How Sears Canada Could Have Been Saved: Expert

A veteran Canadian retail consultant says Sears Canada didn’t have to close down its operations and could have stayed alive if the company adopted a unique and innovative strategy.

Mark Healy, a Toronto-based consultant in investment banking, real estate and retail, was a Canadian Tire franchise owner for 20 years and says Sears could have taken a look at creating a system of franchise ownership similar to Canadian Tire.

“About a year and a half ago, I tried to get ahold of Sears,” says Healy. “They were changing CEOs every two years.”

“I was thinking of my Canadian Tire days and how the system works but I’m thinking a lot of the stores at Sears were catalogue stores or actually dealer stores. So my thinking was with regards to Sears to save it you franchise the stores just like the Canadian Tire model.”

Sears Canada closed all its remaining stores in the country in mid-January. At one point in time, the company, which began operations in Canada in 1953, had 190 stores and well over 15,000 employees.

The controversial closure continues to make headline news across the country as former employees battle in court over a pension shortfall.

“I would have franchised it,” says Healy. “A lot of the stores they were hemorrhaging and bleeding with they could have leased them out or you redevelop. You repurpose that land. You build them into condos. You bring the customers to the mall – the vacant mall.”

“The most important thing is they didn’t have an ecommerce platform. They didn’t have anybody that could handle that. Guess what. Amazon’s going out and building brick and mortar stores. Cut a deal with Amazon and get them to handle your back end. Let them take the ecommerce. Let them do the deliveries. Let them do everything. I think there could have been an opportunity there with Amazon. It’s too late now obviously but I honestly believe that Sears didn’t really want to survive.”

Healy says he tried numerous times to present his plan to Sears.

“I couldn’t get through to anybody,” he says. “Couldn’t get through to Fort Knox.”

His idea of the franchise model would have meant that dealers would have had equity in the store.

“And usually like the Canadian Tire model you have some skin in the game. You care if the lights go off at 9:15 that they’re not burning all night. You watch your wages. You run a better store. You have profit sharing,” says Healy.

“What they do (Canadian Tire) is they own the land and the building. They charge the dealers a percentage of sales for rent. They take a mark up on the inventory but the dealers finance in the inventory and the assets. And they own it. And they make it work.”

“You need to have a dealer in there. A GM (general manager) is not going to care. At the end of the day, he’s going to do his best but there’s only so much he can do. But if you have skin in the game you make it work. You’re rotating your inventory. You’re worried about your discontinueds. You’re a buyer on the premises. You know what’s moving.”

Healy says he would have also renamed Sears.

“It’s an old name. It’s an American name. I would have rebranded it,” says Healy. “They brought in all these specialists spending money on fashion, accessories. Just get down to the retail street. Give the customers what they want. Service the heck out of them. I would have changed the name – made it more a Canadian name.”