Christmas flyers are out—it’s time to hit the mall! Always a shopping procrastinator, this year I decided to have an early start. So last weekend, we went to Sears, which as you might have heard, is closing.
Sears Canada is not having a dignified ending, rather it’s a dismal affair—the grand old store is embroiled in gossip, showing little goodwill, and displaying behavior that denies its glorious past.
There was lots of warning. Recently, bad press has swirled around Sears Canada. News that it was closing its subsidiary store, KMart, hit first, and then there was the bombshell that its top executives were leaving, always a bad sign.
In December of last year, Business Insider reported that Sears’ sales dropped from $41 billion in 2000 to $15 billion in 2015. During that same period, Kmart saw its sales decrease from $37 billion to $10 billion.
This year, things continued to unravel. Sears was granted court protection from creditors, and within months closed 59 stores across Canada, cutting approximately 2,900 jobs. July saw the start of discount sales, with prices slashed by 20 to 50 per cent. Then on Oct, 10, we learned that Sears was seeking court approval to liquidate.
Anger and despair in the aisles
This fall, hearing reports that about 12,000 people in total would lose their jobs, and learning they would lose their benefits, we wondered how workers were faring. Severance pay, it appeared, was out of the question, because Sears was insolvent.
Management was close-mouthed about the entire process, and workers were silent, fearing retribution. But accounts of their frustration and feelings of betrayal leaked through to the media.
“Now that Sears intends to close its doors,” a Sears Canada manager told reporter Sophia Harris (CBC News) in October, ” staff is devastated.”
“We’re really upset. It’s a very terrible Christmas present. There are people that lived this company. They don’t understand how this happened.”
Before we set out on our shopping excursion, we made sure we were prepared. But when we entered the store, it still was a shock. Business was brisk, and cashier line-ups were long. But it didn’t seem like a typical store closing, in which stock would dwindle until it was gone. Rather, stacks of boxes containing new merchandise were scattered throughout the aisles. It was a disorderly mess, with young, dazed staff working the tills. It looked like nobody cared, and no one was in charge. Thinking back to the Sears I knew all my life, it was a sad ending.
The way they were
I first knew Sears through its catalogues, when it was Simpsons-Sears, and at the top of its game. But before I was old enough to even turn the pages, Sears already had a long history. It originated as Simpson’s Limited, a department store in Toronto in 1872, partnering with Sears Roebuck of Chicago in 1952, to become Simpson’s-Sears, the new name for its successful mail order business.
The company expanded across Canada, building hundreds of stores, taking over the bankrupt T. Eaton company in 1999, and dominating the Canadian department store scene. Then, in 2009, during the economic downturn, it seemed to hit a snag, and slowly, but surely, began to spiral down.
There’s something rotten, at the core
Just as with every company that falls apart, there was an explanation. Stories of incompetence and mismanagement abounded. Rumor had it that CEOs were creaming off the profits, instead of investing in new ideas, Customers complained that the stock was uninspired—it was the same old stuff, recycled from rack to rack. Even the Christmas displays were dispirited, and dull.
It’s easy to lay the blame at the feet of those in charge. But looking a little deeper, you could see that management was not the only problem—rather, it seemed to be a sign of something gone bad in the world of retail.
A report in Fortune told the story: Other stores had also gone over the cliff—it read like something out of “Apocalypse Now”. National brands like J.C. Penney, Macy’s, Ralph Lauren and Staples started the year with dismal 2016 holiday season results. Their performance was instrumental in bringing the number of store closings in the US to 2,770 as of mid-May. Bankruptcies followed; chains like Limited, Payless, ShoeSource, and RadioShack.
As recently as 1999, department stores in the US had total sales of $230 billion. Last year they came in at $155.5 billion, according to Census data. All signs pointed to a grim future of national retail department store chains.
Is this the end of department stores?
Don’t be misled, though. Shoppers are still shopping—retail spending in early 2017 rose 3.6% compared with the same period in 2016, according to Department of Commerce data. The National Retail Federation expects that growth to pick up even more, thanks to low unemployment and a strong stock market.
There is a shift, however, and it’s too big to be ignored:
1. One of the biggest shifts is shoppers’ move from expensive quality merchandise to discount prices. There is a constant, ruthless price war, pitting one retailer against another, and putting pressure on those just surviving.
2. Online shopping has steadily grown, shouldering brick and mortar outlets aside, and ending the need for massive store space in malls and megastores. Amazon is constantly improving its ordering and delivery services, offering instant gratification, with smartphones as shopping tools.
3. Consumers are developing fast-changing and wide-ranging tastes, which they can satisfy with a touch of their smart phones. Traditional gift shopping for Christmas seems to be falling from favor.
Yet some are optimistic
There are those in the retail industry, however, who refuse to accept that these trends may signal the end of department and big box retail stores.
Not to worry, says University of Essex professor and author of From Main Street to Mall, Vicki Howard—people were predicting the disappearance of department stores as early as the 1930s. But they’re still here, and will probably always be, she says.
Joel Bines, a managing director at consulting firm AlixPartners concurs, saying “Retail has gone through periods of creative destruction before.” (Fortune, June 15) In the end, he says, the companies left standing may emerge stronger than ever.
But current indications suggest that unless big-box department stores can shed decades-old habits, they may not have the relevancy to survive. Their dependable base of loyal, older customers are dwindling, and they are not attracting new ones.
As Steve Sadove, a former Saks Inc. CEO and Penney director, says, “The world is moving faster than the department stores are adapting.”
As I begin the holiday shopping season, I can’t help but wonder: Will this year mark the beginning of the end for department stores?
As one of the ‘older shoppers’, who has warm and fuzzy memories of department stores, I sincerely hope not.