13 Reasons Why Sears Canada is Closing All Stores, Laying Off All Employeeshttp://guttulus.com/wp-content/themes/corpus/images/empty/thumbnail.jpg 150 150 admin admin http://0.gravatar.com/avatar/cb66419e0a855cba58308878e5155891?s=96&d=mm&r=g
13 Reasons Why Sears Canada is Closing All Stores, Laying Off All Employees
Sears dates back to 1952 when it was birthed as Simpson-Sears, but it’s over 65 years of existence are coming to an end after the company gave a press release publicizing its winding down and intended liquidation of assets.
Court approvals underpinning the move are in place, and the liquidation process is slated to start on 19th October, with creditors, employees and other stakeholders breathing down the company’s neck. Below are 13 reasons why the household brand has been forced to finally close its doors.
In 2001, Sears reported sales of $6.7 billion while in 2016, the total sales amounted to just $2.6 billion. The acute reduction in income has been making it increasingly difficult for the company to stay afloat and it was already getting into trouble with various stakeholders; particularly, creditors. Eventually, Sears was forced to file for bankruptcy.
Signs of a bleak future
From the above numbers, it is evident that Sears had suffered a reducing income trend for over 15 years. With no signs of the pattern letting up, saying that the future was unpromising and bleak for Sears would be an understatement. They would have gotten to this point at one point or another.
State of the retail market
Sears Canada executive vice president, in her press statement, blamed the retail giant’s woes on the “state of the retail market.” The gist of the report was that Sears was unable to maintain its position in the market due to increased market challenges. However, many are of the opinion that the market notwithstanding, the company played the biggest role in digging itself into a ditch.
In one of the stores in Ontario, the given reason for the firm’s closing was to effect a major re-invention. Experts propose that this is unlikely considering the extensive damage the brand’s image has suffered in recent times. The more probable outcome would be a shift in core-business.
Shifting consumer preferences
Another reason floated in the press release was a shift in consumer preferences. This is entirely true as other retailers have been forced to rethink their strategies due to shifting market dynamics driven by the rise of e-commerce.
Untenable running costs
Sears has a lot of real estate in various locations. The digital shift of the market meant that while competitors were enjoying higher sales, and less running costs since e-commerce does not call for much real estate, Sears was increasingly being left with unprofitable spaces that it could not dispose off fast enough. The cost-revenue balance tilted unfavourably, the culmination being that the company had to close shop.
While other companies were flexible enough to market demands; probably due to some level of brand arrogance thanks to its history, Sears Canada remained mildly flexible. Most of the company’s salvation moves came when it was a little too late.
Sear’s reputation has over time degraded to unsalvageable levels. Almost all the parties with a pivotal role in the company’s business structure reported dissatisfaction with the treatment. Some employees, for instance, say that they were treated like “chess board pieces.”
Poor customer service
For a retail business, customer relations is the one area where performance should never decline, but Sears dropped the ball in this regard too. The results were catastrophic with many loyal customers swearing they would never spend another dollar in the store again.
It is a common expectation that to enforce position in a market, a business must have a differentiating factor in its value proposition. In the retail sector, some have great products, offers, discounts, exemplary customer service, etc., but Sears had none. Therefore, it lost its customers to business savvy competitors.
With the power of social media at hand, the public did not hesitate to run a #boycottSears campaign on Twitter. This was in light of the news that Sears would give bonuses to top executives to impel the liquidation process with low ranking employees getting nothing. The effect has been an increase the firm’s reputation grave-depth.
Running an outdated business structure
Sears believed in an obsolete business structure and stuck with it too long only to realize that they the world had moved on. This lead the company down a dark path where at one point, they were losing over a million dollars daily.
Under poor management, inability to predict market trends, strategy naivety and thinly veiled disregard of various stakeholders are the biggest contributors to Sear’s demise. The company’s inadvertent revolving-door policy for high-ranking executives due to inability to hold onto talent has also not helped.
It is sad that a company etched into many Canadian’s early shopping memories is closing its doors. Over 12000 jobs have been lost, and landlords, especially in small towns, may find it hard to locate new tenants. The entire situation offers one more example on why lack of evolution means certain death.