The encyclopedia · Sales & Retail · Strategic decision · 1957–1996
Consumers Distributing was Canada's catalog retailer — $1B in sales, then bankrupt in 1996
A Canadian catalog pioneer that sold watches, jewelry and electronics from 460 stores and $1B in revenue — then Walmart and debt killed it.
Consumers Distributing · 1996-07
What happened
Consumers Distributing was a Canadian catalogue showroom retailer founded in 1957 by Jack Stupp in Toronto. Customers browsed a printed catalogue, filled out a slip, and collected their purchase from a counter — a model that was revolutionary for its time. The company grew to about 460 stores across Canada, with peak annual revenue of approximately CA$1 billion, making it one of the country's largest retailers.
Watches, jewelry and electronics were the company's core product categories. Its stores featured glass display cases with jewelry on counter racks, and customers could flip through catalogues to choose from a wide selection of watches, rings, necklaces, and other items before picking them up at the counter.
The company's decline began in the late 1980s when Walmart entered Canada by acquiring 122 Woolco stores in 1994, and Zellers expanded aggressively. Consumers Distributing's high-cost catalogue distribution model could not compete with the everyday-low-price model of the big-box chains. The company also faced falling jewellery prices, costly investments in superstores and a new inventory system, and high operating expenses. On April 11, 1996, the company filed for bankruptcy protection. It was eventually liquidated, with its assets sold off and all stores closed.
Why it happened
- Consumers Distributing's catalogue-and-showroom model was made obsolete by big-box retailers like Walmart that offered lower prices and immediate product access
- The company invested heavily in superstores and a new inventory system at the same time as its core business was declining, stretching its finances
- Falling jewellery prices — a core category — reduced revenues and margins at a time when the company could least afford it
- Walmart's entry into Canada in 1994 accelerated the decline of catalogue retailers, who could not match the chain's scale and pricing power
The lesson
A distribution model that was innovative in 1957 can be obsolete in 40 years — and a retailer that sells commodities through an expensive channel has no defense when a cheaper channel arrives.
Aftermath
Consumers Distributing filed for bankruptcy protection in April 1996 and was liquidated. All 460 stores were closed. The company's catalogue retail model, which had been a staple of Canadian shopping for nearly 40 years, disappeared from the retail landscape. The case is often cited as a casualty of Walmart's expansion into Canada.
Sources
- Wikipedia: Consumers Distributing
- Walmart Canada press release via Newswire (Tier 1) — From Woolco to Walmart: Celebrating 25 Years in Canada (18 Mar 2019; Walmart opened its first Canadian stores after acquiring the 122-store Woolco division of Woolworth Canada in 1994)
- Los Angeles Times — Wal-Mart to Acquire 120 Woolco Stores in Canada (15 Jan 1994; entering Canada with the purchase of Woolco discount stores from Woolworth Corp.; Woolworth to receive about $300 million in cash)
- CBC Archives — When Walmart set its sights on the Canadian market (14 Jan 1994 news of the purchase of 120 Canadian Woolco stores, to be converted to Walmart stores)
- CBC News — Aug. 9, 1996: Consumers Distributing closes the book on catalogue shopping (customers browsed a catalogue and an attendant retrieved the items from the warehouse; closure of all 129 stores outside Ontario and Quebec; the company ended its 38 years in the Canadian marketplace)
- Ontario Court (General Division), Commercial List, via vlex (Tier 1) — Thomson Consumer Electronics Canada Inc. et al. v. Coopers & Lybrand, Receiver and Manager of Consumers Distributing Inc. (judgment endorsed 11 Oct 1996; in the matter of the bankruptcy of Consumers Distributing Inc., Mississauga, Ontario; CCAA proceeding; suppliers' applications for return of goods dismissed)
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