Feel­ing the chill

The Western Star - - EDITORIAL - Rus­sell Wanger­sky Rus­sell Wanger­sky’s col­umn ap­pears in 36 SaltWire news­pa­pers and web­sites in At­lantic Canada. He can be reached at rus­sell.wanger­sky@thetele­gram.com — Twit­ter: @wanger­sky.

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.

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.

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