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Emerging from the rubble

From the HGO Merchandiser

 9 April 2018     Greg Simpson 

Sears Canada closed its last remaining stores this past January, but the impact of its departure will be felt for some time to come, especially by a group of independent retailers who signed on to become operators of what were once called independent dealer stores, many of which operated under the Sears Hometown banner. While no one is exactly sure how many of these merchants were still operating as the clock wound down, but there was a time – not that long ago, in fact – when the multi-channel retailer had high hopes for the network.

Back in 2013, Hometown stores were singled out as one of the four platforms Sears Canada would use to reassert its dominance as a retailer of furniture, mattress, major appliance and other big ticket categories such as barbeques, lawn and garden equipment as well as other seasonal product lines. That year, they unveiled a new Hometown concept store in Orillia, Ontario – trumpeting it as the model they would use to attract more independent business people to the network.

In addition to furniture, mattresses and appliances, each independent Sears Hometown dealer store – such as this one in Orangeville, Ontario – featured a catalogue order pick-up desk. At one time, there were 248 of them across the country.At one time, there were some 248 independent dealer stores in operation across the country. While they varied in size – the largest being Orillia at 25,000 square feet – each featured displays of selected Sears’ core product line-up in furniture, mattresses and major appliances. Each also had a Sears catalogue pick-up desk, something that virtually guaranteed each unit had some foot traffic every day.

This past June, the publicly-held Sears Canada was granted court-ordered protected from its creditors under Companies’ Creditors Arrangement Act (CCAA).

Suri Dua, owner of what was then Sears Sherwood Park in Sherwood Park, Alberta, told Home Goods Online he learned his fate not long after the story broke on CBC. “They (Sears) phoned me a few hours later and informed me that my store would be closing,” he said.

So unexpected was the move, that even the largest shareholder in Sears Canada shareholder, the Greenwich, Connecticut-based ESL Investments – which is also the majority shareholder in Sears Holdings, the operators of both Sears and Kmart in the United States – was not a part of the decision making process. In his blog this past October, fund founder and chairman Eddie Lampert wrote, “ESL was not informed in advance that Sears Canada intended to seek protection under a CCAA filing, and was extremely unhappy with that decision...ESL believes that the liquidation of Sears Canada was not a foregone conclusion and that a less risky strategy, while not without its own difficulties, could have avoided the unfortunate conclusion.”

Despite that, Sears’ Canada moved forward with what was originally designed as a plan to restructure the company, hiring the local office of the Washington, D.C.-based FTI Consulting to manage the process.

From June through to January this year, stores closed across Canada in waves. Many independent dealer stores, such as that owned by Suri Dua were forced to close almost immediately while still holding multi-year property leases and inventory that Sears Canada was repossessing as fast as trucks would allow.

Those fortunate enough to be on the latter end of the shutdown schedule were able to spend their remaining months as Sears’ store owners liquidating merchandise and trying to plan for the future.

Click here to read the rest of Greg Simpson’s report in Spring issue of the HGO Merchandiser…

This HGO article was written by:
Greg Simpson

Greg Simpson is a freelance journalist based in Port Hope, Ontario.

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Home Goods and its accompanying newsletter - HGO This Week - covers the furniture, bedding, appliances, consumer electronics, accessories, lamps and lighting and floor coverings product sectors of the big ticket home goods market in Canada. HGO is also a forum for the dissemination of market research and hard-hitting articles on best practices for Canadian retailers.

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