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Downturn wallops McNally

Tough market shuts stores

By: Morley Walker

29/12/2009 1:00 AM | Comments: 93

McNally Robinson at Polo Park to close.

WAYNE GLOWACKI / WINNIPEG FREE PRESS ARCHIVES Enlarge Image

McNally Robinson at Polo Park to close.

McNally Robinson Booksellers has entered bankruptcy protection and is closing two of its four stores.

The locally based company's Polo Park location in Winnipeg is being shuttered on Sunday and its Toronto store in the new Shops at Don Mills big-box centre is being closed today.

"It's a painful thing, mostly because of the jobs being lost," co-owner Paul McNally said Monday night.

The result of the economic downturn combined with a difficult climate in general for bookselling, the move means 170 people, 100 of whom are in Winnipeg, will lose full- and part-time jobs. The company has 425 employees here, in Saskatoon and Toronto.

McNally said staff in Winnipeg were told of the closings Monday night. Toronto staff, he said, were to be informed this morning.

The Prairie Ink Restaurant & Bakery in the Polo Park location will cease operations today.

McNally insisted the two remaining stores, the flagship location at Winnipeg's Grant Park Shopping Centre and the other in Saskatoon, will remain open for business, as long as the company's bankruptcy application is approved.

"They make money," he said. "They have a loyal following."

Holiday gift cards and all reader reward cards will be honoured online and at the surviving stores.

"We'll still follow through on all special orders," McNally said. "Apart from the disruption in physical space, we plan to maintain customer service."

He said the company, which was started in 1981 by his wife, Holly, has filed a bankruptcy proposal under the trusteeship of auditors Ernst & Young. He expects the company will apply to the court for sanctioning of a reorganization in the coming weeks.

If all goes well, he said, a smaller company comprising the e-commerce website www.mcnallyrobinson.com and the wholesale division Skylight Books, as well as the two surviving stores, will emerge from bankruptcy protection.

The proposed restructuring, he said, will save approximately 250 jobs.

McNally refused to talk financial specifics.

"The new stores absolutely did not perform," he said. "Business at our other stores was flat, but it was a matter of us taking on huge new costs and not getting the commensurate new business."

The company opened its Polo Park location in April 2008 in the wake of closing its store in the downtown Portage Place mall. It also closed a store in downtown Calgary in August 2008 after operating it for five years.

Last April, it opened a much-hyped big box in Toronto's new upscale Shops at Don Mills. On Monday night, Paul McNally blamed that mall's developer, Cadillac Fairview, for failing to secure sufficient tenants and to even erect proper signage so consumers could find the mall.

"Obviously you buy a pig in a poke when you go into a new place," McNally said. "But one would think that Canada's biggest retail developer might have done a better job."

McNally Robinson is considered Canada's largest independently owned bookstore chain. Its major competitor, the vastly larger Chapters Indigo chain, operates three stores in Winnipeg.

McNally admitted opening two new outlets during a recession proved a costly error.

"It was bad timing, that's for sure," he said. "Bookselling has been struggling in general."

The difficult climate, he said, is the result of stagnant book prices, steep discounting and increasing competition from Internet sales and electronic text formats.

The American online bookseller Amazon announced on the weekend that it sold more e-books on Christmas Day than it did paper books. This was seen as the buoyant consumer response to the company's new Kindle electronic reader, a top-selling Christmas gift.

Earlier in the fall, Amazon and the Wal-Mart chain went head-to-head, selling new hardcover books for as little as US$9.

"There was very aggressive, reckless discounting," McNally said.

In 2004, the McNallys' daughter Sarah opened a McNally Robinson store in Manhattan, where she had been working as an editor in the publishing business.

That store operates as a separate company and, in fact, changed its name to McNally Jackson Books in 2008 to reflect its co-ownership by Sarah's American husband, Chris Jackson.

morley.walker@freepress.mb.ca

Republished from the Winnipeg Free Press print edition December 29, 2009 A3

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93 Commentscomment icon

I suspect McNally-Robs will be sold to an outside buyer within the next six months. After all, the McNallys don't need filthy creditors coming to their Grant Park store trying to collect on old debts. Trying to get their debts written off while also operating a couple stores is a recipe for further financial disaster. Also, who would be stupid enough to work for these [edited] people who's only objective was money....
Also, I've heard that someone from Chapters has already made contact with Polo Park to inquire about using the space in some way....NOW THATS BREAKING NEWS!!

Bottom line...Winnipeg is filled with people who are frugal to a fault. If something, anything, can be purchased cheaper, we will purchase it from that source, regardless of whether or not that purchase supports the local economy. It's always been that way, and always will be.

Lots of great debate:business is business, you do your market research and keep abreast of market trends...MR failed due to competition, which more companies will do in the future. I have been in retail for over 20 years and have started businesses from the ground up - you have to create a better mouse trap..and I did purchase a few books from MR but prefer the library.

whosays....so, my daughter reads, you'd rather she was a level 4 car thief? OK then

I preferred McNally's downtown location. In fact, I was surprised when they left to go to Polo Park. The store at Polo Park is beautiful and all that, but how many people go to the Mall to actually shop? It seems to me that a Mall is more of a 'playground' for most people. A place to walk around, drink a good coffee, and a buy a snack in the Food Court. Shopping is quite secondary it seems. A sad time for McNally Robinson.

I'll continue to go to the Grant Park location and 'feed' my Book purchase addiction. :)

I'd always assumed that the plan was never to keep both the Grant Park and Polo Park stores open (given they are just a short drive apart) and that eventually Grant Park would be closed. I'm delighted it may work out the other way around.

But I also think that McNally's use of technology is sadly lacking. Their website can tell me if a book is in stock, but it can't tell me at which stores? Huh? Or why do they not offer discounts on books ordered on-line? It's obviously saving them money if they do not have to put those books out on display. Come on, offer me *something* for not going straight to Amazon.

Or how many times have I wondered what section a book is in ("Ideas" maybe?) and had to wait my turn at customer service to find out. Why are there no self-serve terminals to look up these things?

Oh ya, and how about the McNally loyalty card -- that you actually have to pay $25/year for! There's a bargain you can't pass up.

I couldn't believe the store at polo park! I found it to be very extravagant and felt that it was a mistake as soon as I saw it.

Having said this I liked M-R and will buy my books at Grant Park.

I worked for them a few years back, and was treated poorly - like much of the staff. I haven't set foot in a McNally store since then and don't miss it. Chapters has everything I need, and ebay supplied me with textbooks for almost nothing.

It's the wonder of capitalism: the market drives the successes. As it happens, the market in Winnipeg is for cheap. It makes me crazy sometimes, but that's how it is. I may be willing to spend 20% more for something "local," but that's the upper edge of the bubble. If a store can't find a way to compete, then I owe them nothing as a consumer.

Too bad for the people who were unceremoniously canned, but welcome to the club of people left in the McNally's wake.

@Ozzy: good points you raise, but you should be aware of the difference between "its" (possessive case) and "it's" (contraction for "it is"). You used "its" five times and each should have been "it's". :-)

I did appreciate having their down town location since that is where I work. However they have not come to realize that there are those of us out there who are not able to read print and for this reason purchase audio books. They have not put any systems in place that make it possible to search for alternate materials. In my experience even staff couldn't figure out how to tell me what audio books they have available. Chapters Indigo have made this very easy for me. Now that I found a place where this is possible, I have not bothered to check if they ever fixed this short coming of theirs.

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