The flagging Canadian economy has hit the home improvement industry particularly hard, and its latest casualty is Giant Carpet.

The 40-year-old carpet and flooring chain has declared bankruptcy, saying it owes $5.2 million. Its 12 warehouse-style stores in southern Ontario will close, putting about 100 people out of work.

Customers who still have outstanding orders are now left wondering what to do and whether their carpet is ever going to arrive.

Though Canada hasn't been hit as hard as the U.S., retailers north of the border still feel uneasy, particularly those in the area of home renovation. The plunge in real estate values is being blamed for the drop in sales at stores such as Giant Carpet.

Even larger chains such as the Canadian arm of Home Depot are making cutbacks - the retailer announced recently that it would not be going ahead with a downtown Toronto location, and cut 180 management jobs last November.

The federal government included tax breaks for homeowners in its latest spending-heavy budget, which it hopes will inspire people to spend that money on improvements.

Whether those incentives will be enough to encourage people to pull out their toolboxes and begin new work on their homes remains to be seen.