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Sears relaunches Eatons

By Susan Thorne

The Eatons name is about to become a force in Canadian retailing again — without the apostrophe and without the Eaton family.

Sears Canada Inc., which acquired 19 former Eaton’s department stores last year during the collapse of the T. Eaton Co., is remodeling seven of those outlets as upmarket department stores, to be reopened under the Eatons (no apostrophe) banner later this year.

The stores, ranging in size from 300,000 square feet to the 700,000-square-foot anchor at Eaton Centre in Toronto, are all downtown locations in Canada’s major cities: Ottawa, Winnipeg, Calgary, Victoria, Toronto (two stores) and Vancouver. A total of 3.8 million square feet of retail space is involved, a 30% increase to Sears Canada’s department store footage.

The company’s plan is to keep Eatons as the name of the stores in city locations, but change it in the suburbs where the Eatons brand has less cachet.

For Sears, the revised Eatons format provides access to a new upscale customer base of young, urban professionals as opposed to the midpriced suburban family market served by its traditional stores, explained Rick Brown, senior vice president for strategic initiatives at Toronto-based Sears Canada.

The move also challenges competitor The Bay, whose department stores currently stand alone in several downtown markets.

Brown said the new Eatons concept will be defined by three changes: new store design, an upscale price point and emphasis on customer service. All seven stores are currently undergoing extensive renovation to add features such as serpentine aisles and open escalators.

Merchandise will be priced “above the level of Macy’s but below Neiman Marcus, substantially above Sears [Canada] and The Bay but below Holt Renfrew [an upscale Canadian department store company],” Brown pointed out.

The reborn Eatons stores will return to a full department store range of merchandise, including home furnishings, whereas the old Eaton’s focused largely on apparel in its last days.

Company research showed that shoppers in the market segment targeted by Eatons appreciate a strong service component and are willing to pay for it, Brown said.

Consequently, the stores will have a much higher level of staffing than before, plus features such as tourist services, coat check, concierge service and personal shopping assistance.

Sears is making a major financial commitment to the Eatons makeover. Just under 4,000 new customer-service employees were hired over the summer and have been undergoing two to three months of training.

Recognizing that it is heading into an unfamiliar (for Sears) customer market, more than 100 merchandise and marketing staff members have also been hired specifically for Eatons.

But the company said it hopes to realize savings through economies of scale in the operating budget. “This initiative enables us to target a different market and still leverage our backhand — in logistics, in supply and distribution,” Brown said.

Can Sears succeed with an upmarket concept where the T. Eaton Co. failed? “It all comes down to execution,” said Maureen Atkinson, senior partner with the J.C. Williams Group, a Toronto retail consulting firm.

“They [Sears] have certainly made a commitment and are putting resources into the new Eatons identity.” Sears’ deep pockets make the situation very different from that of Eaton’s in the late 1990s, Atkinson added.

“With Eaton’s, it was a case of ‘do or die’, and they didn’t have the resources to evolve their strategy. Sears is very flush now, and in a very strong financial position. They can afford to take time to get the bugs out.”

Atkinson noted, however, that the premium-priced department store has good but limited potential north of the border.

“We are not like the U.S. where there is a large complement of people with high spending power,” she said. “In Canada, there is a limited number of people who can buy at such stores.”