Shutting Down Sears

By Emma Bott

 

Sears is a former business that has long been part of the Canadian retail world. The full name was Sears Roebuck and Company. It was open for 65 years in Canada and could be found in most major malls. The Sears Christmas catalogue was often looked through with families to help create a wish list for Santa. The end of Sears, for many people, therefore spells the end of an era.

 

On January 14 of this year, the last Sears store closed. This was the end of a liquidation process that began in the fall with 130 stores with only a few locations remaining open into January. There were 74 full department stores, eight  home stores, and 49 Hometown Sears stores. The closing of Sears followed their declaration of bankruptcy in Fall 2017. No viable buyer could be found; Sears’ executive chairman, who left the company in August to launch the bid, was at the head of a group of buyers that was unsuccessful. The approval for liquidation came from the Ontario Superior Court and Judge Glenn Hainey. The case had come to the court in June 2017 as the company had creditors looking for their money. The liquidators involved were Hilco Global, Gordon Brothers Canada, Tiger Capital Group, and Great American Group. The timing of the liquidation sale was to capitalize on the Christmas season for higher profits

 

The end of Sears did not come without scandal. With its closure, 15,000 employees are now unemployed. Sears faced a shortfall of $260 million in the pension plan; this meant that 19% of the pension plan became nonexist. Originally, Sears had planned for the head office staff to receive retention bonuses, but now, Sears is playing $6.5 million to the top 36 employees. During the liquidation sales, the Canadian Competition Bureau was called in to investigate. There were allegations that prices were being raised, to offset the cost of markdowns; in other words, the “original” price was being set higher so that the “sale” price was higher. Because comparison between original prices and sales prices must be accurately communicated to the consumer, both customers and employees were frustrated.

 

In recent years, Sears has tried to reinvent itself. Some locations offered a grocery section. They attempted to utilize the trend of pop-up stores. They even attempted to bring in online shopping by allowing customers to order from home. Unfortunately, the store put a lot of attention on the real estate of stores rather than growing their online base. The beloved Sears catalogue merely became an opportunity to create a presence in e-commerce.

 

The closure of Sears follows the trend of big-box stores such as Zellers, Eatons, and the much-anticipated yet short-lived Target. The reason for the closure of these stores was due to their inability to adapt quickly. The retail environment has changed since their years of being powerhouses; there is now more of a focus on the internet and the internet presence of stores. These stores are losing their place in the market due to companies like Amazon, which is also known as the silent killer of big box stores. The J.C. Williams group reports that 30% of Canadians are members of Amazon. One of the first big box stores to sink was Eatons. T. Eaton Company Limited was at one time the largest company in Canada; it was founded in Toronto in 1869 and went bankrupt in 1999. Eatons was unable to adapt to the changing economy and retail industry. As well, the managers of Eatons mismanaged the company. On the same note, Zellers was a discount department store. They failed to compete with Walmart and were eventually taken over by Target. Target’s adventure–or should we say misadventure–is one story of many failings. They overestimated, going too big too soon. The losses started to add up.

 

Many people are now questioning the fate of The Bay. Unlike aforementioned companies, however, The Bay has been one of the few big box stores that has been able to recreate itself to stay relevant. One thing we can all agree on, however, is that the end of Sears is a symbol of our changing times.

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