Canadian retailers closing amid intense competition, failure to adapt to market

In fashion, everyone knows that you're only as good as your last season.

But now, you also have to be fast and adaptable, which is something many Canadian retailers likeDanier Leather, Laura, Smart Set and Jacob haven't been able to do.

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In Canada, many retailers had a "great thing going for years," according to Farla Efros,the president of HRC Advisory, a retail consulting firm. There wasn't much competition and the economy was stable.

But that all changed with the recessionand the onslaught of international competition.

"They got a bit sleepy and all of a sudden have needed to gointo recovery mode," says Efros,

An influx offast-fashion brands, combined with an inability to adapt to new styles and a growth in consumer choice,have led to the demiseof many mid-price Canadian retailers.

"When you add all that up it was really just a fatal combination of things," says retail industry adviser, author and futuristDoug Stephens.

Fastfashion changing the game

International companies like Zara, H&M and Forever 21 are seen as fast-fashionbrands they're massive and they operate on a ramped-upschedule.

"A traditional apparel retailer might have taken months to go from the runway to a store," says Stephens. "A retailer like Zara is accelerating that process. So they've really just changed the speed with which retailers need to get apparel to market."

This speed allows these big retailers something traditional ones don't have: flexibility. They can get a new popular style onto the market in weeks or even daysin some cases, according to Stephens.

Traditional retailers just can't keep up.

On top of that, spending habits are changing. Mid-market retailers don't have as much draw because, Stephens says, people are gravitating towards the extremes.

"Theirnew iPhone purchase is being supplementedby buying clothing at Forever 21. So these are the extremes of value," he says.

Lack of innovation

One of the main criticisms of Danier was that it didn't try to change until it was too late. It had a lock on the leather jacket market in Canada.

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But leather's popularity has grown "astronomically" over the last few years, says Efros. That popularity has brought cheaper alternatives and different styles onto the market.

"It became less coats it was more about blazers and outerwear that you can wear to work. And[Danier] just didn't grapple onto the trend," she says.

And Danierwas not particularly popular with the younger crowd, says Ed Strapagiel, a retail industryconsultant. Even if they had tried to appeal to younger generations, their traditional image stuck with them.

"The image and identity of a retailer is like a really big oil tanker it's very tough to turn around," says Strapagiel.

Efros says that by the time many of these retailers tried to change,it was too late.

"They had already ignored their current consumer base and stopped reinventing," she says.

Infinite choice

Most shopping in Canada is still done in "brick-and-mortar"stores only about 10 per cent is done online. But according toStrapagiel and Efros, that percentage growsevery year.

Because of this, consumers now have more choice than ever. And many customers expect Amazon-style free shipping, so the retailers have to eat that cost, says Efros.

Strapagiel says online stores, while actually quite challenging and expensive to operate, have become a necessary cost of doing business.

"But some of the smaller guys just can't afford to do that," he says.

Consumers now hold the power because online shopping has given them almost infinite choice, says Efros. That power had traditionally been in the hands of the manufacturer or the retailer.

"The consumer now says, 'This is how I want it, this is how much I want to pay, and this is how quickly I want to get it,'" says Efros.

"And if you don't succeed on the different levers that are important to me, well then I'm just going to post it on a social network so that you know that I don't support your brand."

The recession is difficult to ignore Efrossays it'sbeen like the final nail in the coffin, but not the main cause behind these brands' failures.

Stephensdoesn't think Canada has seen the end of this trend.

"I think we're going to see more of this, and it's just a natural consequence of the retail category in Canada," he says."They were just stuck in the middle of the polarizing market and under intense competition."