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Is Sears a Target?

Posted Wednesday, March 1st, 2017

Canada’s retail landscape is littered with failures. Target, Zellers, Eaton’s, Beaver Lumber, Sam the Record Man, Dominion’s, Bata and Saan, just to name a few.

Sears Canada is on the watch list due to mounting losses, store closures, lay-offs and sell offs. Sears is trying new things, like boosting online shopping capabilities, redesigning stores RetailImageto enhance consumer traffic and most recently, shifting into the grocery market. So far, however, there has been little improvement in the company’s fortunes.

In our last blog, we examined the reasons for Target Canada’s spectacular crash and burn. Target acted upon a series of untested assumptions without consulting their local managers and frontline staff. Each of these critical assumptions proved wrong. Target thought it could offer consumers a wider variety of lower priced, higher quality goods than its competitors. Market conditions and an underdeveloped distribution system made this vision unattainable. Target’s management sought to introduce its vaunted inventory tracking system into Canada – the system did not work with Canadian dollars, the Metric system or the French language. A substitute inventory tracking software was introduced, however, staff were only given a few weeks’ training to learn the complicated, data intensive system. Efforts by Canadian-based store managers to stock their empty shelves with temporary products ran afoul of Target’s rigid inventory management practices. The resulting low revenues created a spiral of lay-offs, poor morale and disengaged employees. These issues were exacerbated by dictatorial policies, centralized decision-making and a complete disregard for associates’ input.

In short, Target’s foray into Canadian retail was based on a model that didn’t fit the marketplace, was supported by untested assumptions, and was applied with a rigidity that killed off employee initiative and engagement. It is difficult to know whether an informed management team and a well-trained, motivated staff would have saved Target, but it certainly wouldn’t have hurt them.

Is Sears Canada following into the same trap? Does its vision of boosting its online presence, easing in-store pedestrian flow and selling groceries make sense in the Canadian market? Has senior management tested its assumptions by having 19,000 associates scrutinize, evaluate and offer suggestions for implementing (or modifying) the retailer’s new strategies? Have senior management visited the Sears appliance store in Duncan, British Columbia or its department store in Regina, Saskatchewan to learn what the frontline staff already know about customers’ likes, dislikes and future desires, and factored these observations into their plans?

The term “associate” has two definitions – a partner in business, or a person with a subordinate membership in an organization. Target Canada treated its people like subordinates; Sears’ fate may well rest on treating its associates as partners.

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