Tears for Sears: What does departure of anchor tenant mean for Avalon Mall?
MUN business prof says he expects smaller, specialized stores to fill the gap left by Sears departure
Tom Cooper isn't sounding the alarm for the Avalon Mall or the retail industry in St. John's over Sears closing its mall location.
The associate professor in Memorial University's faculty of business — an expert in corporate strategy and risk management — says the recent announcement by Sears Canada of the St. John's closure doesn't mean the Avalon Mall location was performing poorly.
- Sears closing its Avalon Mall store in St. John's
- 'What a disappointment': Sears store in Corner Brook among 59 closing
"These were all high-performing stores. They probably had good leases, they probably had good locations," Cooper told the St. John's Morning Show.
"So I wasn't surprised that it was closed, but I don't think it's an indication necessarily that they weren't performing well at the Avalon Mall."
Trying to avoid bankruptcy
Sears is trying to generate enough revenue to stay out of bankruptcy and assure creditors that the business has a plan in place for long-term survival, said Cooper.
"That revenue can come from selling off assets, and it can come from generating more customers in," he said. "In this case, it was just easier to sell off some assets ... You have some pretty high-pressure creditors who are wanting to get paid, and Sears Canada has been under a lot of pressure for the last number of months."
They rely on the status quo because the status quo has made them a lot of money in the past.- Tom Cooper
Because of its early success as a catalog shopping business, it would be easy to think Sears was well-placed to thrive in a shopping climate where some people favour online ordering over visiting physical locations — but big companies can be slow to adapt to change, Cooper said.
"Sears is not the only victim of not anticipating what could be happening in the future. It's the nature of the business, in a number of ways, of how these transform."
The bigger the company, the more risk-adverse it can be, he said.
"When you get to be that big, you don't want to fail," he said.
Status quo doesn't cut it anymore
"So your ability to take risks and your ability to go out and to look at new markets, look at new channels to sell your products — it's risky, and executives don't necessarily want to do that," Cooper said.
"Then they eventually kind of rely on the status quo because the status quo has made them a lot money in the past. And then you get 10, 15 years of the status quo and the status quo doesn't work anymore, and the model changes."
Cooper said major retailers like Sears could become more rare as trends shift towards a narrower focus by businesses.
"I think what we're going to see is less of these big stores like Sears and we're going to see more specialist stores emerge," he said. "We've seen that throughout malls in North America."
With files from the St. John's Morning Show