What Happened?
The Story of Retailer Consumers Distributing
It operated for 39 years starting in 1957 and grew to 560 locations nearly evenly split between Canada and the United States. In 1996, Consumers Distributing filed for bankruptcy. Affectionately known as Consumers, it had lost relevance with customers and not kept up with changes in retail. This was not an uncommon story for Canadian brands.
Over the years, the country has seen dominant retail players close shop. A&A Records, Bata Shoes, Beaver Lumber, Eaton’s, and Simpsons number among them. These had been in business for decades and were trusted by Canadians coast to coast. In the case of Consumer Distributing, it was all about the business model.
Original grocery stores fulfilled customer orders from a list. Aisles of products, individualized brands and packaging, shopping carts, and checkouts came later. In essence, Consumers Distributing went back to the future in an attempt to reduce costs for customers by maintaining merchandise in a warehouse-type stocking system instead of displaying them in a costly showroom.
Customers made their selections from a catalogue, filled out a form listing the items they wanted, then waited for stock staff to retrieve the items from the warehouse. In a 2017 retrospective of the company, The Toronto Star, described the business model of Consumers Distributing as “Internet shopping before the Internet”. That was a questionable comparison though Canadian households loved receiving the semi-annual catalogue as a paper Amazon. The country had become accustomed to catalogue shopping given the famous Eaton’s department store version that had serviced the large nation for decades. Eaton’s retired their amazing publication in 1976.
Consumers Distributing took big hits due to pricing. Catalogues maintained the same prices for six months, so the company began producing seasonal mini-catalogues issued more frequently to highlight certain items and make pricing adjustments.
Consumers Distributing was not the only retailer to employ this catalogue and warehousing approach. It purchased the 42-store Cardinal Distributors catalogue chain and the 70-store American chain Consumers, bringing its total store count to approximately 400 in 1981. During the 1980’s, Consumers Distributing built a chain of toy stores called Toy City using the same model. Somehow the adults in charge of the business forgot how important it was for kids to have a tactile experience with a toy. And instant gratification applied to all ages. Adults lost patience with the catalogue and warehouse approach.
Consumer Distributing customers were also frustrated with frequently out of stock items. It was not uncommon for a customer to wait in line only to be told by a clerk that they were out of luck. The company undertook several initiatives to help ease the problem, including “super stores” that had all the in-stock products on display, and free home delivery or store to store transfer for items not in stock. A state-of-the-art inventory system checked the availability of other stores in real time and suggested alternate products at the store which were in stock.
These were innovative moves but were highly expensive and overextended the company. High operating expenses, increasing competition, changing retailing trends, and deflation in several key product categories created a perfect storm. A recession and the expansion of Walmart into Canada did not help. But to sum up, it had become a poor retail experience.
