Manitoba clothing retailers reopen but struggle with supply chain challenges, low demand
Small- and medium-sized clothing retailers face difficulty sourcing goods overseas: Retail Council of Canada
Independent Manitoba clothing stores are reopening after months of pandemic closures, but they continue to face demand and supply chain struggles, even as similar issues begin to resolve in some other corners of the economy.
Winnipeg's Regan Bueti usually has clothing merchandise from California shipped to North Dakota, where she then picks it up and drives it home to sell at her Osborne Village shop, Style Bar.
It's a strategy that's served the small business well in its seven years on River Avenue — Bueti saves loads on international shipping and brokerage fees — but that changed when the closures hit Manitoba.
The closure of the Canada-U.S. border to non-essential travel forced Bueti to hire a local company that's still allowed to go into the U.S. to pick up her orders and drive them back. Bueti estimates she is spending 20 per cent more, or $400 per month, to have the company fetch her items in North Dakota and bring them to Winnipeg.
"That has probably been the biggest struggle for me, because my fees are going up to be able to get goods to Winnipeg," she said.
Bueti isn't the only one in the retail industry who is shouldering additional costs or supply chain delays as Manitoba's economy reopens.
The Retail Council of Canada says elements of the clothing industry are struggling because of how reliant the sector is on international suppliers.
"Most other retail has North America supply chains that remain relatively healthy compared to the delays that we're seeing out of China and Asian countries," said John Graham, the retail industry organization's government relations director for the Prairies.
The sales slump showed up in a report released last week by the Manitoba Bureau of Statistics. It showed Manitoba retail sales across the board were down about eight per cent in March compared to the month before, and down about nine per cent compared to March 2019.
At Manitoba clothing and clothing accessory stores, March sales were down $32 million compared to the same month last year, according to the report — a 48 per cent drop.
That was before the mandated closure of non-essential businesses. Numbers for April and May aren't yet available.
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Small- and medium-sized retailers don't have the same clout as larger companies, said Graham, and that may be compromising their ability to quickly source inventory.
Bigger companies such as Canadian Tire and other retailers it owns, including Mark's and Sport Chek, have seen an unprecedented demand for things like bikes, backyard and recreational products such as trampolines and basketball nets.
None of those businesses have had issues sourcing inventory, said Canadian Tire spokesperson Joscelyn Dosanjh.
'Significant backlog in orders'
One smaller retailer that has had issues getting overseas inventory to the Prairies is Eph Apparel.
The downtown Winnipeg suit-maker manufactures in China. Near the end of January, coronavirus-induced work stoppages there forced the company's production partners to halt factory operations, said Eph co-founder Andrew Parkes.
"It led to a significant backlog in orders," he said.
"Our production timelines went from 4½ weeks to I think, by the time we got back up and running, it was somewhere in the realm of 11 weeks."
The company's downtown store closed for all of April and most of May. That gave production in China time to ramp back up and take a bite out of their backlog.
But demand for custom suits plummeted over the same period.
Sales were down 70 per cent in the last two weeks of March and 90 per cent for all of April, he said. In May, Eph Apparel did 30 per cent of the business it normally does ahead of graduation and wedding season.
"The fact that we've been able to claw back our production timelines during all this is mostly just a function of just how bad the downturn has been on the home front," Parkes said.
Bracing for a slow summer
Gimli-based H.P. Tergesen & Sons General Merchant hasn't had much in the way of supply chain issues, but like Eph Apparel and Style Bar, the Interlake retailer is sitting on loads of winter inventory and sales are down.
Co-owner Stefan Tergesen said the 121-year-old family business was lucky to get its spring and summer clothing, along with other merchandise, before the pandemic hit. The store sources products from around the world.
But since it reopened over May long weekend, Tergesen said business has been just 50 per cent of what it normally is in spring, due to a significant drop in foot traffic. He didn't even bother putting out the fall clothing stock at a discount; it went straight into storage.
"Looking at my order for fall, of course it's also up in the air what might be happening, and with the limited number of [people] I am allowed in my store, I definitely need to reduce the amount of inventory that I would carry in the past," he said.
"I thrive on having really big, crowded, busy weekends, and that's sort of going to be something that I am not allowed to even do anymore."
Demand down
Graham said retail supply chain issues and a glut of winter inventory are one thing, but ultimately people haven't been buying a lot of clothes or other items directly from local brick-and-mortar stores.
"The demand for non-essential products like clothing has softened substantially," said Graham.
"It's less of an issue of volume and more of an issue of making sure their inventory is relevant as they compete with an online competitor" in Amazon, he said.
Bueti hopes things continue to improve into fall, which is her most profitable season. She's also bracing for a second wave of COVID-19 closures.
"I think this is going to happen again," she said.
"I don't know how some retailers will get through that."
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