Wal-Mart's Latest Victim: The Sears of Canada
TORONTO — Eaton's department store, a century-old icon as mythic to Canadians as Sears or Macy's is to Americans, has filed for bankruptcy protection.
Competition from American discounters helped push Eaton's over the brink last month, catching suppliers, employees, and loyal shoppers off guard.
Wal-Mart alone has bagged 24 percent of Canadian department store sales in just a few years. A host of other American invaders, including Sports Authority, Toys R Us, and Home Depot, as well as aggressive Canadian specialty stores like Future Shop and Adventure Electronics have also taken their toll.
Analysts put Eaton's market share at a slim 12 percent - ahead of only K mart Canada Ltd. They say the company may now have to close 30 to 40 of its 87 department stores nationwide.
"I was shocked and surprised," says Norma McClellan, a long-time Ontario resident and Eaton's customer. "We used to drive into Toronto from an hour away just to shop there."
But younger generations appear less drawn to the credo "goods satisfactory or money refunded," coined by founder Timothy Eaton, 127 years ago.
Rumors of trouble at the secretive, family-owned T. Eaton Company Ltd. have swirled for years. So retail analysts say they expected a restructuring.
Stagnant consumer spending and fresh competition have transformed a formerly laid-back Canadian retailing environment.
Winners in shakeout
Not all Canadian retailers are shrinking from the battle with US interlopers.
Zellers' a Canadian discounter and Hudson's Bay Company, another old-line department store, both have their competitive juices going.
They have moved away from a retail culture that often took customers for granted, and toward a "customer first" stance - a la Wal-Mart.
Eaton's, however, seemed slower to the mark. Financial records show low sales and high debt - $219 million against a $365 million slump in total sales over five years.
In the most recent fiscal year, ending January, the company lost $87 million against a $58 million loss the prior year.
The company says it is not actively looking for a buyer, but will talk with any interested party.
If Eaton's passes out of Canadian hands, with it will go a legend woven into the fabric of Canada's heritage.
Founder Timothy Eaton, an Irish immigrant, decided in 1869 to try his hand at dry goods, opening a store on Front Street in Toronto. His money-back guarantee was unusual for its time.
Eaton was also the first to sell goods for cash at a fixed price, instead of using credit, barter, and bargaining. He became known as "Cash" because he skirted Canadian wholesalers, preferring to deal with British suppliers directly for cash.
Generations of children used the Eaton's catalog for hockey shin pads. Like the Sears catalog to Americans, the Eaton's catalog was indispensable to Canadian settlers. They called it the Prairie bible. The catalog ended in 1976.