Amid high inflation, rising operating costs and shrinking Canadian demand, clothing designers in Nova Scotia say they’re struggling to find a sustainable business model.
Designers say they’ve had to adjust to significant changes in consumer behaviour, supply chain disruptions and inflation as they’ve navigated through the COVID-19 pandemic and its aftermath.
“We’ve made a lot of hard decisions. They were tough at first but since we’ve done it, we feel a lot freer,” said Anna Gilkerson, co-owner of Lunenburg-based clothing brand Ana + Zac.
But while businesses have made adjustments to survive, there are other challenges on the horizon, including next month’s deadline for the repayment of federal loans handed out during the pandemic.
“I think people were hoping that things were going to go back to normal but they’re not normal,” said Gilkerson. “It’s very difficult for businesses, particularly smaller independent businesses, to try and catch up.”
Cost pressures intensified
During the pandemic, Gilkeron said demand for their product — high-quality cotton basics sustainably made in Peru — went up, though the business encountered other challenges, including paying rent on a Halifax retail space they leased just before non-essential businesses were forced to temporarily close.
But it was in 2022 that the cost pressures really intensified.
“Anywhere from shipping to utilities, sourcing products, it was getting more expensive.”
Anna Gilkerson, left, and Zac Barkhouse, co-own the Lunenburg-based clothing brand Ana + Zac. (Cody Turner)
In response, Gilkerson said they decided it was best for the business to move online. They got out of the lease on their Halifax store, shrank the size of their team and moved to a much smaller space on the South Shore, where Gilkerson is from.
While the brand has been able to attract new customers by targeting the U.S. market, Gilkerson said Canadian demand is stagnant. “I feel like consumers really are struggling with just food and with housing.”
The cost of doing business is going up. Small clothing designers are being hit hard
19 hours ago
Duration 2:00
Amid high inflation, rising operating costs, and shrinking Canadian demand, clothing designers in Nova Scotia say they’re struggling to find a sustainable business model. The CBC’s Moira Donovan has the story.
Declining demand a challenge
Other designers say they’re also dealing with the consequences of stagnant or declining Canadian demand.
They include Maggie MacCormick, owner of the small, sustainable clothing brand Daytime People, which she designs in Nova Scotia and has manufactured in India.
Like Gilkerson, MacCormick’s sales spiked early in the pandemic. “I felt like every customer I ever had showed up and bought multiple pieces.”
But at the same time, supply chain issues posed a challenge — from a worldwide zipper shortage to extreme weather in India that affected her manufacturer’s ability to work — her production cycle was thrown off by about a year.
The manufacturer of Daytime People block printing in Sanganer, Rajasthan in India. (Submitted by Maggie MacCormick)
After MacCormick sold her inventory, she was forced to let the business go dormant, and in the meantime, became a parent.
Since starting up again in spring 2023, MacCormick said her sales are roughly a third of what they once were.
“Before, I felt like if I followed my instincts and if I made a product that was good quality and made in a respectful way, that people would just buy it and that was always true. And now I feel like my instincts aren’t really enough.”
To avoid having her prices get to a “really inaccessible place,” MacCormick is pulling her clothing out of shops, and is moving into a smaller studio space on the South Shore where she hopes she can tap into the in-person tourist market come summer.
“I kind of see value in having something really small. My dream for my business is to be considered a hidden gem.”
A dress in Daytime People’s collection. Owner Maggie MacCormick said she’s pulling out of stores and downsizing her space to avoid increasing her prices. (Meghan Tansey Whitton)
Halifax clothing brand Thief & Bandit, selling sustainable handmade clothing from a studio space in downtown Halifax, has also made changes.
Amie Cunningham, who started the brand in 2009, said they’ve had to be flexible to adjust to the swings of the last several years.
Like other designers, they saw sales go up in 2020, prompting them to add staff and move into a storefront on Barrington Street. But a year or so ago, sales started to shrink — so she started thinking about ways to pivot.
Amie Cunningham runs Thief & Bandit, a sustainable handmade clothing brand based in downtown Halifax (Brian MacKay/CBC)
Cunningham said they made the difficult decision to close the brick and mortar space and consolidate their operations to their studio. They also invested in an advertising strategy, which Cunningham said they haven’t had to do before.
While they’ve seen increases in production costs, she said they’re leery of passing those on to the customer.
“It’s difficult to raise our prices because we don’t want to alienate any of our customers any more than we do. But the truth is that it is a lot of work to do what we do — and it is truly sustainable, truly made in house.”
Cunningham said the fact production is all done in house makes it easier to pivot the business when necessary — though that also adds to the workload.
“I thought I worked hard before and now it’s on another level, and I’m not willing to let it go,” she said. “So until the economy shifts, until we can get to a point where we’re making enough sales that I can hire some extra people to help me … I’m running my social media and I’m doing the website, I’m doing customer service, I’m photographing all the models, I’m designing all the prints.”
No time to recover
Duncan Robertson, senior policy analyst at the Canadian Federation of Independent Business, said while labour shortages used to be the main issue for businesses, domestic demand is now a top concern for members nationally and in Nova Scotia.
Robertson said many businesses are also concerned with the looming deadline to repay federal loans handed out during the pandemic; businesses have until January 18 to pay what they owe, in order to have a portion of the loan forgiven. The deadline has already been extended twice.
“2023 was by no means a year of recovery,” said Robertson. “It was a year of additional cost … so they need that extra time and they’re not getting that, which is a real concern.”
Loan repayment is a concern for Nova Scotia designers too; Amie Cunningham said her business never had debt before the pandemic, but is now feeling the strain.
“I’m struggling just like everyone else to pay back that loan,” she said. “Essentially, it’s just going to take a huge chunk of our earnings over the holidays which means for us it’s going to be a really rough January, February until our sales go up again in spring.”
Anna Gilkerson, right, says while the choices they’ve made to keep their business sustainable have been hard, they’re starting to pay off. (Cody Turner)
Gilkerson said her business is also under pressure.
“We used that money to build our store and now we no longer have our storefront, and we’re actually still paying back rent for that location,” she said. “I think it’s hard for businesses to catch up so quickly.”
Nonetheless, Gilkerson said by making adjustments where they can, they’ve managed to find a business model that works despite the turbulence of the last few years.
“We just want to have a sustainable business where we can pay ourselves and pay our employees and be able to save a little bit — we’re not asking for a lot.”
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
