January 22, 2020; Global News
Even though Canada is ranked among the top countries in the world for social enterprises and social entrepreneurs, offering a supportive and nurturing environment, a venerable social enterprise, Ten Thousand Villages Canada, run by the Mennonite Central Committee Canada (MCCC) since 1981, is shutting its doors, as are 15 of its stores. Not every Canadian location will be closing, however, as eight stores are independently owned and will be able to remain open. US operations are unaffected.
Ten Thousand Villages Canada announced the closure of its corporate operations on January 21st, after decades of selling fair-trade goods in Canada (and 74 years after its founding in the United States). The shutdown should be completed by May. So how did this happen? The cited cause was a “challenging retail environment.”
Rick Cober Bauman, executive director of MCCC, told Broadview that the decline of Ten Thousand Villages was gradual, saying there had been “about a 12-year process of watching the business get less and less profitable and then unprofitable for a number of those last years.”
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In short, Ten Thousand Villages’ traditional storefronts were being squeezed out. For many Canadians, Ten Thousand Villages was once the only place to purchase items like fair-trade coffee and chocolate, items now available across the country on supermarket shelves and at corner stores. In addition, the rise of online retailers and aggregators like Etsy have broadened access for Canadians trying to purchase Kashmiri throw pillows or hand-carved Indonesian crafts.
This story isn’t an isolated one. In Australia, Oxfam shuttered its retail store doors after 50 years in operation, also due to the challenging retail environment. In the UK, according to a PricewaterhouseCoopers study, there was a net decline of 69 charity shops. On the other hand, as we at NPQ have covered, not all social enterprise retailers have struggled. Goodwill’s retail in the US has seen significant revenue growth since the financial crash in 2007. However, their retail model of secondhand clothing is built on the circular economy model, not the purchase of fair-trade, newly produced, artisanal crafts.
What can nonprofits and social entrepreneurs pick up from this? One learning may be a lesson that has also been faced by for-profit businesses—namely, the need to keep up with the technological times. (Remember Blockbuster?) Fair trade, the center of Ten Thousand Villages Canada’s business model, is as popular as ever. But Ten Thousand Villages Canada clearly failed to adequately meet the online move of its customers, and it ended up with a non-sustainable business model as a result.—Niduk D’Souza