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The sorry state of Sears Canada

 22 February 2017     Michael J. Knell 

There was a time when Sears Canada set the standard to which almost every furniture, mattress and major appliance retailer in this country aspired. I’ve been in the industry long enough to remember there was a time when the department stores were the arbiters of home fashions in this country. They literally decided what the consumer furnished her home with.

We all saw the final piece of evidence proclaiming the demise of the department store as a big ticket powerhouse when Madame Justice Catherine Kane of the Federal Court of Canada granted a temporary or interlocutory injunction earlier this month ordering Sears Canada to refrain from using its marketing slogan – ‘there is no reason to buy a mattress anywhere else’ – as it too closely resembled a jingle made famous by Sleep Country Canada.

Related Story: Sleep Country wins temporary injunction against Sears

Leaving aside the merits of the suit – which will be decided at trial sometime in the next two years – what is most distributing is that it was brought in the first place. To go from setting the bar to being accused of plagiarism says more about the state of Sears Canada than almost anything else. The funny thing is Sears Canada has a wealth of talented people in its top ranks. These are people who know the job, who know the industry and who have demonstrated in other roles they occupies for other companies they can get the job done. This begs the questions, why aren’t they?

The Sears Home store in Windsor, Ontario.The answer is simple. When there is malaise or dysfunction in any large organisation, there’s only one place to look: ownership. One of these days, Sears Canada is going to end up as an Ivey Business School case study showing what happens when a good company acquires the wrong owner.

Sears Canada’s largest single shareholder is a person whose primary business is running a hedge fund, something that’s often referred to in the financial community as a money factory. In fact, throughout most of his tenure, Sears Canada has monetised most of its most valuable assets and has invested comparatively little in rebuilding its brand.

I should also make it clear that I’m not accusing him of anything nefarious. I am saying his skill set isn’t compatible with running a great retailer. Sears Canada has a number of easily identifiable problems. We all know that. In fact, I’ve written about a few of them. It should also be noted he has apparently put the company up for sale, but received few offers to buy.

Despite this Sears Canada remains a bedrock of this country’s furniture, mattress and major appliance industries. Yes, sales by its ‘home and hardlines’ segment have been falling lately. They were $851.3 million for the first nine months of its last fiscal year – a fall of 21.4% from the $1.08 billion for the comparable period. But that’s still a big chunk of the industry’s overall business.

Related Story: The trouble at Sears Canada

I still believe Sears Canada can be saved. The first thing it needs, quite frankly, is new ownership. After that, it needs to get back to being an original thinker. The world has changed since Sears Canada set the standards every other retailer in this country followed but with top line sales in the $800 million to $1 billion range for its current fiscal year, it’s still has a furniture, mattress and appliance business worth saving. Now, all that’s needed is someone smart and brave enough to take it on.

But will that white knight come over the horizon in time?

LVM Feb 2018
This HGO article was written by:
Michael J. Knell
Michael J. Knell

Michael is the publisher and editor of Home Goods Online. A seasoned business journalist, he has researched and written about the furniture, mattress and major appliance industries in both Canada and the United States for the past three decades.

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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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