The closure of all its stores by Peavey Industries LP, Canada’s largest farm and ranch retail chain, has sent shockwaves across the retail industry throughout Canada.
The decision follows the company’s filing for creditor protection under the Companies’ Creditors Arrangement Act (CCAA), granted by the Court of King’s Bench Alberta and the closures will affect 90 Peavey Mart stores and six MainStreet Hardware locations, with liquidation sales set to begin immediately.
This marks the end of a nearly six-decade-long legacy for the Alberta-based retailer, which has been a staple in Canada’s rural and suburban retail market.
Michael Kehoe, Broker of Record, Fairfield Commercial Real Estate, said this is a significant event on the Canadian retail scene.
“Peavey Mart is a legacy Canadian brand for over six decades with its mid 60s roots in Dawson Creek, B.C. The Peavey Mart filing is emblematic of the challenges facing Canadian retailers, large and small. The challenges include low consumer confidence and increasing occupancy costs, among others,” said Kehoe.
“The impact will be felt in small markets on the commercial real estate side, where larger format retail spaces are not as easily or quickly released or repurposed. The Peavey Mart brand will emerge in some form in the future as the insolvency process works its way through the courts. It’s a sad day to be sure for a small market Canadian retailer.”
Bruce Winder, a national retail analyst and President of Bruce Winder Retail, said he was not surprised about the news as the retailer was a specialty store that offered items that could be bought online.
“Geographical proximity to customers, in this case rural customers, may not have been enough as other retailers have expanded into medium-sized cities of late. If competitors can sell for cheaper, customers may drive the extra hour to save money. Online shopping may have played a role too as e-tailers avoid costly brick-and-mortar overhead costs that legacy retailers have.
“Without knowing the details from Peavey, I wonder if the acquisition of TSC (a few years ago) played a part in their demise? Did they overpay? Did they take on too much debt to acquire TSC? I also wonder if the farm and agricultural market is in decline or has changed considerably from an ownership perspective?”
Although every chain closing story has its own nuances, one can see how overall consumer and business headwinds may have played a role in this latest development, added Winder.
“To remain in business as a brick-and-mortar retailer, you have to have a strong, defendable and unique value proposition or customers will pass you by. Today, more than ever, price is a deciding issue and if you don’t have the scale of other large retailers your prices are just too high,” he said.
“Store closings are part of the natural retail ‘circle of life’ and are expected as the industry refreshes itself as customer desires change. Having said that, I think we are at a point where we will see more chains close than we are used to, based on the headwinds customers and businesses face. If President Trump enacts large sweeping tariffs, then things will get even worse on both sides of the border as inflation causes customers to spend less.”
George Minakakis, CEO of Inception Retail Group Inc., Author of Predictive Leadership – How Humans and AI Will Transform Organizations, Innovation and Competition, said he has a personal history with this news development.
“I was on the buy side of a deal bidding against Peavey Mart to buy the TSC stores in Canada. That was about nine years ago. It is a challenge to acquire and assimilate a brand like TSC into Peavey Mart, which was a going concern at the time. M&A’s seldom become the success story everyone thinks they can be. I am also reminded of the M&A of SAKS by Hudson Bay. I was on a CBC program where Kevin O’Leary asked me about synergies. I said that they don’t always work out. He looked at me disappointed,” he said.
“The theory is that there are cost savings to be made, which will be able to service debt but that doesn’t always pay out. However, these theories don’t consider customers abandoning a brand—higher costs, bad locations that need to be closed. Any kind of retail expansion is not as easy, whereas some without real operational experience may portray it to be that.
“I believe this was Peavey Mart’s undoing.”
Minakakis said it’s going to become even more challenging for businesses to secure and raise capital.
“Unless a retail chain can prove its digital transformation is both growing in revenue and profits, its physical stores could be seen by investors as irrelevant with consumers. Retailing isn’t about financial engineering and merchandising alone. It is about a brand with a purpose in consumers’ lives and minds. That is a living brand. However, I am seeing store closures. I believe that consumer dynamics (price sensitivities) in Canada are shifting buying habits, and that puts a lot of pressure on the industry,” he said.
“My view on retailing today is about the impacts of the known and unknown. The known is AI. This, for me, is the beginning of The Next Customer Revolution. If a retail chain doesn’t have the strategic, human, and financial capabilities to make this leap, it’s going to be tough for them. The unknown are black swan moments, and in this case, we have a very good indication of what that’s going to be. Tariffs! if all this happens and you pressure consumers to pay more, this will push retail chains to rationalize either their store counts or whether or not they are still a viable business model. Facing the same decision as Peavey Mart.”
Liza Amlani, Principal and Founder, Retail Strategy Group, said she browsed various social media comments about this story.
“If you take a close look at the comments, you will find stories of vendors not being paid on time, customers having a poor experience in the store, a failed attempt at online shopping by Peavey and so on. At the same time, you will find customers saying that Peavey was a preferred choice to get specific farming supplies like feed, fertilizer, fencing equipment, exchanging carbon dioxide tanks and other niche items. Such customers are lamenting the fact that they will likely have to travel further to get those particular items. One would expect that this demand will either be met by other, local businesses or by the likes of Canadian Tire/Home Depot/RONA,” she said.
“As it relates to implications for the retail industry, regardless of whatever corporate word salad statements are released blaming closures on generic issues like ‘supply chain disruptions,’ the fact is that a closure like this is self-inflicted. Retailers that can’t master their fundamentals will eventually fail and make excuses when they do. So, this in fact, is part of a needed cleansing of poorly-run businesses from the retail category. The tough part is that front-line staff will lose their jobs because those in the corporate office couldn’t do theirs properly.
“Are we to expect more closures and bankruptcies to happen across North America? You bet, because winning companies will continue to win and losing companies will continue to lose. And, the gap between winners and losers is growing.”
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