Calvin McDonald wants to raise the cool quotient at Sears Canada Inc., one orange-hued pair of men’s socks at a time.
Dressed the part of the hip chief executive officer in a slim-fitting suit and oversized eyeglasses, Mr. McDonald is “shamelessly” copying ideas from other specialty chains and largely shunning department-store models in his bid to revive Sears.
Now he’s about to ditch Sears’ advertising agency, the established BBDO, for a smaller soon-to-be-named shop, giving it the mandate to consider replacing the department store retailer’s blue and white logo with a less conservative look.
“Things do have to be different here,” he said in an interview after leading reporters on a tour of one of his four refreshed suburban stores. “I want Sears to be noticed. I want people to know we’re here to fight – we’re not going away.”
Bringing the mojo back to Sears is a tall order. Its financial results have been deteriorating over the past several years, squeezed by more agile specialty players and discounter Wal-Mart Canada Corp. By next March, Sears will feel more pressure when U.S. discount giant Target Corp. starts opening its first 125 to 135 stores in Canada, while other foreign chains expand in this country.
Last week, Sears’ U.S. parent said it would spin off a large part of its stake in the Canadian division, raising the heat further on Mr. McDonald to turn around the retailer’s performance. Now the CEO is betting his new three-year plan will help Sears woo back customers with a focus on top “hero” categories, including appliances, mattresses, children’s goods and men’s apparel, while dropping all or much of its unprofitable departments, such as toys (although it is still selling them online), electronics and non-power tools.
The strategy entails emulating specialty chains such as the cheap-chic Japan-based Uniqlo, which gave Mr. McDonald the idea of building what he dubs “power towers,” or major displays that put the spotlight on certain products, such as graphic T-shirts ($14.99 apiece.) It also borrows a page from the playbook of Moores (owned by U.S. Men’s Wearhouse) in such details as folding dress pants on hangers in two rows, similar to how many men hang them in their own cupboards.
At the same time, it is reducing duplications to allow new lines to emerge, such as slim-cut men’s suits. For example, instead of stocking 10 different pairs of black men’s socks, the stores now will carry just a couple of pairs of black socks and five pairs of orange and other coloured or striped socks (three pair for $18). Overall, Sears has scaled back inventory levels since last fall by about 10 per cent, or $100-million, compared with a year earlier.
Already customers at the Newmarket store have noticed the changes. “It’s about time they did something,” said Anna Gjerek, 58, who was shopping for a new refrigerator and stove but checking out the fashions first. “Now the clothes are so well organized. Before it was such a mess.”
Olga Nunes, 44, who had just picked out two Nike shirts (two for $30) and shorts ($20) for her children and a hot pink private-label Jessica evening dress ($30) for herself, agreed. “In the past I came, was upset and left with nothing.”
Mr. McDonald wants to keep Ms. Nunes and others from leaving empty-handed. He’s relaunching the Jessica women’s clothing line in the fall with a more youthful look after his research found that customers were confused with inconsistencies, especially with the fit of the items.
As a result, he’s named just one person to be in charge of choosing the merchandise, rather than the previous six to eight. And he’s reducing the private label line’s suppliers by about 30 per cent, giving them each higher volumes of sales – and more stake in the product’s performance.
He is cutting back electronics offerings by as much as 40 per cent, focusing on televisions and removing much of the home entertainment products. But he said his move to spotlight major appliances and mattresses has already reversed a decline in sales.
Soon he’ll turn his attention to remaking Sears’ image, turning to a new ad agency to reposition the brand to urge customers “to have another look at Sears,” including potentially a new logo. “We don’t want to alienate our loyal customers, but we want to signal to new customers that it’s a fresh start.”