Given all the issues at play (new CEO trying to revitalize the chain, the deepening difficulties faced by its U.S. parent, the entry of Target into Canada, the emergence of the Bay as a stronger competitor, Nordstrom's interest in the Canadian market, the current crappy state of most Sears stores, etc.), Sears Canada will be an interesting retail story over the next couple of years.
Personally, I think the chain will be sold and broken up for scrap. But it will be interesting to watch to see what actually does happen.
Sears CEO unveils refreshed stores
Francine Kopun
Business Reporter
May 24, 2012
Toronto Star
Dowdy old Sears has been made over into a bright, fun, simple place to shop.
After a year at the helm, Sears Canada CEO Calvin McDonald unveiled the new look at the Newmarket location in the Upper Canada Mall.
Gone are the messy racks of dated, deeply discounted merchandise. The sullen, doomed feel of the average aging Sears store has been banished at the Newmarket location by white fixtures, bold colours, wide aisles and newly inspired staff.
Longtime customers said they liked it, including Nic LePage, who arrived on Thursday to find the tool section had been transformed into a hangar-sized area with 300 different home appliances and 44 different mattresses.
No matter. Sears still sells Craftsman power tools, which LePage favours.
“It’s easier, it’s laid-out better,†said LePage, who traveled from Penetanguishene with his wife Anne to buy a wedding present.
“It’s not as crowded. Everything was jammed in before.â€
McDonald won’t reveal how much it cost to refresh the store, one of four pilot locations in Ontario being unveiled Thursday and Friday. The other locations include a store in Belleville, one in Barrie and one in the Lime Ridge Mall in Hamilton. But he didn’t renovate or add staff. He tweaked.
He had to. Sears as it was – and still is in many locations – isn’t ready to compete for market share against any serious rival, never mind Target, the U.S. purveyor of cheap chic clothing and homewares, which plans to enter Canada in 2013.
After 60 years in Canada, Sears, under U.S. ownership that reaped profits from Canadian stores without reinvesting in them, had been disappointing customers for years.
Some analysts welcomed the news last week that the parent company in the U.S. has decided to spin off all but 51 per cent of its Canadian operations. Sears Holdings Corp. currently owns 95 per cent. The deal needs to meet with approval of regulatory bodies in Canada and the U.S.
If the four pilot refreshed stores generate greater revenues, McDonald said Thursday, he will begin transforming more stores in the chain – six, he hopes, by Christmas.
But he thinks he has a hit on his hands.
“Instinctively, every retail nerve I have says this store is going to trade,†he said.
McDonald has reorganized the stores to make them easier to shop. Clothes are grouped by size, not brands. So if you’re looking for a size 34-waist pair of pants, you don’t have to comb through half the store to find a few different pairs.
It’s the same for shoes. If you’re looking for wedges, you find all the wedge sandals grouped together, all the pumps in one place.
He’s increased inventory on items with high-profit margins and consumer demand and cut back in areas where sales were sluggish or profit margins low. Footwear and accessories have been given up to 30 per cent more space.
There is a greater focus on menswear, including slim suits and linen jackets for the fashion-minded. McDonald’s Matinique summer cotton suit was purchased at Sears, for $300.
Consumer electronics have been cut back 30-40 per cent.
Overall, Sears is carrying less inventory. Products are no longer recycled, returned for storage in the back if they don’t sell. It’s in-the-store-discount-and-out. Deeply discounted merchandise is neatly lined along the back walls.
Reducing inventory has freed up more than $100-million for Sears.
Not that the company needs cash. Despite years of decline, Sears has good fundamentals, including a portfolio of prime retail locations, no debt and $400-million in cash, said McDonald.
Sears has exited toys, but ramped up the offering in baby products, especially car seats and strollers, featuring a wide selection from the simplest fold-up stroller to the highly engineered Quinny. They’ve added 30 per cent more to juvenile products, including clothing, overall.
They pulled in 140 managers from across Canada to meet with juvenile products vendors at an event last week in Toronto to be better equip them to explain the merchandise to customers.
The number of vendors is being reduced by 30 per cent, to ensure better product quality and more uniformity in sizing, McDonald said.
The popular Jessica brand is being repositioned and aimed at a slightly younger demographic. Sears has picked up Carroll Reed, a popular clothing line at Zellers.
Mark Ryski, author of Conversion, The Last Great Retail metric, said the challenge will be transforming greater foot traffic in stores into sales.
He questions whether Sears will be able to accomplish the task without hiring more staff.
“Have more staff serving customers and they’ll buy,†said Ryski. Customers met by long line-ups at the cash or staff who can’t help them find what they want, simply move right on through the store, says Ryski.
McDonald said although it’s too early to say, traffic has already begun picking up at the Newmarket location.
Sears customers may have grown disenchanted over the years, but it appears they haven’t given up.
“I think it’s beautiful. I’m impressed,†said Helen Carson, who has been shopping at Sears for 30 years.
€œI hope it turns around for them.â€
Maybe if they are having a white sale — but how much linen does one boy need? They can revamp it all they want — it's still just Sears with more room and less stuff.