Sears CEO Calvin McDonald during a media tour of Sears' latest products in Toronto on Wednesday, March 14, 2012.Michelle Siu for The Globe and Mail
Calvin McDonald is borrowing from Loblaw's fashion playbook to help breathe new life into Sears Canada Inc.
The faltering retailer unveiled plans on Wednesday to trumpet private labels that conjure comparisons with Loblaw's cheap-chic Joe Fresh Style fashions.
Putting the spotlight on clothing represents a massive and crucial initiative by the company, which has been bleeding profits, falling behind the Hudson's Bay Co. and other rivals and bracing for the arrival of U.S. discount Target Corp.
Mr. McDonald, who was an executive at Loblaw Cos. Ltd. during its turnaround efforts of the past five years, is taking inspiration from an array of initiatives at his former company.
Key among them is new orange Look! fashion branding that resembles the orange Joe Fresh label. Sears is distributing a new Look! report, which emulates the grocer's Insider's Report in highlighting the retailer's big product launches of the season. And Sears will aim to simplify merchandise offerings and internal systems to get back to the basics, focusing on both top sellers – which he calls "hero" categories – and items such as a lowly $14.88 print caftan.
But his challenge is daunting. Mr. McDonald admits to not even knowing what a caftan was before he took over at Sears – let alone how to produce and promote the loose-fitting garment. Today, it's an important piece of his bigger transformation efforts for clothing sales.
So is the $200 slim-fitting private-label Attitude suit the 40-year-old chief executive was wearing as he gave reporters a rare tour of his remodelled Yorkdale Shopping Mall store. The suit is a relatively new product on Sears racks that stirs memories of Loblaw's affordably fashionable Joe Fresh styles. It also brings back memories of some of Loblaw's difficult days when it couldn't keep its shelves stocked properly: Sears is already starting to run out of the fast-selling men's cotton suit.
"Loblaws is a great retailer – I was there 18 years and enjoyed and learned a lot," Mr. McDonald said in an interview after the tour. "We're focused on our own transformation. There are a lot of things [Sears]can do better and there are a lot of things in our formula for growth that we're focused on getting better."
In his push to turn around Sears, Mr. McDonald's blueprint has hints of Loblaw's turnaround initiatives. He's concentrating on what Sears does best: appliances, mattresses, furniture, home goods and, on the softer side, apparel and everything to do with children.
At the same time, he's scaling back on weak-performing departments, such as toys, video games and electronics. And he's getting up to speed on an array of private labels and categories, some of which he had no experience in his previous job.
But he's racing against time: Last year, Sears posted a loss of $60.1-million compared with a profit of $115.2-million the year before, while sales fell to $4.6-billion from $4.9-billion. Same-store sales at outlets open a year or more – a key retailing measurement – dropped 7.5 per cent.
Already he has lowered prices, chopped hundreds of jobs and set out plans to close three major stores. Behind the scenes, he is reducing the number of private labels to about 12 in a couple of years, from the more than 90 it has today, to spotlight the key lines such as Attitude, which caters to a younger shopper.
His trimming of product lines will help him emphasize more clearly his "hero" items, such as the private-label Jessica caftan. It sold out quickly when it was first launched a few weeks ago, but the retailer was quick to respond, ordering 15,000 more. "It represents what our journey is about," he said.