Monday, January 28, 2013

Sears in Winnipeg to Close?

Sears Winnipeg in 2003 after $16 million Renovation
The rumours have been flying so much in the last weeks but there may be something to it. Sears many be looking to sell off the lease on their Polo Park location.

Sears department stores have been in free fall for a few years now. They had an absolutely terrible Christmas and Target is opening stores across Canada in only a couple of more months.

Manitoba doesn't figure too large in the grand scheme of things for Sears. There are only four department stores in the province all within Winnipeg. The company also runs Sears Home and Sears Hometown stores and have numerous catalogue pick up locations.

It is a pretty light covering of Manitoba compared to rivals such as Walmart and now Target.

By all accounts Sears Polo Park is a flagship store. It has done very well for Sears over the years. I have not see store breakdowns from this December but I suspect it has been a challenge this year compared to the glory years of past. However, this store was only just renovated in 2003 for $16 million. Can it still be successful in years to come?

Sears has already closed locations in Vancouver, Calgary and Ottawa to allow for the opening of Canada's first Nordstrom stores. These lease buy backs netted Sears $170 million.

The head office of Sears has indicated they are prepared to close even more stores, particularly under performing ones. But what about ones that perform well?

There have been whispers about Nordstrom's coming to Winnipeg. One store's downfall can be another's opportunity. Look at Woolco's sale to Walmart for that in 1994 and Zellers closing to make way for Target in 2012 and 2013. Could Sears be next?

To be frank, the only Sears location in a mall Nortstrom's might be interested in would be Polo Park. The store there is between 250,000 and 300,000 feet and anchors the largest and most profitable mall in Manitoba

Sears has already indicated they are struggling with apparel and home decor but do well with "hero" categories of appliances, mattresses and baby goods. Is this enough for them to hang on to such a large location in Polo Park? Probably not.

A better strategy might be to retreat from the mall and use the money to build on the Sears Home brand in Manitoba. The company already has a location close to Polo Park. They could stand to have more in the city and the province.

Polo Park owner already has a 97,000 square feet of space to fill with Zellers closing. The mall is already in a knock down drag out battle for U.S. retailers with St. Vital Centre and Cadillac Fairview, owner of Polo Park, might be looking to grab Sears space as well.

The retail landscape is changing quickly and Sears is struggling badly. They still have some options compared to Zellers laying down and dying. The time to execute those option is quickly coming.

Perhaps we really will hear that the rumours of Sears at Polo Park is closing are true.


4 comments:

The View from Seven said...

Interesting comment for a post about Neiman-Marcus closing in the Twin Cities:

"Minnesotans are 'tremendously casual,' he said. 'You can go almost anywhere in casual clothing or business casual.' Other places have more events where you need to dress up, he said. 'Dallas is a party town. We're not. If you don't have the events, you don't need the clothes.'"

Seems to me that much the same could be said about Winnipeg, so I expect Nordstrom would more likely stick to the crucial VECTOM markets in a Canadian expansion: Vancouver, Edmonton, Calgary, Toronto, Ottawa and Montreal.

But you're right, the Sears space would be highly desirable for anyone seeking a stronger Winnipeg presence.

Shaun M. Wheeler said...

If Sears does close, that'd be another nail in Garden City's coffin... a coffin already half-full of nails.

Anonymous said...

I'd certainly be pleased to see Sears disappear in favour of Nordstrom's.

Nords is a very good store in the US.

Interesting column. Thanks

Emma said...

I wouldn't be too disappointed to see Sears go. I was there in December and customer service was a total goat rodeo - their computer systems seem horribly outdated and inefficient, and if they're not going to invest in keeping current, they should just fold before it's even more embarrassing.

Department stores are great for certain things, as you identified in your post, but they have to adapt and compete if they want to keep folks coming back.