Avoiding The Errors of Retail Dinosaurs
What can we learn from the recent failure of Sears Canada?
By Jeff Doucette
As you likely already know, the Canadian market can be a meat grinder for retailers in all channels and the latest victim is Sears Canada, which is just winding up its business and putting thousands of employees out of work. It is a sad story but one that was in large part its own doing as it failed to remain relevant to today’s shoppers.
For sure, life has been difficult in the grocery sector over the past decade and even large players such as Sobeys have been challenged to launch new technology and integrate its businesses. The battle seems to be turning a corner with the latest management restructuring but the case is another good example of the distraction and strain on the business caused by getting too far behind the demands of today’s market.
I wanted to focus in on Sears to see what we could learn. How can a company that was an innovator in all senses of the word back in the company’s heyday be brought to its knees? If you told someone in 1960 that Sears would implode in 2017 they likely would not have believed you, just as we would find it hard to fathom Amazon collapsing in the year 2070.
Here are my three key takeaways that can be transferred to the grocery industry:
Deliver a Consistent Customer Experience
If you have interacted with Sears over the past decade you will have noticed a decline in service levels as staff were cut to contain costs. In addition, each store was very different with stores at higher profile malls being fairly well maintained, while others looked like there was no capital investment for the past 20 years.
In retail, consistency is king and shoppers want to have the same, high-quality experience in all locations. That’s why a Big Mac tastes the same in Calgary or Moscow – it builds trust and loyalty.
One could argue that consistency is a key issue in the Sobeys / Safeway business in Western Canada today. While the Safeway locations are for the most part very consistent from store to store, the Sobeys locations felt more like a tapestry of new and old, big and small.
For the most part, when the merged businesses started using the same flyer, the connections between Safeway and Sobeys stores stopped there. The potential of bringing the “best-of” both banners to all stores was missed. Safeway’s HMR and Food-To-Go would be a boon for Sobeys stores while the work Sobeys has done in creating brighter, shopper focused HABA sections could be a boost for Safeway stores.
Understand Your Customer and What They Want
As Sears slowly moved to change their business they were trying to become more relevant to millennials and the new generation of Canadian shoppers. This may have been one of their biggest mistakes.
The fact is that most of Sears shoppers were aging Boomers. Trying to shift to 20 and 30 year olds was too much of a leap. A retailer with a focus in an older demographic does have to replenish its funnel of shoppers, but instead of looking at young shoppers maybe the focus should have been on shoppers in their 40s and 50s.
Understanding what these “mid-life” shoppers want/need would have been easier to integrate into the Sears offering versus trying to appeal to both grandmothers and grandchildren at the same time.
As a grocer, we need to understand the needs/wants of the current shopper demographic and what they will need in 10 years. We also need to understand the needs/wants of the generation behind to refill the pipeline and grow customer count.
An important example is with Ethnic grocery shoppers. With 20 per cent of the population now a visible minority, attracting first generation Ethnic shoppers has been an important growth strategy for some supermarkets. However, the model will need to change as this segment of the population grows as the needs of the second generation, born-and-raised in Canada, will be much different and likely be a blend of an Ethnic, Traditional and On-line grocery shopping.
Know Who You Are
As the business wrapped up, Sears was grabbing at straws to stay alive and even mused about getting into the grocery business to drive traffic and sales. While Sears was likely doing this out of desperation, we often see businesses who over extend their brand into areas where they should not go because shoppers will not follow them there.
As the market and technology changes, the temptation for grocers will be to chase down these new opportunities to drive growth. My suggestion would be that before taking that next step into uncharted territory, the first question should not be: “Can we afford to make this investment?” but instead, “Do our shoppers think we should make this investment?”
We can justify almost any project internally, but if you are about to spend thousands of dollars and hire staff for “Click & Collect” to keep up with competitors, talking to a couple hundred shoppers and asking them if this is really a service they want should be the first step. Market research is cheap in comparison to making mistakes.
The “Silver” Lining
The impact of the Sears failure will be felt right across Canada and likely directly in your stores as 12,000 employees struggle to find jobs.
Regardless of Sears’ reputation as a dinosaur, the upside for our industry that there is a lot of highly experienced retail employees in the market for a new job and supermarket operators should not look past this talent and instead should look to pick the best of the bunch to improve their business. The mistakes and shortcomings were head office management issues and I think that you will be able to find some real “gems” for your operation.
And remember: “Those who cannot remember the past are condemned to repeat it.” George Santayana
Jeff Doucette is the founder of “Field Agent Canada” a smartphone driven audit service that is revolutionizing how retail audits and mystery shops are completed in Canada. He can be reached at email@example.com