Montreal-based bag and accessory retailer Bentley Leathers says that it has successfully navigated court proceedings as it looks to a future of growth. We reported last month that the retailer had applied to restructure its operations after financial challenges associated with operating more than 250 stores amid a consumer shift.
As part of the restructuring agreement, Bentley Leathers will close about 90 underperforming stores in Canada, leaving the chain with 163 locations that the company says are poised for success. That includes opening new locations that reflect the brand’s updated concept that was recently rolled-out at CF Fairview Pointe-Clair unit in suburban Montreal.
Bentley Leathers said in a statement that it had gained the necessary backing from its lenders as well as key stakeholders. As such, the company has exited court protection in a remarkably short period of time. Bentley Leathers said that it credited the support of its employees, landlords, and suppliers, all of whom were critical in making the restructuring successful. As part of the restructuring, Bentley Leathers has been provided new credit lines with the expectation that it will shift operations to become profitable.
Once restructuring efforts are completed early next year, Bentley Leathers will employ about 1,300 Canadians in its 163 stores. Management worked tirelessly for weeks following the restructuring announcement in late November.
“The last couple of weeks have been very difficult for all our employees, particularly with the holiday season so close,” said Walter Lamothe, CEO and President of Bentley Leathers.
The company will push forward with a new strategy that it expects to be successful in years to come. “Our focus now, is to craft a unique position for Bentley in the market place. The entire Bentley team is grateful to continue to support the communities they have catered to for so many years, and we look forward to a new generation discovering the expertise we bring in travel goods and day to day solutions for carrying personal belongings away from home,” Mr. Lamothe said in a statement.
At a time when consumers are shifting their spending habits to online channels, operating 250 brick-and-mortar stores in Canada became cumbersome for Bentley Leathers. Many of the store leases are five years or older and were signed at a time when landlords were able to command higher rents.
Some shopping centres in Canada have seen declining foot traffic at a time when retail centres are polarizing — top landlords have been investing in centres which have resulted in strong foot traffic and sales, while some secondary shopping centres are suffering amid decreasing foot traffic and consumer spending. Record-high consumer debt levels and increased cost of living has also been challenging.
Many cities across Canada have multiple Bentley Leathers locations — that even includes smaller centres. In the Chicoutimi region of Quebec, Bentley Leathers currently operates four stores. Victoria BC, Saskatoon, Regina, and Halifax also each have four Bentley Leathers locations, according to the company’s website. Possibly the highest density of Bentley Leathers stores is in downtown Montreal, which currently has five locations. Four of those are within a two-block radius. The Greater Montreal area is home to nearly 30 Bentley Leathers stores, several of which are expected to close as part of the announced restructuring.
In a telephone interview on Tuesday evening, Mr. Lamothe explained how Bentley Leathers will reduce its store count in certain markets while at the same time expanding its product assortment which includes pieces that are expected to be big sellers. A recent Black Friday sale saw some new styles sell out completely at the CF Fairview Pointe-Claire flagship, which is a vote of confidence for the brand’s updated merchandising strategy.
In terms of store closures, markets where Bentley Leathers has many units will see some shutter. Downtown Montreal, for example, will see three of its five locations close in 2020, while the Chicoutimi store count will be reduced from four units to just one. Markets such as Regina will see half of Bentley’s stores close — two locations will serve Saskatchewan’s capital city once the restructuring is complete, according to Mr. Lamothe.
In a press release last month, Bentley Leathers attributed its financial troubles to the “impact of digital disruptions” — growth in online sales has outpaced that of physical stores for the past several years in Canada. At the same time, sales at some physical retail locations have declined while online sales have grown — paying market rent leases in leading shopping centres has become prohibitive to some retailers and inside sources are saying that more retailers in Canada will be filing for creditor protection before the end of January 2020 amid a challenging time in the industry. Another issue hitting retailers is the unusually short span of time between Black Friday and Christmas Day — retailers will need to sell as much as possible before the end of the month in an effort to survive.
Landlords may have to rethink leasing strategies as retail sales continue to shift online. Rent continues to be a significant cost for brick-and-mortar retailers and in some instances, has become a breaking point. At the same time, retailers are able to see increased online sales by maintaining a physical store presence — a study by ICSC calls it the ‘halo effect’ as consumers shop both channels.
After shuttering 90 stores, Bentley Leathers will look to future growth which will include updating new locations to reflect the design of a recently launched prototype at CF Pointe-Claire that was featured in Retail Insider in October. Bentley’s “store of the future” concept was created to “transform the brand into a solution and experience company with the goal of helping Canadians create lasting memories and supporting the communities they have catered to for so many years.”
The CF Fairview Pointe-Clair store features a design that the retailer says simplifies the buying process while showcasing two new “moment zones” in an effort to create a compelling retail experience. The new store design is modern and organized and is expected to help Bentley Leathers’ efforts to gain market share amid increasing competition. International brands continue to enter the Canadian market at a rapid pace while homegrown retailers are fighting to maintain market share by updating retail concepts as well.
The next ‘new concept’ Bentley Leathers store will open next year at Avalon Mall in St. John’s, Newfoundland. It will be the only location in the city come next year, and will be positioned as a flagship. Bentley Leathers was founded in St. John’s in 1987 and is now headquartered in Montreal.
The unique offerings at Bentley Leathers, coupled with name recognition and consumer loyalty, will see the retailer retain stores in some smaller markets such as Sault St. Marie and Val d’Or.
Stores provide an opportunity for Bentley Leathers to educate consumers on the quality of the product, according to Mr. Lamothe. At the same time, the brand is gaining a digital presence that it hasn’t had in the past — that includes a significant increase in “social footprint” that has led to increased consumer engagement.
While there is still a lot of work to do, Mr. Lamothe expressed enthusiasm when asked about the future of Bentley Leathers in Canada. He was brought into the company about 18 months ago and after reviewing the business’ operations, he and his team set out to find a way to bring Bentley Leathers back into profitability. We’ll continue to follow Bentley Leathers’ progress into 2020 as the retailer repositions itself in the market.