Calvin McDonald wouldn’t even shop at Sears.
Indifferent to its offerings, he was far from alone among Canadian consumers to bypass the stores. But he wasn’t just any would-be customer: At the time, he was being recruited to take the reins at the ailing department store retailer.
Mr. McDonald initially rejected the idea, feeling he wasn’t ready for such a high-stakes test of his merchandising mettle. But then he reconsidered, thinking he could fix the missteps and revive the patient. Within a month, he stepped into one of Canada’s toughest retailing roles, abandoning in mid-2011 the relative security of his senior executive job at grocery titan Loblaw Cos. Ltd.
“I think a lot of people saw it as a no-win situation,” he said, after slipping into a booth at the Joey Eaton Centre restaurant in Toronto, just steps from the Sears Canada Inc. flagship store and ground zero of the retail battle zone where foreign rivals want to lay claim to his space for their own store. “I believe the business can be successful.”
The risk is that he left a safe job where he had been on the fast track. If he turns around Sears, he will have beaten the odds; if he doesn’t, he will have gained valuable CEO experience and positioned himself, perhaps, for a leadership role elsewhere.
As Doug Stephens, president of Retail Prophet Consulting, put it: “It’s a no-lose situation, in the sense that, if he fails, I don’t think anyone is going to blame the guy who wasn’t able to resurrect Sears because a lot of people thought that was an unachievable goal in the first place. If he succeeds, my gosh, he is a genius.”
Mr. McDonald, an avid triathlete and marathon runner who turns 41 next month, faces enormous hurdles in repairing a retailer whose sales and profits have slid annually since 2006, posting a $60.1-million loss in 2011. Department stores are racing to reinvent themselves. Archrival Hudson’s Bay Co. this week confirmed its plans to go public soon in a bid to step up its makeover. U.S. competition will intensify soon from discounter Target Corp. and upscale Nordstrom Inc.
The Sears CEO’s decision to exit three of his prime stores this month in a $170-million deal with their landlord, which opened the way for Nordstrom to move in, raises the stakes further as the U.S. retailer still hankers after Sears’ prized Toronto Eaton Centre outlet.
To fight the burgeoning forces, Mr. McDonald has borrowed from the Loblaw transformation playbook, which he helped to spearhead, of returning to its roots and refocusing on private-label strengths. At Sears, he is concentrating on “hero” categories of appliances and mattresses, which the Bay has largely abandoned, and private-label lines, including Jessica fashions and Kenmore appliances. He’s pumping up his more promising departments, such as men’s clothing, women’s dresses and children’s products. He has lowered prices and loosened Sears’ return policy.
A wild card in Mr. McDonald’s turnaround efforts is U.S. hedge fund manager Edward Lampert, the controlling shareholder of parent Sears Holdings Corp. Struggling with overall weak results, he has started selling Sears store leases and other assets. By the end of this year, the parent will trim its stake in the Canadian division to 51 per cent from about 95 per cent. Analysts speculate Sears Canada is ripe to be snapped up by a foreign player.
What exactly is Mr. Lampert’s end-game? “I don’t know,” Mr. McDonald said quietly.
It’s one of the few silent moments during a three-hour lunch in which the Sears CEO was brimming with ideas on his vision, the wider merchandising landscape and his own retail journey. He was catching his breath after a busy morning that started with him taking one of his four children – his six-year-old son – to a 6:30 a.m. hockey practice.
Gearing up to run the Chicago Marathon that coming weekend, Mr. McDonald ordered a protein-and-carb combo of steak and sushi. He was taking a “rest” in his prerace training, having cut his weekly running almost in half, to 48 kilometres.
His sprint to revitalize Sears is an even more all-consuming pursuit as he focuses on motivating what has been a demoralized staff to execute his battle plan. “I probably haven’t wanted anything more in my life.”
After having been approached by a recruiter in the spring of 2011 about taking the Sears job, he sought advice from his wife and father-in-law, David Williams, then the interim CEO of Shoppers Drug Mart Corp. and a former Loblaw executive. It didn’t take long for Mr. Williams, who remains on Shoppers’ board of directors, to suggest that Mr. McDonald take the riskier path.
“When everybody is betting against you, it brings out the best in you,” Mr. Williams, whom his son-in-law calls his mentor, said in an interview. “It’s a good fit for him today and it will be a big part of taking him to where he goes tomorrow.”
Mr. McDonald is now at the helm of a company that racks up less than 15 per cent of Loblaw’s sales. But he’ll be able to make more of a mark at Sears, and then get on recruiters’ Rolodexes for a potentially bigger CEO job in the future Mr. Williams suggested.
Mr. McDonald said he was tempted by the opportunity to broaden his retail leadership skills beyond the grocery sector, while applying his Loblaw lessons to Sears.
Even as a teenager, he had wanted to solve problems. He aspired to be a homicide detective but when he applied to the Ontario Provincial Police, he was rejected for still living at his parents’ home.
He worked at part-time jobs through university, including stocking shelves and pushing carts at the local Loblaws in his hometown of London, Ont. “I’d be out in the parking lot in my big orange Loblaw parka, and colleagues and students would be walking by. … It was tough work.” He resolved then to pave the way for an easier life for his own children.
At the University of Western Ontario, he dated the daughter of Mr. Williams, but didn’t tell him when he applied for a “senior pricing integrity analyst” job at Loblaw in his last year of undergraduate science studies.
At Loblaw, Mr. McDonald moved up the ranks, working over the years with Galen G. Weston, scion of the wealthy family that controls the grocer and, today, its executive chairman and the face of Loblaw in its advertising. “I felt a friendship to him, even though we didn’t interact socially,” Mr. McDonald said. “He was very personable, a great historian of Loblaw and food and the bakery business. He was a confidant. The two of us respected each other.”
Still, the two men have not spoken since Mr. McDonald told Mr. Weston he was leaving, after 18 years with Loblaw in a meeting that lasted just a few minutes. “I felt my loyalty was challenged when, in reality, I felt that 18 years of 120 per cent is all businesses should ask for in terms of loyalty.”
At Sears, Mr. McDonald takes inspiration from the Loblaw boss, who is a year younger, by appearing in the department store’s new Look Report, a chatty take on Sears’ fashions which evokes memories of Loblaw’s iconic Insider Report.
With a penchant for fashion, Mr. McDonald is a poster boy for Sears’ young-minded target customer looking for cooler styles. In the current Look Report, he is featured in a photo clad in a sports jacket and rolled-up jeans over boots; in the upcoming holiday edition, he will appear in a festive velvet blazer, tartan shirt and bow tie.
His broader initiatives are showing small signs of taking off. Amid weak second-quarter results, Sears’ sales gained in major appliances and mattresses.
The CEO makes a point of walking store aisles: In late August, he took three of his four children shopping at the downtown store. He noticed improvements, but the shelves were light on coloured denims and khakis for boys. He reported back to his staff.
“The message to the team is: ‘We haven’t arrived. We still have a long way to go.’”
Born in London, Ont., his parents divorced when he was four; he lived mostly with his mother, a legal office manager, and stepfather, a delivery truck driver; his father was an executive at 3M.
He lives in Toronto with his wife Andrea and four children (three boys, aged six, nine and 11; and a two-year-old daughter).
His father-in-law is David Williams, director and former chairman of Shoppers Drug Mart Corp., a former Loblaw executive, and a mentor to Mr. McDonald.
1994: Bachelor of science from the University of Western Ontario.
2000: MBA from University of Toronto.
Spent 18 years at Loblaw, culminating in his 2011 appointment as executive vice-president of the grocer’s conventional division.
Appointed president and CEO of Sears Canada in June, 2011.
Long-distance running and cycling; has competed in many triathlons and is a two-time Ironman finisher.
Ran the Chicago Marathon this month in three hours and 12 minutes, beating his goal by three minutes.
Runs daily, one way, from his home in Toronto’s Leaside neighbourhood to his office (10 kilometres) and drives the other way.