After a nightmarish decade of pain for one of North America’s most recognised retail brands, Sears is hitting another hard wall as it throws in the towel on its Canadian operations. The Amazon effect claims another victim.
Sears has announced it plans to liquidate all of its Canadian operations, including online. The disastrous blow will cost 12,000 employees their jobs and close 150 stores, following 65 years of doing business in Canada. There has been no interest from the market in keeping Sears Canada Inc operating as a going concern, with the writing clearly on the wall for the famous department store chain.
No doubt online shopping, and Amazon in particular, has played an enormous part in the demise of Sears, which comes for Sears Canada after nine years of sales declines and years of losses, according to data from Bloomberg. Now, even more scrutiny will be placed on the Sears legacy business in the US, Sears Holdings, which has accumulated more than US $10 billion in losses over the past six years.
Big Ain’t Always Better
Sears is one the original big box giants. The so-called “Amazon Effect” has created an incredible level of disruption within the US, but one could also argue that the days of the big box store footprint in the US were well and truly numbered before Amazon tipped things over the edge. An article earlier this year in Forbes magazine highlighted North America’s enormous amount of retail space per 1,000 people in comparison to other developed markets. The US stands at more than double its nearest ‘rival” (Finland – go figure!) and dwarfs the majority of other western markets. The US averages 21,528 square feet per 1000 people (2000 sqm per 1000 people), and the large excess space comes at a significant cost – especially as the struggle to get customers through the door is exacerbated by e-commerce.