Ari Freed always knew there would be tough times in the rag trade. His grandfather Sam opened the family men’s wear store in Windsor,
Ont., in 1929, just in time for the Great Depression. Sam Freed’s ability to weather those years was an inspiration to his grandson in the early 1990s, when the worst economic slump since the 1930s walloped Canada’s retail clothing business. At Freed’s of Windsor, sales were slow until about six months ago.
Since then, says Freed, shoppers have been more willing to spend | money, their spirits buoyed by a 2 strong local economy. “There’s í been a lot of people coming 2 through the doors, and we’re § optimistic,” adds Freed, a cof owner of the company. “I think 2 there is a very positive outlook for clothing.”
Across the country, in fact, many of Canada’s long-suffering clothing retailers are emerging torn and tattered from years of slumping sales, cutthroat competition and the biggest retail shakeout in the country’s history. Despite the well-publicized difficulties of such established retail titans as T. Eaton Co. Ltd., total apparel sales are on the rise. In the first three months of the year, clothing and shoe stores chalked up $2.4 billion in sales, an impressive 4.4per-cent increase over the same period in 1996, according to Statistics Canada. ‘We’re not going back to the late ’80s, but there is a better buying mood,” says James Okamura, a retail consultant with J. C. Williams Group in Toronto.
Retailers can thank the stronger economy for that. Canadians are opening their wallets more readily for all kinds of merchandise, spurred on by low interest rates and improved job prospects. Consumer spending in the first three months of the year leapt by a brisk annualized rate of 5.2 per cent. The pickup is particularly noticeable in sales of houses, cars and other big-ticket items that many consumers had put off purchasing during the lean years of the early 1990s. The same spirit of austerity affected clothing sales—as a
glance around most offices today quickly reveals. “Everyone’s wearing grey and blue—the same old suit they’ve had for years,” says John Williams, founder of the J. C. Williams Group.
Finally, though, consumers are updating their wardrobes. And investors evidently like the new look. Several retail stocks have zoomed in recent months as the strong economy fuels expectations of a surge in clothing sales. Over the past year, shares in Hudson’s Bay Co., for example, have increased more than 50 per cent, recently hitting a 52-week high of $29.25. Another company popular with investors is Toronto-based apparel giant Dylex Ltd., which operates 642 BiWay, Braemar, Fairweather, Thrifty’s and Tip Top Tailors stores. Two years ago, Dylex was forced to seek Eaton’s-style bankruptcy protection. But since then, the company has closed almost 200 stores, sold its stake in such chains as Harry Rosen Inc., and virtually wiped out its $51-million debt. Its stock has soared to about $7.50 from $1 a share in 1995.
For some stores, the recovery has relieved the relentless pressure to slash prices that severely eroded profits in the early 1990s. Customers remain as hungry as ever for a deal, but as baby boomers grow older, they seem to have become more concerned about quality, and more willing to pay for it. “I was always afraid to carry higher-ticket items,” says Wendy Friedman, 33, who owns Biscuit Clothing, a women’s boutique on Halifax’s fashionable Spring Garden Road. “But lately, I’ve decided to bring in a few higher-priced things, and they’ve sold at full price.” That helped Friedman boost her sales in April by more than 10 per cent over the same month in 1996. Among the fastest-selling items are dresses by Canadian designer Jane Doe and Diesel-brand jeans, priced at $139 a pop.
Store managers are also working hard to trim operating costs and control inventory so they can avoid marking down unsold stock. And retailers have learned the hard way that profits matter more than sales. Last year, for example, total sales at Dylex declined 4.1 per cent, while earnings increased 12 times to $22.9 million, the company’s most profitable year since 1988. “This is a company that went along for a long time with a $ 1-billion sales base and no profit,” says Elliott Wahle, Dylex’s president and CEO. “But to mark down merchandise just to generate sales doesn’t make sense.”
Not every retailer is enjoying renewed prosperity. Along with Eaton’s, major chains such as Kmart Canada Ltd. of Brampton, Ont., are also struggling as a major consolidation continues to sweep the industry. Miserable spring weather has only made matters worse. Many independent clothing stores are also hurting. The most successful businesses are niche players such as Roots Canada Ltd.—stores that have best answered the age-old retail riddles: exactly who are their customers, and what are their needs? ‘We target a mind-set or a lifestyle,” says John An-
derson, general manager of Levi Strauss & Co. (Canada) Inc. “You can’t really target a set age any more.”
By far, the most crowded corner of the market is lowpriced casual wear. Wal-Mart Canada Ltd.—attracted by the higher margins on clothing compared with other types of merchandise—stepped up the competition dramatically last March when it aggressively targeted teens with its “725 Originals” brand of jeans, tops and shoes. To capitalize on the casual Friday trend at many workplaces, the chain subsequently launched a new line of casual men’s wear. Those two moves have helped Wal-Mart stores boost their clothing sales by more than 25 per cent. “Apparel is absolutely red hot at Wal-Mart,” says company spokesman Edward Gould.
Some of Wal-Mart’s Canadian rivals are also thriving. Calgary-based Mark’s Work Wearhouse Ltd. has spent more than $6 million over the past two years to modernize and expand its stores and its selection of clothing. In its first quarter, which ended on April 26, sales at each store jumped an average 7.7 per cent from the same period last year. Plum Clothing, a chain of seven women’s stores in British Columbia’s Lower Mainland, has held its own against competitors many times its size by designing its own lines and dealing directly with manufacturers in Vancouver, Hong Kong and mainland China. The move has allowed Plum to boost its margins § and focus on the needs of local shoppers. The 5 company, for example, has expanded its selects tion of petite styles to appeal to the region’s large |= Asian community, says Kate O’Brien, president k of the Vancouver-based chain.
Other retailers are deliberately moving out of the low-end of the clothing business. Dylex is actively trying to upgrade the image of its Tip Top Tailors men’s wear chain. “We believe there’s a huge hole in the middle market,” Wahle says. In the past, Tip Top’s suits were regularly priced as low as $149; now they range from $249 to $399. Although casual wear continues to be popular, some retailers say they are starting to sense a shift back to dressier attire. At Freed’s of Windsor, double-breasted suits and royal blue shirts are moving especially fast. Freed says some of his clients have discovered that jeans are not always welcome at the office. Biscuit Clothing’s Friedman has noticed the same trend in women’s wear. “People are wanting to look more put-together,” she says. “There was sort of a slob mentality there for a while.”
A return to more genteel tastes would be a hopeful sign for small, independent clothing stores, many of which stock upscale apparel. But independent retailers say their ultimate ace in the hole is the personal service they offer. Freed says the goal today is to build a lasting relationship with consumers: “It’s not just about selling a pair of pants, it’s about caring for the customer.”
American futurist Faith Popcorn has predicted the revival of neighborhood shops as aging baby boomers gravitate to more friendly environs and abandon the cookie-cutter sameness of chain stores. “A lot of people don’t like malls,” says Jessie-Anne Kostyniuk, a former nurse and the owner of Jessie’s Boutique, a successful women’s shop in Thunder Bay, Ont. Faced with the departure of national chain stores, downtown malls in some cities are turning to locally owned shops to occupy the space and enliven the atmosphere. In Kitchener, Ont., Cora Group Inc. has actively recruited independent retailers to make its downtown mall, Market Square, more distinctive. “It gets pretty tough to compete with stores like the Gap unless you’re being different,” says Audrey Wilson, the mail’s general manager.
Clearly, some clothing merchants will not survive the retail war. But for many, the revival in consumer confidence has come just in time, and it seems bound to continue. Ari Freed says he can feel prosperity in the air. The store recently expanded its golf-wear shop, and is opening an in-store boutique featuring Germandesigned Hugo Boss suits, priced between $795 and $1,195. “There are just a tremendous amount of good things happening in the economy,” he says. “People are working and making money, and it just gets the whole industry rolling.” The turnaround has been a long time coming, but Freed and his competitors are clearly happy with their new image. □
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