For many Ontarians, the Consumers Distributing catalogue was a large part of the holiday experience. Kids eagerly browsed its pages for toys that they hoped Santa (or their parents) would slide under the Christmas tree. Adults browsed through the selection of jewelry, watches, household items, and even the odd vibrator. To receive these products, you visited the nearest showroom, where you were greeted by rows of catalogues and plenty of stubby pencils to fill out the order forms. Then you would play a game that ultimately helped seal the chain’s doom: would the products you want be ready for pickup or, as was too often the case for some customers, be out of stock?
The Consumers Distributing story began in Toronto in 1956 when door-to-door salesman Jack Stupp launched it as a mail-order wholesaler. It specialized in items for other salespeople as well as companies looking to source gifts and premiums for events — ranging from bowling tournaments to honouring retiring employees. Early newspaper ads also tried to attract anyone interested in running a home-based business. "Our huge catalogue is loaded with name brand popular items," promised an ad published in 1957. "Our name does not appear anywhere in the catalogue but your name is imprinted on the cover."
Within a few years, Stupp opened a showroom in an industrial area where customers would grab a clipboard and fill an order form based on the samples on display. Expansion into other parts of Ontario began in the early 1960s as Consumers gradually shifted its focus from corporate and industrial buyers to the general public.
"If you’re the type of customer who likes to browse through a store, don’t go to Consumers," the Toronto Star warned in a 1968 profile. "If you like to have sales staff lurking at your elbow, don’t go there. If you like to pepper sales clerks with questions, don’t go there (each item sold is a top-name, top-condition article, with the catalogue’s description of it guaranteed)."
Jack Stupp, from the 1980 Consumers Distributing Annual Report
Overhead was kept as low as possible. Stores were located in industrial areas away from city centres with minimal parking that wasn’t always paved. Frills such as delivery, gift wrapping, and cash refunds? Forget it.
"We sell inconvenience," Stupp observed. "But we save the customer money."
The concept worked. A typical Consumers store operating in 1969 had average sales of $800-$1,000 per square foot, compared to $70-$100 for most major Canadian retailers. On average, prices were generally 20-40 per cent lower than other chains. This sparked a rapid expansion phase: Oshawa Wholesale assisted for Canadian locations outside of Ontario and, beginning in 1972, a joint venture with May Department Stores which was concentrated around the Los Angeles, New York City, and San Francisco metropolitan areas. The chain’s popularity inspired many Canadian imitators; by the end of 1973, the competition included Cardinal (owned by Steinberg’s), Shop-Rite (operated by Hudson’s Bay Company) and Woolco-branded catalogue stores.
But growth had its limits. Executives spent too much time focused on American expansion, which led to neglect on the Canadian side that resulted in too much leftover inventory following the 1974 Christmas season. Profits and stock prices plunged amid a recession. New president Albert Plant slowed the pace of expansion, worked on inventory issues, and sold its interest in the American branch to May. Stupp, who had remained CEO and chairman of the board, couldn’t give up control and reassumed the presidency when Plant resigned (due to Stupp’s interference) in 1977. "I am probably the best merchandiser in the business and my involvement is critical," Stupp told the Globe and Mail. "I know this business better than anyone else because I’ve lived it for 20 years. It is one of the few entrepreneurial businesses that will succeed by the guts of the entrepreneur. It doesn’t require the planning and sophistication of other retail businesses." Among his gutsy moves was buying back the American branch in 1978 and absorbing most of Cardinal’s locations in Quebec.
Stupp made headlines for the wrong reasons when, along with two others, he was arrested in January 1979 and charged with conspiring to manipulate the market price of Consumers shares. A rapid rise in Consumers stock prices over the course of 1978, along with transfers of stock that also involved property in Florida, sparked a joint investigation carried out by Metro Toronto Police, the Toronto Stock Exchange, and the Ontario Securities Commission. Despite the charges, Consumers management kept faith in Stupp and he continued to run the company.
The early 1980s were promising for Consumers in terms of sales. By 1983 it claimed it was the largest seller of watches in Canada and the third-largest jewelry retailer. Its dominance in toy sales led to the launch of Toy City, a chain modelled on American retailers like Toys R Us.
But problems mounted.
In April 1982 Consumers was fined $35,000 by the federal government on five counts of misleading advertising, which was at the time one of the largest fines ever levied under competition laws. Among the counts was a ring which an investigator discovered cost $20 more than advertised, and a barbecue which failed to come with a promised rotisserie.
In June 1985 Consumers was fined $125,000 for cooking its books to hide over $250,000 in payments made to Teamsters Local 419 secretary-treasurer Sean Floyd between 1979 and 1982 to ensure labour peace. Floyd received the money in clandestine meetings with Consumers executives in hotel parking lots and donut shops. Floyd later alleged that Stupp had similar arrangements with the Teamsters in New Jersey, which was part of a pattern of associating with criminal elements.
When the fines were announced, employees at Consumers’ warehouse in Malton walked out for two days, vowing not to return until union steward John Persaud was rehired. Persaud, an immigrant from Guyana, was fired the previous year for leading a work slowdown. Rather than fight for his job, the Teamsters urged him to take a $50,000 payout. Persaud refused and was soon convinced he lost his job because of corporate payoffs to union officials. Legal actions dragged through the courts and the Ontario Human Rights Commission for years, with Floyd testifying in 1989 that conditions in the warehouse reflected racist middle management attitudes, including allegations that some executives resented paying union wages to non-white workers.
Employees protested against alleged racism. (December 18, 1985 Toronto Star)
During the summer of 1985 Quebec grocery giant Provigo bought Stupp’s shares as part of CEO Pierre Lortie’s efforts to expand outside the food business. Stupp stayed on, vowing to remain as Consumers’ chairman and CEO until he hit retirement age in 1991. He lasted nowhere near that long, resigning in early 1986 shortly before the long-simmering stock manipulation case came to a conclusion. Stupp and a co-defendant were fined $100,000 each for their actions, while the other man was acquitted. Observers estimated the trio made millions on the deal.
One final incident involving Stupp occurred in October 1985, when Floyd and a friend attempted to extort over $150,000 from the Consumers founder. Floyd, who was in financial distress as his life had crumbled, met Stupp in a hotel parking lot near Pearson Airport. There he threatened to harm Stupp and his family if he didn’t hand the money over. Stupp had contacted police, who placed a tape recorder in his car and moved in once the threats were made. Floyd was sentenced to 18 months in jail.
Provigo worked to revitalize the company as its sales and reputation sank following problems with a new computer system installed prior to the 1985 Christmas season. Among the ideas proposed were modernizing facilities, implementing home telephone shopping systems in cities, and expanding into rural markets through grocery store kiosks. Ad campaigns included a catchy jingle based on Donna Summer’s hit song "She Works Hard for the Money." The eternally money-losing American locations were closed or sold off.
Provigo soon tired of Consumers’ underperformance. To end the money drain, it reached an agreement in early 1990 to sell to a consortium which included Malaysian investor Vincent Tan and Markham-based International Semi-Tech Microelectronics for $165 million. The deal collapsed when Semi-Tech charged that the finances were worse that they were initially told. "They were selling apples to us in January and now they turn around and give us oranges," Semi-Tech president James Ting declared. Legal wrangling ensued, including a failed attempt by Provigo to force the deal to proceed.
A buyer was finally found at the end of 1990, when a consortium of Toronto-based Westbourne Management Group Ltd. and Belgium-based Ackermans & van Haaren NV bought the chain for $190 million. They had plenty of work ahead of them, as the company’s inefficient distribution system and frequent stock shortages had turned off many customers. Some industry analysts felt the impersonal catalogue store format had outlived its usefulness in an era when shoppers demanded more personalized service. "People want the old sensation of being able to feel, touch, and smell," retail analyst David Marcus told the Financial Post. "Consumers will have to have a hard look at how they position themselves in the marketplace. There’s no question it’s not what consumers want." A May 1991 Globe and Mail article dubbed Consumers "the leper of Canada’s retail industry."
One reason for the problems was the antiquated distribution system. It took five days to reorder stock from Consumers’ warehouses in Montreal and Toronto, and delays go on and on if the warehouses were also out of stock. The reputation it developed for being out of stock and poor service was harmful in the long run. They failed to deliver the customer satisfaction that they promised. Even the catalogue’s "In-Stock Promise" hedged its bets: "We promise to do our best to keep in-stock, but sometimes demand exceeds supply."
A Consumers Distributing store interior. (1984 Annual Report)
In 1994, Consumers introduced the first of its new "supercentre" stores, which were three times larger than a traditional outlet and carried 50 per cent more items. Out with pencils and catalogue counters, in with computer terminals that accepted credit cards. Jewelry and watch counters were expanded to handle appraisals and repairs. Future plans called for the use of CD-ROM and touchscreen technology. If an item was out of stock, the terminal would suggest an alternative with a similar price or a clerk would search for the item at another store. Free delivery was on offer. Plans called for an interactive electronic catalogue that would allow customers to shop at home.
These changes came too late. Losses continued to mount as the new format showed mixed results and failed to keep up with Walmart’s entry into the Canadian market. Consumers Distributing filed for creditor protection in July 1996, hoping it could restructure in time for that year’s holiday season. The Belgian co-owners and a consortium of four international banks refused to supply it with any more cash and, after a brief reprieve, halted printing of a new catalogue. In September 1996, the banks forced Consumers into bankruptcy, with receiver Coopers & Lybrand keeping 80 of its 217 stores operating until a bidder could be found.
Competitors took advantage of Consumers’ fragile state. Retailers ranging from Kmart to Peoples tried to lure Consumers customers with special offers including honouring warranties and offering product guarantees for five years. Eaton’s offered credit card holders fast-tracked applications and a 10 per cent discount if they opened Eaton’s accounts, along with a repair/replacement service for warrantied items. Anyone who took up this particular offer probably wasn’t pleased when Eaton’s went into bankruptcy protection a few months later.
With no serious bids, the remaining stores were liquidated. By the time winter arrived, Consumers was gone. Its ghosts lingered on for years, including one storefront with signage in Don Mills that survived into the early 2010s. Several attempts have been made to revive the brand, including one that was in the works earlier this year.
Sources: Consumers Distributing 1986 Annual Report; the April 29, 1991, March 3, 1994, March 8, 1994, July 30, 1996, and September 7, 1996 editions of the Financial Post; the April 30, 1969, May 28, 1977, January 11, 1979, August 18, 1979, April 30, 1982, June 20, 1985, July 5, 1985, July 20, 1985, March 8, 1986, March 14, 1986, March 22, 1986, April 28, 1990, May 20, 1991, September 12, 1996, and September 25, 1996 editions of the Globe and Mail; the November 6, 1968 and June 11, 1969 editions of the St. Catharines Standard; and the July 10, 1957. October 22, 1963, October 30, 1968, January 10, 1976, June 22, 1985, and February 17, 1989 editions of the Toronto Star.
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