First Target, now Sears? Why retail jobs will keep disappearing

Click to play video: 'Sears Canada raises ‘significant doubt’ about its future'
Sears Canada raises ‘significant doubt’ about its future
Sears Canada says it's unsure it can continue operating for more than another year. The classic department store says it is running short of cash and has been squeezed by competition from other chain stores, and by online retailers. As Eric Sorensen reports, Sears may have to restructure or sell its operations – Jun 13, 2017

Theories abound about how it came to be that the future of Sears Canada is now in “significant doubt,” as the company put it in its latest quarterly release on Tuesday.

READ MORE: Future of Sears Canada in ‘significant doubt,’ company says

Perhaps the most obvious reason is that Sears simply missed the boat.

“Sears has missed the opportunity of attracting the younger shopper. It’s really where my mother and my grandmother shopped,” Robert Levy, president of Toronto-based BrandSpark International, told Global News.

Sears stores didn’t keep up. Its supposedly fashion-forward brands never earned the “cool” label. And the company kept trying “to be in the middle and all things to all people” in a sector that has been moving away from that for years, if not decades, according to Levy.

READ MORE: While Sears Canada’s future looks grim, Sears’ American stores are on the brink, analysts say

Then there’s the fact that more and more business is going online. Sears’ recent move to bolster its e-commerce presence was largely seen as too little, too late.

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But in Canada’s retail landscape, even companies that are doing things right aren’t necessarily doing well.

READ MORE: No changes planned for new Sears business centres in New Brunswick

Take the Hudson’s Bay Company (HBC), for example. It spruced up its department stores. It now runs a vast and user-friendly online store. And it moved upscale as middle-of-the-road retailers kept struggling.

And yet, HBC, too, is in trouble. The company announced a net loss of $221 million last week, more than double the $97 million loss it had in the same period last year.

The cash hemorrhage will force 2,000 job cuts by 2018, it said.

READ MORE: Hudson’s Bay Co. to cut 2,000 jobs by 2018

What that means for potential cutbacks at Sears is anyone’s guess.

When asked by Global News, the company declined to comment about what the chances are of massive layoffs, but it did say it employs approximately 16,000 people nationally.

That means the losses — if Sears Canada were to also disappear — could be on the scale seen when Target closed up shop, noted Craig Patterson, editor-in-chief of Retail Insider magazine.

READ MORE: Here are our 10 picks for Canada’s greatest brands of all time

Target’s retreat south of the border two years ago left nearly 18,000 low-income Canadian workers without jobs, a hit big enough it reverberated through the entire economy, said Patterson. As a measure of comparison, economists generally cheer if the Canadian labour market adds more than 15,000 net new jobs per month.

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Part of a broader trend

Retail jobs are disappearing across Canada.

“I continue to see stores closing,” said Patterson, adding that “it looks as if we’re in a recession, even though we aren’t.”

The number of retail jobs the Canadian economy created between 2012 and 2016 went up only 3.7 per cent, compared to overall employment numbers that rose 4.7 per cent over the same period, according to Statistics Canada. And that includes auto dealers, which have been doing brisk business as Canadians take advantage of low interest rates to take out car loans.

READ MORE: Baby boomers big spending fuels record-breaking year for Canadian car sales

That’s hard to believe considering that consumer spending fuels the economy.

But, in a country obsessed with real estate, a lot of Canadians’ disposable income is flowing toward things like kitchen renovations.

READ MORE: Home reno projects are surging again, fueling Canada’s housing boom

And consumers are also increasingly spending more money on experiences and techie gadgets rather than, say, clothes and shoes, said Patterson. That has left many retailers scrambling.

It will probably get worse before it gets better (if it gets better)

If you want a glimpse of what’s ahead, just look at the U.S.

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America has shed about 89,000 retail jobs since October, the New York Times reported in April, more than the number of people employed the country’s coal industry.

As Amazon-style warehouses keep replacing stores fronts, the U.S. retail sector, which currently employs one in 10 Americans, may have reached “a tipping point,” the Times mused.

In Canada, e-commerce sales have shown growth of between six and 10 per cent over the past several years, while traditional store sales flatlined, said Patterson. But online shopping here is still two to three years behind where it stands in the U.S., he added.

The retail industry is one of Canada’s top employers, along with the health-care sector and manufacturing, accounting for more than 11 per cent of employment, according to StatsCan. In 2011, retail salesperson was the most common occupation among both men and women.

If the future looks like the U.S., it will be a rough ride.

READ MORE: Retail sector accounts for 13 per cent of N.B. jobs: Retail Council of Canada

— With a file from the Canadian Press

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