Why a 90-store farm retail chain is disappearing

Peavey Industries LP announced in late January it is closing its Peavey Mart stores nationwide. The company’s sudden announcement raises the question: What is happening in the farm retail sector across the country?

Here are some things to know.

PEAVEY DELIVERS BAD NEWS IN TWO STAGES:

 After initially announcing it was closing 22 of its stores in Ontario and Nova Scotia, Peavey Mart announced on its X page it is closing all 90 of its stores across Canada.

The farm retailer said it had obtained a creditor protection order and was closing stores after nearly 60 years of serving “predominately rural communities." The company closing store sales and liquidation would begin immediately.

PEAVEY'S REASONS FOR CLOSING SHOP:

 In its social media statement, the company attributed its decline and store closings to outside influences.

Peavey Mart stated the Canadian retail industry is “experiencing unprecedented challenges” such as “record low consumer confidence, inflationary pressures, rising operating costs and ongoing supply chain disruptions,” creating significant obstacles for its operations.

In response to Peavey Mart’s statement, an X user named Kim said, rather than blaming inflation and the government, the company should take responsibility for its “failures caused by fast expansion and poor decisions and management.”

Replying to the user, Peavey Mart acknowledged it expanded quickly, purchasing TSC stores and ACE Canada just before the COVID-19 pandemic, and its growth coupled with a rapidly changing market dynamic led to the issues the company has faced in recent years.

 WHAT DOES A FARM RETAIL EXPERT SAY

 SHIFTING MARKET:

 David Soberman, a marketing professor at University of Toronto’s Rotman school of management, said Peavey Mart performed an important role in the farm retail sector, but noted a monumental shift to the online sphere for purchases.

A retailing and business-to-business expert, Soberman said the market shift has enabled farmers to order feed, supplies and other goods online, increasing the ease of purchases, usually at lower prices directly from manufacturers, putting “tremendous pressure on retailers.”

Soberman said prices are lower for online retailers because those businesses don’t have to maintain a network of stores like Peavey Mart, which can be costly.

“There's a fixed expense in terms of running those stores: keeping them up, paying for the staff and also for inventory,” Soberman said.

Online retailers have centralized warehouses and while shipping costs may be higher, delivery has become more efficient, he said.

 SHOWROOMING:

 “Showrooming” is how Soberman describes consumers visiting retail locations to view products, while purchasing them elsewhere. The benefit of farm retail stores like Peavey Mart is the consumer's ability to look, touch and understand a product before buying it, he said.

“One of the problems they have is that the farmers are under no obligation after looking at merchandise in the store to buy it,” Soberman said. “There's very little friction stopping the farmer from going home and then making the order that she or he needs online.”

Providing an example, Soberman said: “If the price at Peavey for something is $662 and they're able to get it for $590 online, you have to understand that the farmer is also trying to make ends meet.”

 FUTURE OF FARM RETAIL:

 Soberman said Peavey Mart is just one of many farm retailers, but there were similarities between that industry and others nationwide.

“We've seen a weaning down, for example, in the number of department stores in Canada,” Soberman said. “You're going to see a similar sort of a thing in this sector as well.”

With a shift to online sales, issues could arise for consumers, such as farmers in the market to purchase new equipment, he said. In the absence of retailers, it could become difficult for some consumers who live in smaller communities to test products. 

“That's an interesting problem that I'm not sure what the solution will be,” Soberman said. “If there are no retailers and there's new equipment, how will farmers get to see and examine that equipment?”

 PEAVEY MART STORES IN SOUTHWESTERN ONTARIO

• Leamington

• Essex County

• Chatham

• Strathroy

• St. Thomas

• London – Hyde Park, Dundas Street and Lambeth locations

• Tillsonburg

• Woodstock

• Stratford

• Simcoe

• Sarnia

• Goderich