By Jamie Barrie F irst is was Sears Canada Inc., the Canadian subsidiary of the American-based Sears (Sears Holdings Corp.) that operated a chain of retails stores in Canada from 1953 until January 14, 2018. What began as a joint venture between the Simpsons retail chain and the U.S. Sears chain that operated as a national mail order business and co-branded Simpsons-Sears stores modelled after the U.S. Sears chain grew to one of the biggest retailers in Canada that everyone thought would be around forever. Well in January of this year it came to an end for Sears Canada and now it looks like their parent company Sears Holdings Corp. may be looking at the same fate after filing for bankruptcy earlier this month south of the border. These days it is extremely rare that a company lasts forever if it looks to past success as the road map of the future. Markets and consumers habits change and those that stay on top of the curve survive and those that do not, well we know what happens. This process is called, Creative destruction, a term coined by Joseph Schumpeter in “Capitalism, Socialism and Democracy” in 1942, which describes the “process of indus- trial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” This occurs when innova- tion deconstructs long-standing arrangements and frees resources to be deployed elsewhere. In earlier eras, Sears’s revenue had been driven by its catalog business, and the company prided itself on selling just about everything that you needed. As their catalog So, what happened to this giant and can it happen to others. The answer unfortunately is yes.
business started fading, Sears was able to remain a top retailer thanks to its thousands of stores across the country.
This is the start of Sear’s downfall as it was beginning to depend less on same-store sales and more on opening new stores to boost revenue. Added to that, Sears like many mature companies was dominated by its internal politics and executives believed that no other retailer could be a true competitor because they sold to everyone. But retailing was and still is changing. The malls that housed many of the Sears stores were seeing more smaller special- ty clothing stores popping up drawing away middle-class customers. The opening of discount retailers likeWalmart and shopping clubs like Costco and Sam’s along with standalone appli- ance retailers chewed into Sear’s core customer base. Sears executives had spent their whole careers doing things a certain way, they didn’t want to change and looked at past success and customer habits even as the world was changing around them. It is a sad lesson to learn for all entrepreneurs and a reminder of how capitalism works. Keep evolving, listen to your customers and looking and learning from what is happening in the marketing pack as that is the key to survival and growth in today’s economy. So, the next time you hear somebody talking about Walmart or Amazon continuing to grow and that nothing can stop them, think about Sears. It can happen and unfortunately, probably will. Not to mention online retailers like eBay and Amazon.
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OCTOBER 2018 • SPOTLIGHT ON BUSINESS MAGAZINE
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