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Over 1,500 retail workers lose their jobs

February 1, 2013 - News

More than 1,500 retail workers suddenly lost their jobs yesterday morning at Best Buy, Future Shop and Sears locations across Canada.
At a closed Future Shop on Vegas Blvd. in the Erin Mills Power Centre, near Dundas St. W. and Winston Churchill Blvd., a steady stream of after-work shoppers arrived at the doors yesterday to find them shuttered, a security guard just inside waving them away. Signs hung on the window read: “This Future Shop is now closed.” There were maps to alternative locations.
Michael Dehn said he had phoned customer service to make sure the location was still open and was assured it was.
“I’m not going to go to another Future Shop, this wasted my time,” said Dehn.
Eight Future Shops and seven Best Buy big box stores were closed, throwing 900 people out of work. Separately, Sears announced it was terminating 700 positions.
The job losses at Sears were predominantly at distribution centres, said spokesman Vincent Power. Between two and four people per full-service department store were also let go, mostly team leaders.
“We did it in such a way that it wouldn’t affect customer service,” said Power. “The associates that we need to help the customer, we don’t want to impact that at all.”
Sears employees were informed of the terminations yesterday morning.
Best Buy is widely seen to be a victim of show-rooming — providing bricks-and-mortar locations for customers who test-drive products and then buy them at the lowest price they can find online.
In a release issued to the media, Best Buy Canada announced it would open new Future Shop Small-Concept web stores and new Best Buy Mobile locations over the next 36 months. The release did not specify how many or when.
Best Buy Canada continues to operate more than 120 Best Buy and Best Buy Mobile locations and 140 Future Shop stores.
Sears Canada is in the middle of a three-year turnaround plan being led by CEO Calvin McDonald, who said yesterday afternoon there is reason for optimism at his company.
“Some key areas are starting to show signs of progress,” said McDonald. He said apparel and accessories were positive in the fourth quarter, and significant gains have been made in online toy sales and in mattresses.
Sears has also exited the consumer electronics category, where show-rooming was a problem.
But retail consultant Ed Strapagiel says Sears is out of time, with discount retailer Target set to open 125 stores in Canada beginning in March.
Sears operates 118 full-line department stores in Canada and six distribution centres, in Calgary, Regina, Vaughan, Belleville, Montreal and a small one in Vancouver. About 300 of the 700 jobs lost were at the distribution centres. The Belleville distribution centre lost 120 jobs and the Regina centre lost 80.
Sales at Sears Canada were down 5.8 per cent in the fourth quarter of last year, during the all-important holiday sales season. In November, Sears Canada reported that sales at stores open for more than a year fell 5.7 per cent. As if to underscore the problem facing bricks-and-mortar retailers, Amazon.com Inc., the world’s largest Internet retailer, reported yesterday (Thursday, Jan. 31) that fourth-quarter sales climbed 22 per cent to $21.3 billion (U.S.).
“It’s hard if you’re a bricks-and-mortar retailer,” said Ken Wong, marketing professor at Queen’s University. “It’s hard for you to compete against an e-commerce site that basically has no major inventory issues, they can store it all in one place, isn’t paying rent, and doesn’t have any of the costs of running a physical store.”
Alex Arifuzzaman, retail consultant at Interstates Consultants Inc., wondered why Best Buy is still operating under two banners in Canada.
“Having Best Buy and Future Shop right beside each other means more real-estate cost and not a huge difference in products and services,” he said.
The Future Shop store in the Erin Mills Power Centre operated directly across the road from a Best Buy on the south side of Dundas St. W., in Oakville.
Strapagiel says the retail sector in Canada is simply not in good shape. He expects retail sales growth will end up at about 3 per cent for 2012 once the final numbers are in.
“That will be the second lowest gain of the last 10 years, the exception being the recession year of 2009,” said Strapagiel.
“There’s no good economic news going into 2013 either — GDP growth is slowing down and unemployment remains high.”
— Torstar News Service

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