Q&A: Sears Canada’s Operation Turnaround

President and CEO Calvin McDonald on why Sears isn't advertising more, and its fashion plans

Here’s a sneak peek at our May 7 issue

Sears Canada has a problem.

The department store chain’s 2011 Q4 earnings dropped to $38.7 million from $82.7 million the previous year. President and CEO Calvin McDonald – an ex-Loblaw exec in the big chair for less than a year – has set a three-year plan in motion to give the tired, outdated department store a makeover.

If it works, ‘Sears fashion’ will no longer be an oxymoron.

Where is Sears today compared to when you started last June?
We’ve launched a new vision focused on creating lifelong relationships built on trust. There’s been a lot of focus on our five pillars of growth, and one of those pillars is “Building the Core.” It really focuses on key hero categories that we have a lot of strength in and opportunity to be very relevant with Canadian families.

Can you give an example of a ‘hero category?’
Major appliances would be a great example. We have the best assortment in the country. We have the Kenmore brand, which is the largest major appliance brand in the country and is exclusively available at Sears. We service what we sell, which no other Canadian retailer has.

Has Sears increased its advertising in recent months?
It has not. We’ve refocused our marketing spend and we’re very focused on the efficiency and effectiveness of what we spend. We are increasing our marketing in particular areas. Radio is one we’ve increased our spend and focus on and we’ve [cut down on] our [weekly] flyer expenses—moving from gloss to newsprint, the number of pages, maximizing our distribution—so it’s really a balance of getting more effectiveness out of the dollars we spend and reappointing the dollars in areas we see real growth potential.

Has the advertising changed?
The tone has changed. It’s much more focused. One of the ways you get credit for value is making sure that your price communication is done in a more clear, concise manner, so we’ve simplified our price communication in our flyer. We’ve made sure that we’ve put weight behind our core hero categories such as appliances and mattresses, which are in the flyer every week.

How is Sears engaging with consumers in the online and social media space?
While we are focused on the core business at Sears, we also recognize the importance of visibility in the growing online and digital world. Most recently, we launched our first iPhone and Android app, which improves [our customers’] shopping experience and connects them to our social media community, including a Sears Canada Facebook page, Twitter account and YouTube channel. Through these channels, our social media team continually works to engage a younger generation with our brand through new and exciting content as well as promotes our house brands like Attitude Jay Manuel, Jessica, Craftsman and Kenmore appliances.

Sears has a pretty solid reputation for appliances. How will you convince Canadians that Sears is also a fashion destination?
The Look Report [oversized flyer] is really designed to be a big part of that. It’s going to be four times a year as a vehicle to kick off each season. It’s very focused on fashion and apparel and a bit of home, but very much a fashion element and how it connects to the in-store experience. We’re changing the way we plan by doing what we call “floor to flyer.” Rather than buying merchandise and then simply trying to fit it on the floor, we are starting our apparel buying and marketing processes much earlier. The flyer is an important component of marketing strategy, but retailers need to remember that it is used to support the in-store shopping experience, not the other way around.

What role does customer service play?
We have a handful of format initiatives that we’re piloting over the next few months. One of them is we are updating four of our full-line stores and those are opening May 18. The in-store consumer experience will change how the product is presented and merchandised and the total proposition. We’re also opening a new Sears Home store. We have 48 Home Stores, which are in the 50,000-sq.-ft. range, which trade predominately furniture, mattresses and major appliances. We’re opening a new one that’s 70,000 sq. ft. in Ottawa in the first week of June. In the next few weeks we’ll be launching an initiative around our customer service proposition, a return policy, and experience the consumers can expect in-store and have training behind our associates to get them prepared.

With the number of Canadian retailers preparing for Target’s arrival and the competition within the retail landscape increasing, do you feel Sears is in a race against the clock?
Everything we’re focused on, we’re focused on doing because we want to deliver a better proposition to Canadian families. Retail in Canada is competitive and it always will be. I’ve been in retail for 18 years and I love it because of the competitiveness, the dynamic nature and servicing the consumer, who has continual and ever-changing needs… Everything we’re doing we’re doing because of the general nature of retail, not because of any impending change that’s going to happen to the Canadian marketplace.

What hope does Sears have as a fashion player? How can this brand turn itself around? Post your thoughts in our comment section.

For more interviews with Canada’s top retailers and marketers, subscribe to Marketing.

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