Kelly talks about the missed opportunity to help small businesses recover from the pandemic, the rising costs for doing business, concerns about government spending and tax increases, the Temporary Foreign Worker Program, the business tax rate, and credit card processing fees.
The Video Interview Series by Retail Insider is available on YouTube.
Connect with Mario Toneguzzi, a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and the only Canadian – to learn how you can tell your story, share your message and amplify it to a wide audience. He is Senior National Business Journalist with Retail Insider and owner of Mario Toneguzzi Communications Inc. and can be reached at mdtoneguzzi@gmail.com
Also check out the other series offered by Retail Insider, including The Weekly podcast and The Interview Series, which are both available on Apple Podcasts, Stitcher, TuneIn, Google Podcasts, or through our dedicated RSS feed for Simplecast and other podcast players.
Palliser Production Facility in Winnipeg (Image: Palliser)
Winnipeg-based furniture manufacturer Palliser is making a big investment in its operations to fuel the company’s growth in North America.
Peter Tielmann
The company is building a new 130,000-square-foot facility in Winnipeg as well as another plant in Matamoros, Mexico, to complement its facilities already in place at those locations.
“This investment is our commitment to growth in the North American market,” said Peter Tielmann, President and CEO. “We’re eager to create new jobs right here in Manitoba, where our business is anchored, as well as in our Mexico facilities that primarily support our US customers. It’s important for us as a company to continue to produce domestically, which reduces our environmental impact by lowering our emissions and carbon footprint.
The two new facilities will create 700 new jobs.
Palliser Production Facility in Winnipeg (Image: Palliser)Palliser Production Facility in Winnipeg (Image: Palliser)
“We are dedicated to providing retailers and consumers with personalized, made-to-order products our customers have come to appreciate over our nearly 78-year history. We are proud of our success, which we attribute to personalization, as well as our commitment to style, and dedication to comfort, quality and sustainability.”
Tielmann said the company currently has three factories in place in Winnipeg, employing about 1,200 people. Those three factories are about 500,000 square feet in total.
“Winnipeg is our hometown. We’ve been there for a long time. We’re a 75-year-old company. That’s where our head office is. In the past we produced more in Canada but it’s been difficult for the last number of decades because competition was very stiff from countries where labour rates are much lower and we were dealing with certain unfair trade practices coming out of Vietnam and China – at least that’s what the industry complained about,” he said.
“Once the government looked into it and found that was true and implemented tariffs against these certain categories of furniture, that really gave us confidence to invest in Canada because we’ve been otherwise expanding in Mexico. In Mexico, we have 2,500 employees and we’re still growing there. And we’re using the Mexican plans to support our US market. But now that the tariffs are in place we’re confident again in investing in Canada as well because we believe that under these new conditions there is a future for manufacturing of these types of product in Canada again.”
The creation of the two new facilities will help the company increase total North American production capacity by 30 per cent in 2022.
The Winnipeg facility is expected to be completed by the end of the second quarter of this year.
In Mexico, Palliser has four factories in place currently with about 600,000 square feet. Another 100,000 square feet is being added. It is also adding more shifts there to meet demand.
Palliser Production Facility in Winnipeg (Image: Palliser)
“We have been investing in new product lines and these product lines have been successful in the marketplaces both in the US and Canada so that requires more capacity,” said Tielmann.
“More importantly, we really see a trend towards on-shoring. That trend we believe will continue. There’s more market share going towards manufacturers who manufacture on the continent. So that’s really a big trend that’s been going on for multiple reasons. During COVID there were a lot of supply chains interrupted and retailers decided they didn’t want to be dependent on supply chains that rely on really very distance places and wanted to on-shore to re-balance their product portfolio.
“Also, the consumer sentiment towards sustainability is a big deal and that’s been an ongoing trend already but it’s been accelerating as the more the public is aware of requirements for us to do something about the climate change we’re dealing with – the issue of our generation. Many consumers want to do what’s in their power to make choices that are more sustainable. We make bulky products and shipping across the ocean leaves a huge carbon footprint. So being domestic makes a big difference. And also domestic manufacturers can be more transparent towards the materials and where they come from and how they make things. Also for us our goal is to be leaders in our industry of making products more sustainably. So it’s a big deal. Sustainability is a factor that has driven a move towards on-shoring and it’s driven from the consumer.”
Rendering of Future lululemon at 2 Bloor Street West in Toronto (Image: Kingsett Capital)
Vancouver-based retailer lululemon will open one of its largest stores in early 2024 in 2 Bloor at the iconic northwest corner of Yonge and Bloor Streets, in downtown Toronto.
The lululemon store will span about 12,100 square feet over three floors including street level and second floors as well as access in the concourse with direct connection to the TTC. A signature double-height glass facade with wraparound corner exposure will give lululemon a significant presence. The store is part of a substantial podium renovation including an expanded third floor glass façade and an office lobby upgrade which will modernize the 430,000 square feet Class A office tower located above.
Tim Sanderson of JLL in partnership with Open Realty Advisors acted on behalf of lululemon in the lease deal with KingSett Capital which owns 2 Bloor Street West. The landlord broker for the deal was Graham Smith of JLL with Jaimy Hunt of KingSett Capital handling the transaction on behalf of the company.
Rendering of Future lululemon at 2 Bloor Street West (Image: Kingsett Capital)
Lululemon is relocating from a much smaller 3,067 square foot space nearby at 153 Cumberland Street. That building, known as 130 Bloor Street West, is also owned by KingSett Capital and houses retailers Aveda, Nicolas Menswear and a recently opened Moscot store on the Cumberland Street facing side, and Gucci, St. John Knits and a future Lafayette 148 store on the Bloor Street side.
When it opens in early 2024, the Yonge & Bloor lululemon storefront will be one of the retailer’s largest. In Chicago, lululemon operates a store spanning about 20,000 square feet in the city’s Lincoln Park area that opened in July 2019.
KingSett Capital’s 2 Bloor Street West retail podium is located directly at the northwest corner of Yonge and Bloor Streets. We recently reported that retailers Swarovski and Talbots had shut for the podium renovation which will create about 15,500 square feet of retail space at the corner.
The commercial podium has a few remaining available spaces. Next to lululemon at the corner of Mayfair Mews/ Bloor, there is a 3,355 square foot flagship opportunity (825 square feet at street level and an additional 2,530 square feet on the second level). There are also four small CRU units spanning from 380 square feet to 640 square feet in the concourse that are directly connected to the TTC subway entrance. The space is being marketed by Graham Smith and Brandon Gorman, co-Practice Leads of the Agency Retail Group at JLL.
2 Bloor Street West Lobby Rendering (Image: Kingsett Capital)
The immediate area is seeing significant changes. A development facing Cumberland Street called Cumberland Square in years to come will transform the area behind Holt Renfrew into a new neighbourhood also housing thousands of new residents in tall residential towers. Significant changes to the Hudson’s Bay Centre at the northeast corner of Yonge and Bloor Streets is said to be at play following the closure of a Hudson’s Bay store next month. On the southeast side of the intersection is a Nordstrom Rack store and on the southwest side is The ONE, a massive tower that is under construction that will house an Apple flagship store at its base according to news reports. The Bloor Street corridor to the west will also see big changes as per an article in Retail Insider last month.
Lululemon won’t be the only yoga-themed retailer on the block — we reported in January that US-based Alo Yoga will be opening a flagship storefront at the northeast corner of Bloor and Bay Streets in the 60 Bloor St. W. office tower podium, replacing The Gap which shut early last year. Sources said that Gap-owned yoga-focused brand Athleta had also been considering the former Gap space.
Vancouver-based furniture store Sundays has expanded its reach in Canada with the opening of a warehouse and a store in Toronto and the addition of an executive to oversee its logistics network.
Barbora Samieian
“I think we’ll primarily continue to be ecommerce, however we do see opportunity for two more physical spaces as we consider US expansion going into 2022,” said Barbora Samieian, Co-Founder, Director of Brand and Community for Sundays.
The retailer launched in November 2019.
“An interesting time to launch a new business,” said Samieian. “The model was just to be a direct to consumer model with everything in stock. That was sort of our motto. We’ll stock a very curated selection of items and in November of 2019 we started with livingroom only – some sofas, coffee tables and a few end tables.
Sundays on Ossington (Image: Sundays)
“Eventually we started expanding our living room collection and then we got into dining and bedroom as well but still a very tight and focused line.
“We started with just ecommerce but during COVID there were all of these empty spaces because restaurants were leaving and other businesses were shutting. So we actually started a little pop-up – a showroom – in Vancouver in about May or June of 2020 and we saw from that kind of experiment – it was like a two to three month lease – there was a lot of interest for customers to be able to touch and feel our furniture. So we’ve since opened a permanent showroom in Vancouver. That opened in the fall of 2021 on West 6th Avenue, South Granville, just off of the main furniture row in Vancouver.”
Samieian said the company opened a Toronto pop-up location in the spring 2021 which has now also turned into a permanent showroom in Toronto. That one is on Ossington Avenue.
“In addition, we started a partnership in November 2021 with a business in Calgary called Socality House. They’re a coffee shop and sort of creative working space on 17th Avenue S.W.,” she said. “What we’ve done there is we’ve partnered with them where we furnished their entire space and any Calgary customers that are interested in seeing our furniture in person can go there to Socality House to check it out.”
Sundays x Socality House
Sundays x Socality House
Samieian said the retailer’s line is smaller and more focused than some of its competitors in that space. It’s very design-forward.
“We’re very passionate about the product. I would say we’re not a tech that chose to sell furniture but we’re furniture people first,” she said. “The value proposition is that there’s an accessible price point for the quality that we offer.”
The retailer also has a white glove delivery service for all orders, so that customers’ items get unwrapped and assembled on the spot, with packaging removal as well.
“That’s a differentiator for us,” she said. “Since we started the business, we wanted to provide a premium experience to the customer. Furniture shopping overall can be quite a headache for people. It can be a little overwhelming. You go into these big furniture stores and there’s so much choice, you order it, you’ve got to figure out delivery, you get free shipping if it’s over a certain amount but then they drop it at your curbside, and you live in an apartment building and you’re hauling it up the stairs in your building.
“We really saw an opportunity to re-haul that. We built in white glove delivery into our pricing. All of our larger items, anything that needs assembly, is shipped with our delivery partners in each market and it is assembled in the customer’s home and we remove the packaging.
Image: Sundays
Image: Sundays
Sundays on Ossington (Image: Dustin Fuhs)
“I think people want that kind of service. It also reduces the chance of a customer maybe assembling something wrong, which then might result in a damage claim or potential return. That’s the other benefit. But I think it’s just a much nicer, smoother kind of A to Z experience for our customers.”
Recently, the company opened a warehouse in Toronto to ensure even speedier deliveries of furniture to those in Eastern Canada, with some items even being delivered the same week as they’ve been ordered.
It has also continued to grow their inventory so that there is even more product available.
Sundays on Ossington (Image: Dustin Fuhs)
“When we started we thought everything would be in stock, there would be no need to have pre-order items on our website. But we realized pretty quickly that we’d be at zero revenue and we wouldn’t be able to sell anything when the supply chain issues really started unfolding,” said Samieian.
“We made pre-orders available and because we’ve been growing quite significantly being a bit bullish in our projections, knowing that the lead time for furniture is pre-COVID it used to be 100 days from placing an order to receiving items. During COVID that turned to almost 300 days. Just managing those expectations with our customers. It’s normalized a little bit. The supply chain issues have improved and customers grew to expect that. We saw when the supply chain issues started that likely this would take some time and so fairly early on we started ordering some bigger quantities to make up for that. It’s been a challenge absolutely.
“Because of the supply chain issues that we saw in the market, I think one thing that we maybe expedited and did sooner than we otherwise would have as a startup is we actually brought on a Director of Logistics earlier this year.”
The 2022 federal budget, announced on Thursday, was a missed opportunity to help small businesses recover from COVID, says the President and CEO of the Canadian Federation of Independent Business.
Dan Kelly said the budget ends all COVID supports, including the Hiring Program which was meant to help small firms rebuild their workforce in the recovery phase. The national organization said it is disappointed the budget doesn’t include measures to help small businesses’ post-pandemic recovery. Small businesses continue to struggle after an extremely difficult two years and now face a host of higher costs and a mountain of COVID-related debt.
Dan Kelly
“The federal budget ends all COVID support programs, including the Canada Recovery Hiring Program, which was meant to help small firms rebuild their workforce in the post-COVID recovery phase. The budget was a missed opportunity to help small firms now facing massive cost increases on virtually every line of their own budgets, including payroll and carbon taxes. It also doesn’t help the two thirds of businesses (67 per cent) that were forced to take on COVID-related debt, at an average of $158,000 per business,” said Kelly. “CFIB will continue to advocate for a small business hiring incentive and 50 per cent forgiveness of Canada Emergency Business Account (CEBA) loans.”
The CFIB said the budget includes billions in new spending and deficits as far as the eye can see. Small businesses know that today’s deficits mean more taxes for them down the road. A plan to move more quickly to balance the budget remains a priority for small business owners, it said.
“April 1 saw an increase in carbon taxes, adding further unfairness to a tax regime that collects hundreds of millions from small businesses while returning next to nothing to them in rebates. Fuel and energy costs were viewed as the single biggest cost challenge facing small business and a process to return these desperately needed dollars to small businesses has yet to be created,” said the national organization.
“At a time when many small firms are struggling to make payroll, the budget confirms workers and employers will see another significant increase in both Employment Insurance (EI) and CPP/QPP premiums. And with potentially costly changes planned for the EI system, small firms are rightly worried about many years of payroll tax hikes ahead,” added Kelly.
On a positive note, the CFIB said it was pleased the budget allows more firms access to the nine per cent small business tax rate on the first $500,000 in corporate income. Instead of losing access at $15 million in taxable capital, firms with up to $50 million will be able to benefit.
“We congratulate the government for accepting CFIB’s long-standing recommendation to raise this threshold to $50 million, encouraging more small firms to grow to medium-sized. We are also encouraged by the planned review of rollover provisions for small business investments,” said Kelly.
Michelle Wasylyshen
Michelle Wasylyshen, National Spokeswoman for the Retail Council of Canada, said the federal government’s 2022 budget contained some good news measures for retailers, most notably the adjustments to the Temporary Foreign Workers Program (TFWP), announced earlier in the week, to help businesses address labour shortage issues.
“Retail is Canada’s largest private-sector employer and our members have had to cope with a significant loss of experienced staff throughout the pandemic as employees needed to find work in other industries when stores and malls remained closed or operated at a limited capacity for prolonged periods of time,” she said.
“We are seeing signs of economic recovery in our sector, but things remain fragile, with inflation rates the highest they’ve been in over 30 years, the recurring threat of new COVID variants, leading to changes in work and spending patterns, and the recent instability arising from blockades and occupations of border points and urban centres. As such, we are disappointed to see limited movement on the many ideas we put forward during the past two years, as they would have helped ensure the recovery of Canada’s retail industry, boost Canada’s economic growth and make life more affordable for Canadian families.
“Of these, RCC was most hopeful that the government would take action on credit card swipe fees for our small businesses which, we estimate, are costing merchants $10 billion a year. These costs will only be further multiplied with rising inflation rates coupled with the declining use of cash and rise in online shopping. We also called for the elimination of tariffs on essential items Canadians use every day, such as clothing, shoes, and baby items which translates into around $5 billion in hidden taxes for Canadians each year, unnecessarily adding to their cost of living.”
Honourable Perrin Beatty
Perrin Beatty, President and CEO of the Canadian Chamber of Commerce, said Canadian businesses have faced an unprecedented two years, characterized by a multi-wave pandemic, inflation that has reached a 30-year high, supply chain disruptions, extreme weather events, and geopolitical turmoil. Given these conditions, it has never been more important for the federal government to focus on economic growth.
“This economic growth must be private sector-led. While our public finances have benefitted from higher inflation rates and energy prices and low interest rates, we cannot borrow or inflate our way to prosperity. Federal spending needs to be both fiscally responsible and targeted at where it can generate genuine economic returns. Generating economic growth requires carefully using all the tools available, including tax, regulatory, labour, and infrastructure policy, to attract private sector investment,” he said.
“The government has set out an ambitious agenda in Budget 2022. It now will be essential to work collaboratively with businesses to ensure measures announced are implemented in a manner that will support economic growth.”
The Chamber outlined the following measures it welcomed from the budget for Canadian businesses:
The gradual phase out of the small business tax rate when taxable capital reaches $50 million instead of $15 million;
Investments in the critical minerals industry to support the full development of supply chains, from extraction through to processing and recycling;
Various measures to support the net zero transition, including the introduction of a tax credit for carbon capture, utilization, and storage, incentives for Zero Emissions Vehicles, and investment tax credits for net zero technologies;
Funding towards a trusted employer program for Temporary Foreign Workers that will address labour shortages; and
Support for exploiting the opportunities from the legal cannabis sector.
But the Chamber also noted the following that will “undermine” much-needed economic investment and growth:
The absence of debt relief for businesses that used government support programs such as the Canada Emergency Business Account;
A lack of focus on cybersecurity supports directly for the private sector; and
Only a partial review of the tax system rather than a comprehensive review, particularly given the implementation of additional measures on a sector basis for financial institutions and digital services.
“The gap between Canada’s potential and our performance continues to grow. It has never been more important for the government to view Canadian businesses as a partner, and not as a problem. Our competitors are squarely focused on how to attract investment and growth. That needs to be our top priority, too,” said Beatty.
The Canadian Taxpayers Federation criticized the budget announced by Finance Minister Chrystia Freeland for failing to provide a plan to balance the budget and rein in spending.
“Freeland is giving taxpayers another credit card budget with no plan to pay the bills on time and chip away at the $1-trillion debt,” said Franco Terrazzano, Federal Director of the CTF. “Freeland is taking the wait-and-see approach to the government’s credit card bills and hoping the economy can grow faster than its borrowing, but that’s not a good bet with its track record of runaway spending.”
Franco Terrazzano
The CTF said the federal deficit is expected to be $52.8 billion this year and Budget 2022 does not include a plan to balance the books.
“The debt is projected at $1.2 trillion by the end of the fiscal year. Budget 2022 is adding another $148 billion to the debt by 2027. At 45.1 per cent, the 2022 debt to GDP ratio remains higher than pre-pandemic levels, which were close to 30 per cent,” explained the Federation.
“The federal government’s spending is projected to be $452.3 billion this year, which is $89.4 billion above pre-pandemic spending in 2019. The federal government’s spending was at all-time highs before the pandemic. Interest on the debt is projected to cost taxpayers $26.9 billion this year.”
Shoppers Drug Mart is Canada’s most reputable company, according to the 25th Annual Reputation Study by Leger, and the Toronto Raptors is Canada’s most reputable professional sports team.
Leger, the largest Canadian-owned market research and analytics company, with more than 600 employees in eight Canadian and US offices, surveyed more than 38,000 Canadians to explore their perspectives on more than 285 companies in 30 different sectors. In 2022, a new sector was added—professional sports teams.
Collectively, Canadian companies are experiencing a reputation crisis, and how they will respond is yet to be seen, said the report.
David Scholz
Dave Scholz, Executive Vice-President, Leger, said overall reputation scores have dropped again this year after two years of uncertainty and change through the COVID-19 pandemic.
“The industries hardest hit are breweries, drugstores, hospitality and bookstores. Shoppers Drug Mart is the most reputable company this year; however, their score is down five points from the year before,” he said.
“The industries with the largest growth in reputation are the industrial category and the insurance industry. The industrial category’s reputation increase is driven by Boeing’s resurgence/recovery . . . The insurance industry’s growth is broader, with four companies showing substantial reputation score increases this year: Canada Life, The Co-operators, Wawanesa and CAA.
Shoppers Drug Mart at Tsawwassen Mills in Delta, BC (December 2021). Photo: Lee Rivett.
“We saw no overall increase or decrease in reputation score over the past year in the pharmaceutical category, but we saw significant movement within the category. Pfizer’s reputation score shot up by 10 points in the past year, while Astra Zeneca’s decreased by seven points, showing the impact of the COVID-19 vaccines and how the ongoing discussion has shaped perceptions of these two companies.”
This year, the top 10 most reputable companies have an average score of 71 out of 100, with the highest scores (Shoppers Drug Mart and Sony) at 73. Ten years ago, the average score for the top 10 list was 83, with Google in the highest spot at 91. This is a 12-point average score drop in a decade.
“With overall reputation scores dropping so significantly, you would expect that more Canadians have a bad opinion of these companies. In reality, bad opinion ratings have not changed on average. Rather, we are seeing a drop in good opinion ratings and an increase in the percentage of Canadians who say they “know the company but not well enough to rate it”,” said Scholz.
“This mirrors the change in reputation we see when a company goes through a crisis. Canadians don’t flip flop between good and bad opinions; rather, we allow companies a grace period in which we are waiting to see what they will do next. Collectively, Canadian companies are experiencing a reputation crisis, and we are waiting to see how they will respond.
The challenge for companies will be to learn as much as they can about their stakeholders’ perceptions of them and look for ways to rebuild the relationships that have led to this decline. Canadians are open to feeling positive again, but what organizations do next will affect if these one-time positive perceptions can be rekindled.”
The Top 10 Most Reputable Companies in Canada in 2022 are:
1. Shoppers Drug Mart (Reputation Score: 73)
2. Sony (Reputation Score: 73)
3. Samsung (Reputation Score: 72)
4. Canadian Tire (Reputation Score: 71)
5. Interac (Reputation Score: 71)
6. Google (Reputation Score: 70)
7. Campbell (Reputation Score: 70)
8. Microsoft (Reputation Score: 69)
9. A&W (Reputation Score: 69)
10. Netflix (Reputation Score: 69)
Scholz said even the companies at the top of the list are not scoring as well as they used to 10 years ago. It was not uncommon when Leger first started this study to see scores in the 90s. It’s very uncommon to see that now.
“The interesting thing is that it’s modeling, or mirroring, what we see when an organization has a reputational crisis . . . If we have respect for an organization and we have trust in that organization, we’re willing to let them show us what they can do. And that’s what we’re seeing in the reputation scores. We’re not seeing people going from a good opinion to a bad opinion. We’re seeing people going to this holding pattern,” said Scholz.
“It’s not that they have a bad reputation but they need to re-engage with people. Think about it in relationship terms. We’ve had a bit of a timeout and now we need to figure out how to get back together and feel good about each other again. If you’re in that holding pattern for a long enough time where you don’t know if they’re good or bad, it’s easier to build up bad perceptions or it’s easier to become complacent about that relationship. If I’m an organization I want to have a strong reputation, I want to be engaging with my stakeholders, I want to be creating that relationship with them and I want them to be feeling good about me.
“That’s why we say they’re in crisis because people are starting to slip and they need to not be complacent about this. There needs to be some activity or actions, depending on the organization, and they need to listen to their customers and stakeholders and ask them why they are feeling this way. They need to go for couples’ counselling.”
Scholz said people are more likely to frequent a business and buy products from them if they have a good reputation. People are also more likely to want to work there.
“I’m also more likely that if I have a problem with the product or with the service, to forgive you and come back again if you have a good reputation. From a larger perspective, when you start looking at where you’re going to be building new locations or where you’re going to be putting your organization, you want to get approvals, you want to go through that red tape process that retailers have to go through, it’s better if you have a solid reputation or easier if you have a solid reputation than if you don’t,” he said.
The Top 10 Most Reputable Professional Sports Teams in Canada in 2022 are:
1. Toronto Raptors (Reputation Score: 59)
2. Toronto Blue Jays (Reputation Score: 57)
3. Winnipeg Jets (Reputation Score: 55)
4. Montreal Alouettes (Reputation Score: 51)
5. Calgary Stampeders (Reputation Score: 50)
6. Toronto Maple Leafs (Reputation Score: 48)
7. Calgary Flames (Reputation Score: 47)
8. Edmonton Oilers (Reputation Score: 46)
9. Vancouver Canucks (Reputation Score: 46)
10. Winnipeg Blue Bombers (Reputation Score: 45)
The Top 10 Most Reputable Airports in Canada are:
Image: McArthurGlen Designer Outlet
1. Vancouver International Airport (YVR) (Reputation Score: 71)
2. Halifax Stanfield International Airport (YHZ) (Reputation Score: 65)
3. YUL Montréal-Trudeau International Airport (Reputation Score: 64)
4. Toronto Pearson International Airport (YYZ) (Reputation Score: 59)
5. Calgary International Airport (YYC) (Reputation Score: 55)
6. Winnipeg International Airport (YWG) (Reputation Score: 48)
7. Edmonton International Airport (YEG) (Reputation Score: 40)
8. Billy Bishop Toronto City Airport (YTO) (Reputation Score: 31)
9. Abbotsford International Airport (YXX) (Reputation Score: 25)
10. Jean Lesage International Airport (YQB) (Reputation Score: 25)
Retail Insider is streamlining its Canadian retail news from around the web to include a handful of top news stories that can be viewed quickly during the day. Here are the top stories from the past 24 hours.
Retail Insider is streamlining its Canadian retail news from around the web to include a handful of top news stories that can be viewed quickly during the day. Here are the top stories from the past 24 hours.
Montreal-based Lolë, an active lifestyle brand, is poised for growth as the retailer rebounds following the closure of 30 stores in May 2020 due to the pandemic.
Nadine Garneau
Recently, it announced a partnership with Tandem West Sales to grow the brand in Western Canada and Lolë is also opening its second store in Canada in the near future in Bromont, Quebec to complement its flagship location on Sainte-Catherine Street in Montreal.
Nadine Garneau, VP of Sales at Lolë, said Tandem West Sales will represent the brand in British Columbia and Alberta to meet the growing demand for the company in Western Canada.
“They’re an agency. Basically, Western Canada is a focus for us. The brand was born in Quebec and has always been really well covered in Eastern Canada. We have a great wholesale presence. We have two outstanding reps in Quebec, and we also enjoyed really strong partnerships over the years with accounts like Sports Experts, Hudson’s Bay, Altitude Sports, Simons,” said Garneau.
Exterior of Lolë store on Rue Sainte-Catherine in Montreal. Photo: Lolë
“The business is well-established here and we decided last year that basically we wanted to invest in Western Canada’s wholesale market and build a presence there. Tandem West Sales have a huge experience in our segment. They understand our consumers. They understand the product and basically share the same values as a company. We’re super excited to have them on board.
“We’re hoping to expand in boutiques, in outdoor active lifestyle stores. To grow and expand and cover that region that’s not being serviced properly right now. We were still servicing it internally but it’s hard when you don’t have a presence specifically there to service the customers in the right way.”
Lolë clothing can be found at more than 1,500 retail outlets around the world, in Lolë Ateliers and online at www.lolelife.com.
Last fall, Lolë announced the appointment of Rob French as the brand’s new vice president of digital omni-commerce. The company said French would be leading efforts in consumer insights, testing supply chain-to-consumer models, improving online customer journeys, sustaining and growing Lolë’s retail brand, and more.
Lolë concept store in Montreal
Lolë concept store in Montreal
In the fall of 2020, it reopened its store on the iconic Rue Sainte-Catherine in Montreal after the COVID-19 pandemic forced the closure of all of its stores in May of 2020.
The retailer had to close its 31 stores (20 stores in Canada from Vancouver to Halifax, seven stores in the US, four stores in France) due to the financial challenges presented by the coronavirus. The company at that time had about 200 employees.
“The world has gone through a challenging time and so has Lolë,” said Todd Steele, CEO, at the time. “Our stores closed across the country and it was a heartbreaking time for our employees and the company overall.
“We’re excited to welcome our customers to a brand new and revamped space that will be safe, stylish and full of the Lolë essentials they’ve missed enjoying in a store environment since lockdown.
Image: Lole
“We closed our stores at the outset of the pandemic. We closed them globally and ultimately we went through a formal restructuring process where we exited the leases of those stores, we sold the assets of the company and re-started the company as Lolë Brands which is the new company name. This Sainte-Catherine opening will be essentially the first reopening of any retail we’ve had since the start of the pandemic.”
The company was started about 30 years ago.
Garneau said the company’s goal is for increased distribution over the next year across North America.
“In the US, we’re also focused on increasing our distribution in the core and active markets and finding new advocates for our brand. We will also open two to three new retail stores in the next year as well – one in Canada and two in the US,” she said.
“And on the product side, we’re super excited so far with the 2022 line that we’re shipping. The product has been super well received. We’re looking to have more and more product as seasonless items, meaning that we would always have them in stock. This will really allow our wholesale partners to have a better ability to manage the inventory and to provide their customers with those items over and over again.
“The next five years I would say we’re hoping to get the Lolë awareness globally. Right now, the brand awareness is super strong in Canada, growing in the US and thanks to our Quebec roots we have a nice brand awareness also in France, but we would like to grow more in the rest of Europe and when the time is right we’ve also discussed growth in Asia. But before we get there we need to solidify our position here which is our main focus right now.”
Food prices in Canada continue to soar in the face of labour shortages, the rising cost of goods and supply chain disruptions. Statistics Canada recently reported that the food inflation rate in the country has reached 7.4 per cent and that it will most likely rise again in the coming months.
Last December, Canada’s Food Price Report 2022 forecast an overall increase in food prices in Canada of up to seven per cent, but there is a strong possibility that market disturbances related to the conflict in Ukraine could push prices even higher this year. This could cause trouble for grocery retailers that have become the epicentre of food price increases.
The general inflation rate is at its highest since 1991. This underpins serious concerns for food security as food, energy, gas and housing prices soar.
A comparison of the profit margins calculated from their respective annual reports published in 2021 for the big three retailers — Loblaws, Sobeys and Metro — against Canadian companies in other sectors shows us their financial results are rather modest. At the end of their respective fiscal years in 2021, profit margins were 3.7 per cent for Loblaws, 2.7 per cent for Empire/Sobeys and 4.5 per cent for Metro.
Certainly, these are interesting results; profits are indeed on the rise compared to pre-pandemic years, but these rates are still below the increased rate of food inflation. In other words, the performance of these chains has actually stagnated, if we compare it with the increased cost of living.
Profit margins in the food distribution sector are generally smaller than in other sectors. The profits of large Canadian companies in other industries far exceeded those of the major grocery chains. For example, in 2021, Enbridge’s profit margin reached 13.4 per cent and Telus’ was 9.8 per cent. In the banking sector, the profit margin of the Bank of Nova Scotia was 33.8 per cent — almost 10 times more than the largest food distributors.
Profit and food security
While the unease between profit and food security is not new, a company taking advantage of an inflationary windfall is still irresponsible and immoral. However, proving there is profiteering is virtually impossible, unless there is a confession like the 2017 announcement by Loblaws, admitting to having participating in bread price fixing.
The balance between profits and social responsibility remains fragile in food, compared to other types of businesses. Nonetheless, if some people believe that our retailers are making too much money, then the question must be asked: what is the acceptable threshold of profitability in food distribution? One per cent? Three per cent? Five per cent?
How can we protect consumers?
In order to protect consumers, some refer to retail price regulation. This strategy already applies to a few products such as milk and beer, among others. However, state intervention for thousands of products would become a veritable bureaucratic and managerial nightmare, leading to high management costs that would end up being passed on to taxpayers.
In Canada, we have fairly well-run food retail businesses, but the lack of competition in the country often invites criticism. We only have five big players in grocery distribution: Empire/Sobeys, Loblaws, Metro, Costco and Walmart.
As profit-related accusations linger, the distributors could still show some empathy towards the public. There are few in-store discounts and promotions these days and flyers seem to be getting thinner since the start of the pandemic.
Grocers were subject to increased scrutiny during the pandemic, as one of the only public spaces to remain open during lockdowns. In a matter of days, they had to put protective measures in place and make the rapid switch to online retail. Actions to support struggling consumers, such as offering discounts for food nearing its best before date, will be key going forward.
Metro has made a step in the right direction by announcing it would use its profit margins to offset some of the cost of food price inflation. Other grocers should take similar steps to find ways to improve affordability for consumers, who can’t catch a break otherwise. If the big chains don’t demonstrate their intention to help the consumer struggling to balance their budget due to inflation, criticism of their profits will intensify.
By Janet Music, PhD Student, Social Anthropology, Dalhousie University and Sylvain Charlebois, Director, Agri-Food Analytics Lab, Professor in Food Distribution and Policy, Dalhousie University.
