Skip to content
Join our Newsletter

Sears chief pledges new customer focus

With pressure coming from Target, chain wants to emphasize service
Sears Canada CEO Calvin McDonald with some of Sears' new branding at the Hillside Centre location in Victoria. McDonald says Sears lost customers through its own actions and has the power to bring them back.

Sears Canada is telling Canadian consumers it will take time for the company to turn itself back into the vibrant retailer it once was.

That was the message Thursday from Sears Canada CEO Calvin McDonald as he toured the Sears location in Hillside Shopping Centre.

Just over a year into his stint as head of the company, McDonald said he is starting to see some of the promised transformation take hold in the 60-year-old retailer as it fights to get back to what made it a success in the first place.

"We still have a lot of work to do. It's a three-year transformation," McDonald said, adding a well-worn line he's trotted out during his cross-country tour of Sears outlets: "We traded ourselves into the challenges we're in, and we have to trade our way out of it."

McDonald said losing focus has cost the company more than $1 billion in sales over the last four years, and it is determined to pull that back.

"Most of the challenges are because we stopped doing the right things - focus on the customer and products. We have to change behaviour to get back to what great retailers do," he said.

But changing behaviour in a massive company with 30,000 sales associates does not happen overnight, and McDonald said they are using the first year to get back to basics by retraining all their associates with a focus on customer service and new hassle-free return policies.

They have also "dialed up" the quality and depth of their product mix to offer more choice to consumers.

"Right now, we're focused on changing behaviour and product, the two key drivers," McDonald said, noting they have committed to improving their quality and style of fashion to get "excited about what we do as merchants."

The first year under McDonald, however, has been a bit of a rocky start.

After posting $60 million in losses last year, Sears reported it lost another $10 million in the second quarter of 2012, ended July 28, compared with a loss of $200,000 in the same period in 2011.

Earnings over the first half of this year were $83.2 million, up from a net loss of $47.2 million through the first two quarters of 2011, but that includes a a $164 million bump from the early surrender and return of leases on three properties.

And it's not likely to get any easier for the chain with new players like Target and Nordstrom entering the Canadian market.

McDonald said they are not daunted by the prospect of Target coming into the market. Target will open a 150,000-square-foot location in 2014 at Hillside Centre to compete with Sears.

In fact, he argues that because Sears lost customers due its own inaction, rather than another retailer luring them away, Sears has the power to bring them back.

"We stopped doing the right things. It's less someone beating us; we were beating ourselves," he said. "We lost our retail rhythm, and therefore I think we control most of what will make us successful. It's a great position to be in, but you have to regain that rhythm and change behaviour."

As for Target itself, McDonald labelled the chain a mass merchant that will not deliver the kind of value, quality and service Sears can.

"Canadian consumers will want an alternative other than just a mass merchant to go and shop for apparel and household needs. We believe we offer that and can remain competitive," he said. "And good competition helps make you stronger. You can't succeed today if you run and hide from good competitors."

Marketing expert Ingrid Kajzer Mitchell said the national chain, which is majority owned by U.S.based Sears Holdings, is making the right noises when it comes to turning things around.

"It's a bit early to tell how they are doing; it's the early stages," said the associate professor of marketing at Royal Roads University. "But a return to its roots is the right approach in a competitive retail landscape - go back to the origin of the brand and how it connected to the consumer."

Kajzer Mitchell said it's never enough just to refurbish stores and improve lighting. Any change has to be fundamental.

"It's important that the whole organization, both internally and externally, is living the revitalized brand, and that means employees, which will be manifested in customer service," she said.

Kajzer Mitchell said in what has become a heavily connected-consumer society, Sears must once again find the connection to their customers.