The fashions were identifiable, iconic and indisputably synonymous with the brand. It’s where you went to buy your prom dress, a new bar top for the weekend or black dress pants for work. In the height of its success, Le Chateau was unmatched in the world of Canadian fashion retailers. While it was evident that the last few years have been challenging, the announcement that the company would be liquidating its remaining 123 stores 2 months ago rippled waves of nostalgia throughout the country. The end of it’s era lead many of us to reminisce on fond memories of days passed, but more importantly, it left us asking the question, “what went wrong?”
Founded in 1959 by Herschel Segal, Le Chateau began as a menswear apparel store in Downtown Montreal that began by selling overstock from his father’s store. The company had modest success and expanded to three locations in its first two years. By the third, Le Chateau came close to bankruptcy and Segal closed all but his original location in Victoria Square. Segal knew he needed to differentiate. He expanded into womenswear and began importing high-quality fashions from Europe. This model worked for the next decade and by the end of the 70s, there were over 50 Le Chateau stores across Canada. By the early 80s, Le Chateau switched from selling high-end imports to mostly mainstream fashion, and by the early 90s, the company was doing most of it’s designing and manufacturing.
By the early 2000’s, Segal recognized the “disposable fashion” stereotype and vowed to invest more time and money into improving garment quality and changing public perception. Collections became more structured and deliberate, but that also meant that they were going to be more frequent. In 2011, international competitors like H&M and Zara were gaining market share, and Le Chateau made the drastic choice to abandon the younger, trendier customer in favour of producing quality, “grown-up clothes” at various price points. Since then, Segal has re-invested millions of dollars to help the company to stay afloat, but it never really did regain the popularity that it once had.
In a statement released in late October the company conceded that it was a decrease in consumer demand for Le Chateau’s holiday and occasion wear (which represented the core of their offering) that diminished their ability to pursue any other avenue but the liquidation process. However, one could argue that the trajectory of the company had been determined for quite some time before the COVID-19 crisis. Bruce Winder, an independent analyst and author of Retail Before, During and After suggested that Le Chateau “was a brand that resonated very well with Generation X and baby boomers, but it struggled with millennial shoppers and Gen Z”. Regardless of that, the unfortunate truth remained that the company could no longer even rely on that customer based because they had fully abandoned them a decade earlier.
Le Chateau was a shopping destination for so many Canadians because it was fashion-forward and trendy. Canada had enough Smart Set’s, Reitman’s and other retailers that catered to business casual attire, so why the company chose to pivot instead of attempting to actually compete will forever remain the million dollar unanswered question. They assumed their customer’s would prefer the new competitors instead of giving their customer’s the opportunity to make the choice for themselves. If they needed to cut costs then reducing their massive product line and investing in a stronger online infrastructure could have been a better place to start. And if they wanted a competitive advantage, they should have focused on expanding their home-based manufacturing plan. Did you know that at least 30 percent of Le Chateau’s garments were made in Canada? If you did you are likely one of the few. It wasn’t in their marketing campaigns or in their store windows that they spent so much time, effort and money on creating. You could find it in fine print on the company’s website, three clicks deep into the “About” page. “Made in Canada” sells itself. It was a missed opportunity that could have incentivized environmental and socially conscious people to shop there. It also would have justified the price increase that so many of their loyal customers struggled to comprehend.
Retailers, designers and small business owners across Canada have faced unprecedented challenges over these last ten months, and they will continue to over the next few years. No one could really have been prepared for this, but the difference between the companies that are barely surviving and the ones that are thriving is that the latter found a way to be adaptable while remaining connected to their core consumer, dependable in terms of service/product delivery and quick to react to the growing demand for social responsibility. It is impossible to know if an alternative strategy 10 years ago would have changed the fate of Le Chateau today, but it is certainly an interesting business case study to look back on and learn from. 60 years is an incredibly long time in the fashion industry, we just can’t help but wish they got one last chance to get it right.
Kristen Vizzari is a freelance writer and resident fashion and lifestyle contributor for STYLE Canada. She works as a private events coordinator and has been in the hospitality and customer service industry for more than twenty years. In her spare time, she enjoys travelling, running, wine tasting, and vintage shopping. Keep up with her new projects and daily adventures on Instagram.