Recession Hits Toronto’s Luxury Stores Like a Tsunami

[ 3/11/2009 ]

The economic downturn is forcing luxury stores to close, following a wave of closures among small independent businesses. ‘First Hazel,’ an upscale women’s store in Toronto’s downtown Yorkville area, closed last month. ‘Finishing Touches,’ a luxury store on Lawrence Avenue for 34 years, and ‘Sola Shoes’ have also shut their doors. ‘Noutique Le Trou,’ which sold work by well-known Canadian fashion designers, closed its store last year. The company handling First Hazel’s closing sale said on the 10th that more than $1 million worth of inventory would be sold at discounts of 40% to 70%. An early sign of the downturn’s impact on Toronto’s luxury stores came last year, when downtown shop ‘San Remo,’ a favorite stop for famous American singers visiting the city, quietly closed. “Even wealthy customers who have always insisted on luxury goods are feeling anxious about the recession,” said a luxury retail industry representative. “Most have stopped shopping and say they’ll return when the economy recovers. But it’s unclear whether the luxury sector can hold on until next year.” “The fashion industry has weaknesses as a business model,” the representative added. “They aren’t apparent when the economy is strong, but in a downturn, stores are affected one after another.” Debra Anissimoff, owner of Zola, said luxury stores face higher operating costs than small retailers, including rent and staffing. “Gap has closed several stores, too,” she said. Prada and Hermes have reportedly replaced their branded luxury shopping bags with plain ones to cut costs. Hazelton Lanes said customers who still visit its stores are checking prices more carefully and spending less than before.