Readers are undoubtedly fed up with reading about Sears Canada’s demise (FYI, I am also similarly tired of writing about it). Nevertheless, I feel compelled to offer a eulogy for the company.
Sears Canada was a retailer that over the long-term earned the respect and affection of many Canadian households. It was viewed as a good corporate citizen whose products and services could be trusted by Canada’s middle class. As such, it is with a note of sadness that its passing is acknowledged.
The death of Sears Canada was not a foregone certainty…
- Yes, department stores are struggling worldwide, yet in many cases it’s because they operated too many outlets,
- Yes, many apparel retailers positioned in the middle of the market are struggling, yet many including Marks and La Maison Simons are not,
- Yes, Sears Canada was late to ramp up its e-commerce business, yet e-commerce today counts for only 2%-4% of most Canadian retailer’s sales.
The two reasons for Sears Canada’s death were the greed/short sightedness of its principal shareholder and the seemingly incompetence of a series of Sears Canada’s CEO’s.
For over ten years, Eddie Lambert and his hedge fund were the primary stockholders of Sears Canada. In that position, Mr. Lambert was able to “call the shots” as when a number of Sears Canada’s primary locations were sold. Instead of Sears Canada reinvesting the sale proceeds back in the company, the monies were paid out in special stockholder dividends, totally in excess of C$1 billion. In addition, quarterly dividends, which should have been cut in light of the company’s deteriorating position, were maintained at unsustainable levels.
Without a doubt, Sears Canada’s former CEO Mark Cohen, who was fired in 2004 by Mr. Lambert over “strategic differences,” recently spoke the truth when he said, “Lampert has no strategy to make the company (i.e. Sears Canada) profitable…Sears is like an ATM machine for Lampert, he has his hands on it. Eddie Lambert is either dishonest, delusional and disingenuous, or some combination of the three.” To that, this I say, “Amen!”
Mark Cohen’s departure was followed in quick succession by six CEOs. Each one suffered from three shortcomings. The first involved their inability, with the exception of Calvin McDonald, to articulate where they saw Sears Canada being positioned in an ever changing retail market. The second and third reasons were interrelated as the CEO’s were not given either the needed funds or the authority to make the changes required to make Sears Canada competitive.
Finally we come to Sears Canada’s last CEO, Branden Stranzl, who in his infinite wisdom, hid from the Sears Board the hiring of his wife as Chief Marketing Advisor. However, in retrospect that decision should not have come as a surprise, given his “quixotic” reputation among Sears Canada’s management team.
While the “ship” was increasingly taking on water, Mr. Stranzl squandered the retailer’s remaining time and re-sources on at least four highly questionable initiatives, in-cluding:
- Designing a new corporate logo,
- Creating a Sears pop-up shop in Toronto’s trendy Queen Street area,
- Eliminating three of the country’s best known private label apparel brands, and
- Making plans to compete with both Loblaws and Walmart by selling groceries.
It’s no wonder that while the retailer was almost comatose, Sears Canada’s last CEO lacked the gravitas to put together a deal that would have saved the company.
This eulogy concludes with my offering Sears Canada’s employees, pensioners, suppliers, shareholders and loyal customers its condolences, as this retailers passing was without a doubt preventable.
Final note re: the Canadian business press and Sears Canada:
In retrospect, one other group that must be called out for either negligence or complacency when it came to Sears Canada’s demise, is the country’s business press, who dutifully regurgitated Sears’ quarterly earning press releases with only minimal any in-depth analysis or commentary. The same journalists conducted fawning interviews with the never ending parade of new Sears CEOs without either asking tough questions during the interview or coming back later to find out why the glowing initial plans described by each new CEO never came to fruition. It’s obvious that Canada’s business press, with a few exceptions (e.g. Hollie’s Shaw’s first class article regarding Brandon Stranzl’s wife) were reluctant to question why Sears CEO’s kept “moving the goalposts.”
*Article is taken from Trendex’s monthly Newsletter available at http://www.trendexna.com/can-apparel-insights
Randy Harris is president and owner of Trendex North America, Inc., one of North America’s largest marketing research and consulting firms specializing in the Canadian and Mexican apparel markets. As owner of this Toledo, Ohio based company; his area of specialization is the NAFTA apparel market. Follow Trendex North America, Inc. on Twitter at @Trendexnainfo
This article appeared earlier this month in Canadian Apparel Insights, a monthly publication by Trendex North America. For more information and to subscribe, visit the Trendex website.