Sears to limp out of Garden City mall

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This article was published 21/06/2017 (2498 days ago), so information in it may no longer be current.

Canada’s retail industry is undergoing a seismic shift, with the Sears store in Garden City Shopping Centre among the latest additions to a growing list of casualties.

Sears Canada announced Thursday that 59 of its 127 retail outlets in Canada, including its outlet store in Garden City, will be closing over the next three months or so. More than 2,900 of its roughly 10,500 employees will be laid off as part of a plan to restructure its business while under court protection from its creditors.

The remainder of its stores and its e-commerce website will continue operating during the restructuring. That includes its three Winnipeg department stores in the Polo Park, St. Vital and Kildonan Place shopping centres. Its Home Store at Ellice Avenue and St. James Street closed in March.

The latest round of cutbacks follow years of dwindling sales and a revolving door of top executives for the beleaguered department store chain. They also follow a string of other store closures and downsizings over the last three years involving such other well-known retail chains as Le Château, Danier Leather, Smart Set, Jacob, Future Shop, Aeropostale and Target Canada.

Maureen Atkinson, a senior partner at Toronto-based retail consulting firm J.C. Williams Group, said the latest round of bloodletting began about five or six years ago in the United States, and eventually spilled over into Canada. One of the driving forces behind it is the growing popularity of online shopping.

“It probably happened sooner in the States because e-commerce developed faster in the States than it did in Canada,” she said. “Also, they were more over-stored than we were.”

She said this isn’t the first time the industry has experienced a major shake-up, and it won’t be the last.

“It keeps changing. It just keeps rolling along, and if you’re not good and if you don’t have a real point of differentiation, or if you’re not staying on top of things, you just get left behind. And it doesn’t matter how big you were, as you can see in the case of Sears.”

Atkinson said retailers on both sides of the border are closing bricks-and-mortar stores and using the money they save to beef up their online operations. But the problem with department store chains like Sears and others that failed before them — Eaton’s, Target Canada and Zellers, to name a few — is that not only are they being impacted by online sales, their role has also changed.

They were originally designed to be one-stop shops where consumers could find almost anything, “but the issue is that they don’t have everything,” she said. “You can get everything online, therefore what is their role?”

Shopping centres are also being impacted by all of these store losses because that’s where a lot of department stores and fashion retailers, are located. But Atkinson and John Pearson, a commercial real estate broker/developer with Winnipeg’s Shindico Realty Inc., said it’s not all bad news for them.

Pearson noted that when Kildonan Place lost its big-box Target store, it redeveloped the space and added a bunch of new retail tenants, including Marshalls, Home Sense and H&M.

“A lot of shopping centre owners are pleased to get the space back because these large department stores don’t pay much rent and it’s giving the shopping centre owners a chance to reformat and position the shopping centre better for the future.”

He said one of the things working in Garden City’s favour is the Sears store faces onto McPhillips Street, making it the most attractive space in the mall.

“It’s got excellent exposure, so I would say it will lease up in relatively short order,” Pearson said.

Because the space is quite large, Pearson and Atkinson said it may require more than one tenant to fill it.

“Nobody has stores that size,” Atkinson said, “and it’s proof of the problem with department stores. They have these legacy stores that aren’t the right size for this century of retailing.”

The manager of one of the other stores in the Garden City mall — Northern Reflections — said she’d like to see a London Drugs store move into the Sears space because it carries a variety of different products, including pharmacy and food items.

“They need something with prescriptions and such… and there is nowhere in this mall to get grocery items or any food items besides the Dollar Store,” Britney Hart said in an interview.

Hart said the pending loss of the Sears store will hurt the other tenants because it drew a lot of shoppers to the mall.

“They have deals at this store that they don’t have at the others,” she noted

She said she’s also a little sad that the store will soon be closing.

“They were one of the only classic department stores we still had left.”

The Sears stores slated to close include 20 full-line department stores,15 Sears Home stores, 10 Sears Outlet stores and 14 Sears Hometown locations. About 500 office positions will be eliminated immediately, with the rest of the job losses coming as the stores begin to close.

The store closings and layoffs came after the Ontario Superior Court of Justice granted the department store chain temporary protection from creditors under the Companies’ Creditors Arrangement Act (CCAA).

The company said it plans to continue operating throughout the restructuring and said it intends to emerge as a leaner, more focused operation better able to compete in the hyper-competitive retail industry. The 30-day court protection from creditors will give it some “breathing space” as it tries to revamp its business and secures financing to maintain operations.

Under the plan, Sears Canada has been authorized by the Ontario Superior Court of Justice to obtain up to $450 million in financing to maintain operations throughout the restructuring.

— with files from The Canadian Pressmurray.mcneill@freepress.mb.ca