Sears to unlock land value in Burnaby: CEO
Work is progressing on plans for a major redevelopment of land Sears Canada Inc. owns next to Metropolis at Metrotown mall, says the company's new president and CEO Doug Campbell.
"The fun part's over, now the work begins for them," Campbell said of the project's architects and planners. He was in the Lower Mainland Tuesday meeting with the company's general managers.
As reported in the NewsLeader, last spring Burnaby city hall began considering a rezoning application to allow the redevelopment of 8.9 acres that Sears owns at Metrotown. That property includes its own store currently integrated into Metropolis, the space where Toys R Us is located underneath in the basement, surface and underground parking, loading facilities and the public plaza at the corner of Kingsway and Nelson Avenue.
Sears wants to establish a conceptual master plan for the site that would guide individual phases and rezonings for the project. According to a city staff report, the retail giant's vision for the property includes a new flagship Sears store, five mixed-use, high-density residential towers and two office towers on top of podiums containing retail and commercial space.
While the current Sears store is essentially the same building that opened in 1954, Campbell gave assurances a new store is being planned. "That old Sears store will be gone."
He hopes a proposed timeline for the phased construction project, which still requires rezoning approval, will be ready in a couple of months.
The company's real estate assets is one of the areas being focused on as part of its current transition and restructuring plan.
"The reality is we own a lot of prime real estate and where there's opportunities for us to release value from that we're taking advantage," said Campbell, who took over as head of Sears Canada in September after serving as its chief operating officer.
"It's property, some of it we're not actually using as well, such as the parking lot for instance in Burnaby [at Metrotown] … To release that value to the company is important."
Releasing value from its assets was also a reason behind closures of several Sears stores in recent years, including ones at Pacific Centre in Vancouver and the planned closure of the Richmond Centre store.
In all cases, the stores were profitable but "the landlord came to us with a very lucrative deal" to sell back the leases which forced Sears to consider the moves, Campbell said.
As for recent layoffs in the company that have numbered in the thousands, he said, "we have neglected [operating efficiencies] for too long. The reality is that we used to be a $6-billion retailer but we're closer to a $4-billion retailer today."
The hard work of making the company more efficient hadn't been done "so we're going through those tough decisions."
Part of the reason he was in town was to meet with staff about improving the flow and mix of merchandise for the local market, for instance, to ensure stores in Metro Vancouver get more rain-related clothing as opposed to the snow-related gear more prevalent in Toronto.
With major changes in the retail landscape, Campbell is steering the store towards serving middle-income customers.
Discount retailers such as Target and Wal-Mart are focusing on the low end while Hudson's Bay and incoming American department store Nordstrom are aiming at the high end.
"There's been a fascination lately with luxury retail," Campbell said. "My assessment of that is those retailers are essentially abandoning the middle class of Canada. They can either go to one end of the spectrum, which is cheap and low quality, or they can go to expensive luxury. And there's a huge market of the middle in Canada. Sears has always been in that service to the middle class and that's where we need to stay … and double down our investment there."
In the end, he believes the luxury market is "not big enough to sustain all of the people that are moving there." Meanwhile, Sears will be focusing on providing "quality for dollar spent."
Prior to Campbell's work in retail and consulting, he served as an officer in the U.S. Marine Corps.
He noted that it's one of the few U.S. military branches to give unspent money back to the government every year, demonstrating a definite level of fiscal responsibility.
And the Marine Corps' status as one of the greatest fighting forces of the world is due to its investment in people and leadership development, not necessarily on military equipment.
"The Marine Corps is a leadership company essentially," he said. "That's probably the thing that I've taken from the Marine Corps throughout my career, it's the importance of investing in people."
He added he "continues to be surprised and impressed by the dedication" of Sears' staff, some with several decades of service. "That level of commitment people have to the brand … it's pretty impressive."