Sears to have significant impact on New Brunswickers, retail analyst says
The decision by Sears Canada to close its stores in Saint John and Bathurst is expected to have significant impact on people across the province, according to a retail analyst.
On Thursday, Sears Canada announced the closure of two New Brunswick stores as part of a national restructuring plan that will close 59 stores and lay off 2,900 workers.
"We're going to see impact on two communities in New Brunswick and maybe a little bit more, given New Brunswick is also home to a call centre for Sears," said Jim Danahy, the president of Customerlab, which consults with retail firms.
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Danahy said the closure means less selection for local shoppers, the loss of jobs and the province's local tax base.
It will also have impact on any New Brunswick vendors who could be selling products to Sears, who have "likely shipped their goods and haven't been paid yet."
Sears has about 100 employees at the Saint John store and another 46 in Bathurst, most of which are part time.
The other New Brunswick stores, in Fredericton and Moncton, are not among the 20 full-time Sears locations across the country that will be shut down.
"There's no certainty to what could be happening going forward for New Brunswickers who work for one or more of the Sears businesses," he said.
Problems could have been prevented
Danahy said the announcement came quickly but a lot of people have seen this coming for years.
"The ownership group of Sears, they've managed to keep this company on life support for far longer than anybody has every predicted," he said.
"Once you lose the confidence of the lenders and investors that support a company, it goes down very quickly."
Danahy said the struggle could have been prevented back in 2005, when a hedge fund leader, Edward Lampert, bought the U.S. company, which also controls the Canadian company.
"Almost immediately, they started doing things like share buy backs, which is a way of making sure the shareholder's value is improved," he said.
"But all the money from doing that goes into the pockets of the owners, it doesn't go into improving the company in any way or making it more competitive against Walmart and Amazon."
He said while Sears was busy improving shareholder value, companies like Hudson's Bay and Walmart were committed to making money from being retailers, plowing money into modernizing stores and creating more of an Internet presence.
Call centre questions
In January, Premier Brian Gallant announced the province will provide up to $8.6 million in financial assistance to Sears Canada for it to create a call centre with 350 jobs in Saint John and a 180-job call centre in Edmundston.
Danahy said some of these call centres could be free-standing businesses and sold off to other companies, allowing them to continue providing national services.
"It's not just there to serve the [four] stores," he said.
"It's conceivable that somebody else could buy that business and happily continue to run it."
Joel Shaffer, a Sears spokesperson, said in an email on Thursday to CBC News that "nothing is happening to those call centres" and "hiring targets remain intact."
