Over the holiday season, Jean Machine was hurt by a flurry of new rivals selling premium goods as well as low-cost fast-fashion players.Getty Images/iStockphoto
The Jean Machine chain has filed for bankruptcy protection, feeling the squeeze of deep-pocketed brick-and-mortar and online rivals in the postholiday season.
Toronto-based Jean Machine, which has about 35 stores selling mid- to high-end denim, this week filed a notice of its intention in Ontario Superior Court to make a restructuring proposal under the Bankruptcy and Insolvency Act, owing an undisclosed amount of money to creditors.
Retailers tend to wait until after the busy holiday shopping period to see if they can survive the increasingly crowded market, or need to surrender to suppliers that are demanding payments. As a result, January and February can be busier months than usual for retail insolvencies.
"I wouldn't be surprised if there are more," said Mark Satov of strategy adviser Satov Consultants. "This is the time it would happen."
"We expect to see more follow suit," added Susan McGibbon, co-founder of retail consultancy Three Sixty Collective. "Many retailers are just not realizing that they need to be fresh, differentiated, engaging and relevant."
Over the past few years a growing array of retailers have filed for bankruptcy or got court protection from their creditors, closing stores or finding buyers, as the retail landscape is being reshaped by large players and e-commerce competitors.
Retailers ranging from Target Canada to Mexx, Danier Leather, Smart Set, Jacob, Future Shop and Blacks Photo have shut down or shrunk to just a few stores or an online-shopping site.
South of the border, a number of major retailers, including Macy's Inc., Sears Holdings Corp. and the Limited, announced store closings after the holidays.
Even so, other players have entered the Canadian market or expanded, including Quebec-based La Maison Simons, Uniqlo of Japan, U.S.-based Nordstrom Inc. and Saks Fifth Avenue, which is owned by Toronto-based Hudson's Bay Co.
"Lots of retailers, even the ones that are bricks-and-mortar focused, are finding ways to do well," Mr. Satov said. "But the holiday season over all wasn't great for bricks and mortar retailers."
Jean Machine was hurt by a flurry of new rivals selling premium goods as well as low-cost fast-fashion players such as H&M of Sweden, making it more difficult for smaller chains to draw customers, said Gilles Benchaya, partner at Richter Consulting, which is the insolvency trustee in the Jean Machine matter.
Jean Machine, whose filing is under MRP Retail Inc., which stands for its founders Malcolm and Roy Perlman, is looking at a host of different options, ranging from closing stores to a sale of the business, Mr. Benchaya said.
Ms. McGibbon said Jean Machine is among denim wear players that have been challenged by the rapid rise in so-called athleisure wear competitors. They sell athletic or yoga apparel that is often worn as everyday casual clothing.
She said Jean Machine shifted to catering to a more "mature" customer but "clearly isn't appealing to that target" group.
Mr. Satov said it has become increasingly difficult for retailers to specialize in such a narrow area as jeans or leather wear. Consumers prefer to head to fashion retailers with a wider offering of goods, such as H&M and Zara of Spain.
For jeans, shoppers will look for a $500 pair of designer jeans at Saks or a $25 pair of denims from Zara, he said.