnishings and notions market with lower prices than the those who actually have to have a fixed outlet can deliver.
The Chronicle Herald reported Wicker Emporium’s founder saying in an affidavit accompanying its bankruptcy filing that, “We have continued to face pressure from online retailers that ship direct from suppliers and have no overhead associated with physical stores ... This had a major impact on our bottom line.”
That overhead includes all kinds of things: employee wages and benefits, brick-and-mortar stores, municipal and provincial taxes.
You might suggest that in the cases I’ve listed, this is just playing out the way most might expect; Wicker Emporium at one point had 23 Atlantic locations, with only six left by the time it closed permanently. Bowring and Bombay already went through creditor protection once before, closing 50 stores out of 112 in 2015. You could argue that none of those three were poster children for continued retail success.
But it’s still the timing that worries me — no one was even waiting for the biggest retail sales weeks of the year before pulling the plug.
If these are the bellwether, watch out for January.
Winter is coming.
Russell Wangersky’s column appears in 36 SaltWire newspapers and websites in Atlantic Canada. He can be reached at [email protected] — Twitter: @wangersky.
