Sears: 'Small-box' savior?
Michael Knell -- Furniture Today, February 10, 2005
TORONTO -- Could Sears Canada, this country's No. 2 merchant of furniture and bedding, be the White Knight that rescues the smaller, independent furniture retailers that make up the bulk of Cantrex Group's members from the clutches of big-box, category-killer chains?
That's one possibility raised by Sears Canada President and CEO Brent Hollister, who spoke to Furniture/Today after addressing Cantrex members at a meeting during the winter market here. "We have a fair degree of experience with the independent owner-operators, not just on the retail side but in every part of the business," he said. "The category killers are coming into the marketplace and taking over the role of the independent retailer.
"We want more Cantrex members a year from now than today," Hollister said. "There is no one out there who is going to give the independent retailer a better offering. We are committed to the big-ticket business. Our motives are good. We have a culture that values people and we want to grow this business."
Sears Canada, the country's largest retailer, is moving to acquire Cantrex, Canada's largest fee-for-service buying group, from a Canadian subsidiary of General Electric Capital Corp. The deal, expected to close by mid-April, would return Sears Canada to the top of the heap as a furniture and bedding retailer.Hollister said independent dealers face competition in furniture and appliances not only from such multinational giants as Wal-Mart and Home Depot, but from such Canadian big boxes as Loblaws and Rona. Loblaws, whose core business is groceries, is selling more imported casual furniture every year, he said."They have a powerful business model," Hollister said. "These groups are almost as large as we are, and in these commodities (furniture and appliances) it's all about dollars and volume."Acquiring Cantrex is both defensive and offensive for Sears Canada, he said. "We just don't know where the next category killer is going to come from," he said. "It made a lot of sense to us as a multi-channel retailer who wants to grow its market share."He believes that once Cantrex members understand what Sears brings to the table, they'll stay in the group. He called member retention "the least of our worries. We're interested in growing these businesses. We didn't buy it to shrink it. We will do everything we can to prove we can (grow it)."Hollister reassured Cantrex members their privacy will be respected and maintained. He pointed out that Sears has over 2,200 independently operated catalog outlets and well over 200 independently owned dealer stores, not only in furniture and appliances but in floor coverings, and has a track record of helping these businesses grow.No drastic changes
Sears plans no drastic changes at Cantrex in either personnel or programs, he said. Where members will notice improvements a year from now are in other areas, particularly logistics and transportation.
SLH Transport, a Sears Canada subsidiary, is believed to be this country's third-largest trucking company. "It's already set up to go into every market in Canada," Hollister said. "There's a lot of room for us to leverage this and improve efficiencies for everyone."Adding the 1,000 or so Cantrex member stores to the network will reduce costs and improve service for all, he said. Some 600 Cantrex stores sell furniture.Hollister noted Sears has 3,100 technicians making 5,000 service calls and 2,500 home deliveries every day. "We can provide a lot of expertise in all of these areas," he said.Inventory productivity is another area where Sears can offer Cantrex members added value, he said. Hollister said Sears Canada often achieves 12 turns annually in furniture and appliances. "We are selling it without holding it in inventory," he said.Transferable programs
These programs are easily transferable to independent retailers, particularly when combined with the strength of SLH, he said. Succession planning, direct imports, consumer credit, merchandising, product access and the latest in retail technology are other areas where Sears can give independent retailers a competitive edge, Hollister said.
Sears Canada also operates its own bank and offers both a Sears credit card, the largest in circulation in Canada, and a Sears MasterCard. "We're the most respected and trusted company in Canada — ahead of the banks — and we're going to expand (credit card) use considerably," he said.Cantrex will be operated as a freestanding subsidiary, and a president will be named after the acquisition closes. For the next few months, Sears Canada will proceed cautiously, and will make retaining existing members its first priority, he said.
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Sears: 'Small-box' savior?
Feb 20, 2005
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