BUSINESS

BETTER TIDINGS

RETAILERS ARE PREDICTING THAT THIS HOLIDAY SEASON WILL BE MORE REWARDING THAN LAST YEAR’S

BARBARA WICKENS December 21 1992
BUSINESS

BETTER TIDINGS

RETAILERS ARE PREDICTING THAT THIS HOLIDAY SEASON WILL BE MORE REWARDING THAN LAST YEAR’S

BARBARA WICKENS December 21 1992

BETTER TIDINGS

BUSINESS

RETAILERS ARE PREDICTING THAT THIS HOLIDAY SEASON WILL BE MORE REWARDING THAN LAST YEAR’S

BARBARA WICKENS

JOHN DeMONT

Santa Claus will be stopping at the MacQuarrie household in Bedford, N.S., this Christmas—but his sleigh will not be piled as high as it was in previous years. Sherri MacQuarrie, 33, a stayat-home mother of four children aged 1 to 7, said that she and her husband, Ronald, 35, a trust officer with a bank in nearby Halifax, will not exchange Christmas gifts this year for the first time in their eight-year marriage. And, she said, they also plan to cut their spending for their daughter and three sons in half compared with what they spent in 1991. The reason, according to Sherri MacQuarrie: “We just don’t have the money.” But she added that their frugality has other benefits besides avoiding expense. Said McQuarrie: “We also feel that the kids are getting too selfish and are starting to forget that Christmas means more than just receiving.” But despite the fact that the MacQuarries and many consumers like them are carefully considering each purchase, many Canadian retailers say that sales have improved in December—and that this holiday season will be more rewarding than last year’s.

Retail analysts acknowledge that last year was one of the worst in decades for Canadian shopkeepers. In December, 1991, three major clothing chains, representing more than 300 stores across Canada, were forced into bankruptcy or announced plans to voluntarily close their doors. Their going-out-of-business sales hurt other, healthier retailers who were forced to match those rock-bottom prices to attract shoppers. Last week, Vancouver-based Woodward’s Ltd. announced that it had filed for court protection from its creditors. The retailer added that it will continue to operate its 59 stores in Alberta and British Columbia. And the Canadian retail industry has so far escaped the dampening effects of a major nationwide bank-

ruptcy during the most important shopping season of the year. Still, even with improved sales, analysts say that the heady days of the mid-1980s may never return. “We noticed a change even before the recession hit,” said Elisabeth Jaye, vice-president of The Creative Research Group Ltd., a Toronto polling firm that tracks consumer attitudes. “People are turning away from conspicuous consumption.” Some retailers in Canada now have an unforeseen ally in the Canadian dollar. A year ago, it was worth 83 cents (U.S.), but it has fallen significantly since then, to close last week at 78 cents. As a result, the flood of Canadian cross-border shoppers has slowed. “In retail, perception is stronger than reality,” said Ian Thomas, a Vancouver-based retail analyst and president of Thomas Consultants Inc. “Prices in the United States are not always a bargain, but now, with the drop in the dollar, Canadian consumers are finally seeing that.” Indeed, according to Statistics Canada, same-day automobile trips to the United States, a prime indicator of the number of cross-border shopping trips, have slowly but steadily declined throughout most of 1992, and some border-crossing locations have experienced dramatic declines. Canada Customs said that traffic at the Boundary Bay crossing between British Columbia and Washington state was down by 20 per cent in October and 10 per cent in November, compared with the same months last year. Allan Watt, chief of traffic operations at the crossing, added that the value of goods declared is also down because people are buying fewer big-ticket items, including televisions and refrigerators.

Instead, Canadians now appear to be spending their money at home. Donald Beaumont, president and chief executive officer of Brampton, Ont.based Kmart Canada Ltd., said that after a difficult 1991, business is up at Kmart’s 127 stores across Canada. “Our border-town stores are coming back most strongly,” Beaumont added. Department stores in general are experiencing a business pickup. According to Statistics Canada last week, department-store sales were up by 4.3 per cent to $1.15 billion in October over the same month last year.

There is at least one notable exception to the trend towards improved performance: Woodward’s. Last week, the 100-year-old retailer, which employs 10,000 workers at 26 fullline and 33 discount department stores in Western Canada, filed for court protection under the federal _ Companies’ Creditors Arrangement Act. Woodward’s president Marc Chouinard told a news conference that the company needed time to draw up a reorganization plan. “Without this

court protection, the company will be unable to meet its obligations as they become due,” said Chouinard, who took over as president last week. He replaced Allan Brent, who resigned as president after just one month in the job. Chouinard said it was too soon to tell how many jobs would be lost. The announcement followed two years of mounting losses. In October, Woodward’s announced a $26.9-million loss on sales of $411 million for the first nine months of 1992. It lost $19 million on sales of $409 million a year earlier.

According to some industry analysts, the jewelry sector was also hit particularly hard during the recession. “If there is anything you can do without, it is another bauble,” said John Williams, a Toronto retail consultant. As a result, there has been widespread speculation that two of Canada’s major chains, Montrealbased Henry Birks & Sons Ltd. and Torontobased Peoples Jewellers Ltd., are on the brink of bankruptcy. For his part, William Meder, executive vice-president and chief operating officer of Birks, denied that the privately held company was in trouble. “I’ve heard that every week since I started here three years ago and we’re still here,” he told Maclean’s. “In fact, on Dec. 3, business started to go gangbusters. We’re all smiles here.”

At Peoples head office, however, the smiles are strained. In November, the company, which operates 276 stores under the Peoples, Mackenzie’s and Mappins banners, announced that for the first six months of 1992, it had lost $15.2 million on sales of $75.7 million. That compares with a loss of $44.1 million on sales of $85 million for the same period last year— but the 1991 figures also include a $41.1million loss from Jewellers Holding, the company that Peoples used to hold a 47-per-cent stake in. Peoples has written off its entire investment in the U.S. jewelry chain, which is operating under protection from U.S. bankruptcy laws. Peoples chairman Irving Gerstein was not available for comment, but he told the company’s annual meeting in September that “we know we have problems, and we know that they must be resolved.” However, he added that he expected another slow Christmas.

Other specialty stores are finding it profitable to concentrate on a particular niche. John St. Onge, general manager of the Sherway Centre in the west Toronto suburb of Etobicoke, said that many of the 240 stores in the mall had sales increases of 10 per cent in the first week of December compared with the same period a year ago. Among the busiest, he added, is a newcomer: The Nature Company, which sells scienceand nature related gift items. Said Toronto analyst Williams.“It’s very Darwinian. Old stores die and new ones come along to replace them.” Canadian retailers will clearly have to continue to work hard to entice cautious shoppers to spend their money during the holiday season—or any time of the year.

BARBARA WICKENS with JOHN DeMONT in Halifax