Sears Canada’s Failure to Adapt

Shocking but inevitable news was delivered to Canadian’s on tuesday.  Sears Canada announced they are shutting down operations in Canada. The shutdown consists of 166 stores across the country, leaving 12000 Canadians unemployed. It is estimated that, “The company has been losing about 1 million Canadian dollars a day” (NYT P2). When I was reading the article all that went through my mind was, how? How could a built up, internationally reputable brand run such high deficits after years in the market?  The answer became apparent,” customers are increasingly shifting their retail shopping to e-commerce” (NYT P3).  Consumers are now able to purchase the same goods, at a lower price, from the comfort of their home.  Companies such as Amazon can provide this luxury to consumers.  My next question was, why did Sears not adapt to the change in consumer preference? It turns out they did! Unfortunately with Sears Canada, “high shipping costs have limited the growth of online shopping in Canada relative to the United States” (NYT P3).  With a combination of consumer preference and location, Sears Canada is no longer feasible.

Sears currently employs more than 12,000 people in Canada. But all of the stores will be closing.

Sear's Canada location under liquidation

Sears Canada as an international corporation took a major hit. The trading price of a Sear’s stock is the lowest it’s been in 8 months. In fact, it has dropped over 13% in just two days. However, I want to discuss the impact the shutdown will have on Canadian citizens.  Some of my high school friends were hit particularly hard by this announcement. One of my friends currently works part time at Sears in Coquitlam to help subsidize his university tuition. This unexpected lack of income will force him to search out a new job opportunity. Unfortunately, in the meantime he will have to live off of savings. Furthermore, not only will the laid off employees feel the financial loss but also the, “18,000 retirees of Sears Canada may be facing cuts to their pension payments.”

Image result for e-commerce

Diagram outlining the ease of online shopping

At first glance Sears Canada’s announcement seemed to only effect the corporation.  However after analyzing the situation, I learned that there are many more stakeholders involved in the closure. In the current technological-driven day and age the retail world is constantly changing. Companies who cannot adapt will be forced to shut down because the movement to e-commerce is inevitable.

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