Amid high inflation, rising operating costs and shrinking Canadian demand, clothing designers in Nova Scotia say they’re struggling to find a sustainable business model.
Designers say they’ve had to adjust to significant changes in consumer behaviour, supply chain disruptions and inflation as they’ve navigated through the COVID-19 pandemic and its aftermath.
“We’ve made a lot of hard decisions. They were tough at first but since we’ve done it, we feel a lot freer,” said Anna Gilkerson, co-owner of Lunenburg-based clothing brand Ana + Zac.
But while businesses have made adjustments to survive, there are other challenges on the horizon, including next month’s deadline for the repayment of federal loans handed out during the pandemic.
“I think people were hoping that things were going to go back to normal but they’re not normal,” said Gilkerson. “It’s very difficult for businesses, particularly smaller independent businesses, to try and catch up.”
Cost pressures intensified
During the pandemic, Gilkeron said demand for their product — high-quality cotton basics sustainably made in Peru — went up, though the business encountered other challenges, including paying rent on a Halifax retail space they leased just before non-essential businesses were forced to temporarily close.
But it was in 2022 that the cost pressures really intensified.
“Anywhere from shipping to utilities, sourcing products, it was getting more expensive.”
In response, Gilkerson said they decided it was best for the business to move online. They got out of the lease on their Halifax store, shrank the size of their team and moved to a much smaller space on the South Shore, where Gilkerson is from.
While the brand has been able to attract new customers by targeting the U.S. market, Gilkerson said Canadian demand is stagnant. “I feel like consumers really are struggling with just food and with housing.”
Declining demand a challenge
Other designers say they’re also dealing with the consequences of stagnant or declining Canadian demand.
They include Maggie MacCormick, owner of the small, sustainable clothing brand Daytime People, which she designs in Nova Scotia and has manufactured in India.
Like Gilkerson, MacCormick’s sales spiked early in the pandemic. “I felt like every customer I ever had showed up and bought multiple pieces.”
But at the same time, supply chain issues posed a challenge — from a worldwide zipper shortage to extreme weather in India that affected her manufacturer’s ability to work — her production cycle was thrown off by about a year.
After MacCormick sold her inventory, she was forced to let the business go dormant, and in the meantime, became a parent.
Since starting up again in spring 2023, MacCormick said her sales are roughly a third of what they once were.
“Before, I felt like if I followed my instincts and if I made a product that was good quality and made in a respectful way, that people would just buy it and that was always true. And now I feel like my instincts aren’t really enough.”
To avoid having her prices get to a “really inaccessible place,” MacCormick is pulling her clothing out of shops, and is moving into a smaller studio space on the South Shore where she hopes she can tap into the in-person tourist market come summer.
“I kind of see value in having something really small. My dream for my business is to be considered a hidden gem.”
Halifax clothing brand Thief & Bandit, selling sustainable handmade clothing from a studio space in downtown Halifax, has also made changes.
Amie Cunningham, who started the brand in 2009, said they’ve had to be flexible to adjust to the swings of the last several years.
Like other designers, they saw sales go up in 2020, prompting them to add staff and move into a storefront on Barrington Street. But a year or so ago, sales started to shrink — so she started thinking about ways to pivot.
Cunningham said they made the difficult decision to close the brick and mortar space and consolidate their operations to their studio. They also invested in an advertising strategy, which Cunningham said they haven’t had to do before.
While they’ve seen increases in production costs, she said they’re leery of passing those on to the customer.
“It’s difficult to raise our prices because we don’t want to alienate any of our customers any more than we do. But the truth is that it is a lot of work to do what we do — and it is truly sustainable, truly made in house.”
Cunningham said the fact production is all done in house makes it easier to pivot the business when necessary — though that also adds to the workload.
“I thought I worked hard before and now it’s on another level, and I’m not willing to let it go,” she said. “So until the economy shifts, until we can get to a point where we’re making enough sales that I can hire some extra people to help me … I’m running my social media and I’m doing the website, I’m doing customer service, I’m photographing all the models, I’m designing all the prints.”
No time to recover
Duncan Robertson, senior policy analyst at the Canadian Federation of Independent Business, said while labour shortages used to be the main issue for businesses, domestic demand is now a top concern for members nationally and in Nova Scotia.
Robertson said many businesses are also concerned with the looming deadline to repay federal loans handed out during the pandemic; businesses have until January 18 to pay what they owe, in order to have a portion of the loan forgiven. The deadline has already been extended twice.
“2023 was by no means a year of recovery,” said Robertson. “It was a year of additional cost … so they need that extra time and they’re not getting that, which is a real concern.”
Robertson said without the year-long extension the CFIB is advocating for, the organization has estimated roughly 250,000 businesses nationwide will be at risk of closing.
Loan repayment is a concern for Nova Scotia designers too; Amie Cunningham said her business never had debt before the pandemic, but is now feeling the strain.
“I’m struggling just like everyone else to pay back that loan,” she said. “Essentially, it’s just going to take a huge chunk of our earnings over the holidays which means for us it’s going to be a really rough January, February until our sales go up again in spring.”
Gilkerson said her business is also under pressure.
“We used that money to build our store and now we no longer have our storefront, and we’re actually still paying back rent for that location,” she said. “I think it’s hard for businesses to catch up so quickly.”
Nonetheless, Gilkerson said by making adjustments where they can, they’ve managed to find a business model that works despite the turbulence of the last few years.
“We just want to have a sustainable business where we can pay ourselves and pay our employees and be able to save a little bit — we’re not asking for a lot.”