Posted Apr 9, 2017, 8:52 PM
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Planet Ottawa and beyond
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Join Date: Feb 2009
Location: Greater Ottawa
Posts: 14,540
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Sears is going after Winners now. How long can they possibly last...
Quote:
Abolish it’: Sears disavows department store model with new pop-up location, merchandise
Hollie Shaw, Financial Post
April 7, 2017 | Last Updated: Apr 7 7:00 AM ET
TORONTO — Versace, Tom Ford and BCBG are not brands you’d typically associate with Sears Canada, but the retailer’s latest iteration, with ash wood flooring and exposed brick, doesn’t look anything like a typical Sears outlet.
“Internally, we have banned the word ‘department store’ — we have tried to abolish it, because we are not a department store anymore,” executive chairman Brandon Stranzl said as the company readied its newest store concept, a 2,100-square foot pop-up outlet set to open this weekend on Toronto’s trendy Queen Street West strip.
“The department store’s whole business model is fundamentally broken,” Stranzl said. “I don’t think it will work and in 10 years, it’s probably not going to exist.”
Stranzl is comfortable disavowing what once defined Sears because the Toronto-based company has been “reinvented,” he said, following a vast overhaul of its house merchandise and pricing model. Sears Canada also spent last year reconfiguring its IT platform and consumer-facing website after Sears.ca lost ground to Amazon and other online retailers.
The pop-up store, a concept used by mass brands from Ikea to Target in order to showcase special lines and introduce merchandise to urban dwellers who might not otherwise visit the big stores, are also part of the veteran chain’s reinvention.
The merchandise inside the Queen Street boutique is a small-scale reflection of what consumers can now see inside Sears’ full-size Canadian locations as management attempts to reverse years of poor sales performance: an off-price business intended to compete with Winners and HomeSense in apparel, footwear and home goods.
Sears has also done away with 64 largely irrelevant private-label brands such as Jessica, Nevada and Arnold Palmer and patterned its private-label strategy in the vein of Uniqlo or Japanese retailer Muji, Stranzl said — under the umbrella of a single Sears brand for apparel, footwear and home goods. Kenmore, the company’s appliance brand, is the only non-Sears house label that remains, because it still has some traction with consumers.
How the strategy will fare with consumers or whether shoppers will even realize or care that the changes have happened is another matter, analysts say.
In its third quarter, Sears’ same-store sales fell 7.1 per cent year-over-year, and the company has been exiting unproductive stores and subleasing the square footage of others, though if the urban strategy catches on in Toronto the company could open more small locations with non-traditional assortments.
“It’s interesting that Sears is trying, but there are issues with both parts of the strategy,” said David Gray principal at Vancouver-based retail consultancy DIG360. “First, the Sears brand has baggage. Why would they use that brand to create affinity with consumers when they are doing something this radical?”
And refashioning one-third or more of Sears Canada’s business to offer flash deals on designer goods priced at 30 to 60 per cent off regular prices could work only if the company had enough time and money to invest in the concept and give consumers a chance to discover it, Gray said.
Winners and its affiliate chains HomeSense and Marshalls already have a highly successful and entrenched position in Canada. “I’m cynical because Sears is bleeding every quarter,” Gray said. “You are not going to out-Winners Winners.”
The off-price channel in itself could be shaky: Hudson’s Bay reported this week that same-store sales fell 5.9 per cent in the fourth quarter at its off-price division, including Saks Off Fifth and Gilt.com.
Sears Canada may not have the time required to invest in waiting for its changes to get traction, industry analysts have said, given the broader landscape for department stores and the retailer’s links to troubled Sears Holdings in the U.S., which voiced “substantial doubt” in its annual report last month that it would be able to continue as a going concern over time.
Though no longer majority-owned by the ailing U.S. business, the Canadian unit’s biggest single shareholder is Sears Holdings CEO Edward Lampert, who along with his hedge fund controls about 45 per cent of the Canadian company’s shares. Lampert and his fund also control close to 50 per cent of Sears Holdings.
“Eddie’s is a shareholder,” said Stranzl. “Eddie and (his fund) are not in any way involved in the day-to-day operations of the company (and) there is no ongoing communication between (Lampert) and Sears Canada.”
The off-price and Sears house brand strategies are only being executed by the Canadian business, which Sears Canada executives have long tried to distance from Sears Holdings.
The pop-up and changes to the classic Canadian department store format are geared to put some distance between the company and a tired store format, Stranzl says. It’s one that consumers are also abandoning in the U.S., as evidenced by hundreds of store closures at Macy’s, J.C. Penney and Sears.
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Twitter.com/HollieKShaw
http://business.financialpost.com/news/r...del-with-new-pop-up-location-merchandise
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