In Retro T.O., we revisit key moments in recent Toronto history that still reverberate today. This week: A look back at how Canada’s reigning retail empire crumbled 13 years ago this month.
“The notice posted on the doors of the flagship Eaton’s store in the Toronto Eaton Centre on the morning of Aug. 23, 1999 is not the usual professional presentation,” observed Eaton-family biographer Rod McQueen. “The 8-1/2 by 11″ document has been photocopied and hung in place with Scotch tape. The typescript statement, evocative of the words carved on a tombstone, reads: ‘The T. Eaton Company Limited, an insolvent person, pursuant to subsection 50.4(1) of the Bankruptcy and Insolvency Act, intends to make a proposal to its creditors.’”
Shoppers lined up outside the store that morning, expecting bargains galore as Eaton’s began to liquidate its stock. They were disappointed; the details were still being worked out, and the great sell-off wouldn’t begin for two more days. While some customers bought items before they vanished forever, others browsed quickly before wandering off empty-handed. Nostalgia for a faltering Canadian icon was one thing; benefitting from its misery was another.
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from the August 21, 1999, edition of the Toronto Star
The store’s second dalliance with bankruptcy in two years ended a dramatic week that opened with a very unlucky Friday the 13th. That day, executives were informed that a potential deal with Federated Department Stores was dead. Had the deal gone through, the American retailer would have purchased around 16 of the chain’s remaining 64 stores and rebranded them as Macy’s. Concerns about how much budget-conscious Canadians would spend and Eaton’s management playing hardball soured Federated’s enthusiasm.
On Aug. 16, 1999, Eaton’s closed its main distribution centre on Sheppard Avenue West, throwing 300 people out of work. Advertising was suspended indefinitely. Within days, the four Eaton brothers who owned most of the company cleaned out their offices. This appeared to be a sure sign the end was coming, despite corporate statements that bankruptcy was a last resort and a libel suit filed against the National Post weeks earlier for suggesting Eaton’s would seek protection.
Frustrated suppliers who were owed millions decided they’d had enough. Armed with a court order, Tommy Hilfiger seized their merchandise from Eaton’s Montreal stores. Fearing other suppliers would take the same action, all Quebec locations were closed on Aug. 20. The next day, the bankruptcy filing was announced. When the Toronto Stock Exchange closed on Aug. 23, Eaton’s stock sat at 40 cents a share, down from 15 dollars during its IPO a year before.
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from the Aug. 23, 1999, edition of the Toronto Star
The Eaton family, which had eased itself away from operations following the chain’s first bout with bankruptcy protection in Feb. 1997, gave little public indication of their feelings. While many people publicly endorsed the fourth generation of the Eaton family to run the company, others saw their seeming detachment from the business and failure to adapt to the changing retail environment as the heart of the chain’s woes. The goodwill established with Canadians over a century had eroded through moves like killing the catalogue in 1976 and ending its operation of the Santa Claus Parade in 1982.
The 1990s saw boneheaded moves like CEO George Eaton’s implementation, despite internal criticism, of an “everyday value pricing” policy that eliminated promotional sales. Until sinking profits ended the policy in 1994, George defended it as “sensible,” and reacted to criticism of his management by declaring, “Don’t tell me how to run my store. I’ll run it any way I want.” As the decade progressed, cutbacks lowered staff morale, while creditors worried about the balance sheet. Restructuring undertaken in 1997 brought in new management who dropped traditional product lines like appliances, brought in expensive merchandise that alienated long-time customers, and tried to attract younger shoppers through its “Diversity” advertising campaign and clothing department. Trying to recast the retailer as a higher-end destination didn’t work.
As the liquidation sales proceeded in 1999, one source suggested to the Star that Toronto Eaton Centre owner Cadillac Fairview had a list of potential retailers to woo, among them Crate and Barrel and IKEA. That October, Sears Canada announced its intention to buy half-a-dozen stores and the Eaton’s name. The apostrophe and capital E were removed, and the rest of the name disappeared in 2002.
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from the Aug. 25, 1999, edition of the Toronto Star
Among the assets that were disposed of during the liquidation period was the statue of Timothy Eaton that had graced the flagship stores that bore his name for 80 years. After many rubs of his foot by consumers hoping for good luck, Timothy was donated to the Royal Ontario Museum. Family regarded Timothy as the only Eaton who was a genius, while succeeding generations grew more arrogant and made poor management decisions. The end of the chain didn’t seem to bother Fredrik Eaton, CEO during the 1980s, who told the Star in June 1999 that he had no regrets about decisions the company had made—“I mean, the world goes on.”
“The root problem,” Rod McQueen concluded, “was achingly simple. Canadians cared more about Eaton’s than the aristocratic family itself. They didn’t mind the store.”
Additional material from The Eatons: The Rise and Fall of Canada’s Royal Family (revised edition) by Rod McQueen (Toronto: Stoddart, 1999), and the June 16, 1999, August 17, 1999, and August 25, 1999 editions of the Toronto Star.