Business

No 'giant balloons': Sears plans to start liquidation sales on July 21 with subdued ads

Sears Canada will ask an Ontario Superior Court on Tuesday to green-light its liquidation sales plan for the stores it's shutting down.

Sears will seek court permission to start sales in its soon-to-be-shuttered stores

Sears Canada will soon start selling products at a discount at most of its 59 stores slated to close. (Brian Higgins/CBC)

Sears Canada will ask an Ontario Superior Court on July 18 to green-light its liquidation sales plan for the stores it's shutting down.

According to court documents, Sears aims to start the liquidation sales on July 21, winding up the process by Oct. 12.

Sears Canada plans to close 59 stores and eliminate 2,900 jobs across the country as part of a court-supervised restructuring process. The chain will axe 20 full Sears stores, 15 Sears Home Stores, all 10 outlet stores and 14 Sears Hometown stores — roughly one-third of its current retail footprint.

Click here for a list of stores closing.

Most of the Sears stores slated to close will use third-party liquidators Gordon Brothers Canada and Merchant Retail Solutions to carry out the sales.

The exceptions are the Hometown stores, which are independently run and will conduct their own liquidations.

The stores will still have to follow Sears' sales guidelines, with the exception of three locations in B.C. and 1 in Melville, Sask. These Hometown stores terminated their agreements with Sears Canada prior to the restructuring process and won't be subject to the liquidation order.

No flashing lights

For the remaining locations, the department store chain has laid out strict guidelines mainly applying to store appearance and signage.

According to court documents, all signs in connection with the liquidation will be "professionally produced." They can broadcast slogans such as "everything on sale," "everything must go," or "store closing."

However the signs can't advertise a "bankruptcy," "liquidation" or "going out of business" sale.

The Sears stores also can't post neon or "day-glow" signs. Other no-noes are using "giant balloons, flashing lights or amplified sounds to advertise the sale or solicit customers," unless the property landlord allows it.

Sears' sale guidelines stipulate that the liquidation signs must be 'professional.' (Colleen Connors/CBC)

Bankruptcy expert Jonathan Ordon says these types of liquidation guidelines often come about because of regulations laid out by store landlords.

"It's an image perspective," says Ordon, president of Toronto-based liquidators Danbury Global. "No mall wants it to be advertised that the tenants in that building are bankrupt or liquidating, because what message does that send to the consumer that's coming to the mall?"

Ordon adds that if a mall made an exception for a troubled retailer, other mall merchants would want to follow suit.

"If you had neon signs and flashing lights, and it happened during a liquidation sale, they would have a lot of pushback from other tenants in the mall — why can't they do it?"

What about the deals?

Many of Sears' sale guidelines stipulate that the stores must work with their landlords during the liquidation. For example, they state that if a landlord is concerned with "store closing" signs hanging in the front window, Sears, the third-party liquidator and the landlord "will work together to resolve the dispute."

The guidelines also state the stores can sell furniture, fixtures and equipment owned by Sears during the liquidation.

But it adds that the landlord may require the signs advertising these deals be placed "in discreet locations" in the store, and that people buying the products take them out the back door — unless they can fit them in a shopping bag.

The guidelines do not specify what type of deals Sears will be offering during the liquidation.

A retailer will typically start at a smaller discount — 20 to 30 per cent, Ordon says.

"Once they either see sales are dropping, or the inventory levels are dropping below certain levels, they will then drop the discounts," says Ordon.

Clarifications

  • The court date for Sears to request approval of the liquidation process has been moved to July 18. This article has been updated to reflect this detail.
    Jul 17, 2017 3:09 PM ET

About the Author

Sophia Harris

Business reporter

Sophia Harris has worked as a CBC video journalist across the country, covering everything from the start of the annual lobster fishery in Yarmouth, N.S., to farming in Saskatchewan. She now has found a good home at the business unit in Toronto. Contact: sophia.harris@cbc.ca

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