Sears slashes prices to compete with Target

A customer enters the Sears store in North Vancouver, British Columbia in this February 23, 2011...

A customer enters the Sears store in North Vancouver, British Columbia in this February 23, 2011 file photo. (REUTERS/Andy Clark/Files)

Hank Daniszewski, QMI Agency

, Last Updated: 8:19 PM ET

LONDON, Ont. — Calvin McDonald remembers his first job: Pulling a wagon loaded with Sears catalogues and delivering them to homes in this small southwestern Ontario city.

Now McDonald is CEO of Sears Canada and his latest job is to pull the faltering department store giant into a new era, where it can thrive in a fiercely competitive retail market.

McDonald returned to his hometown of London Friday and toured the Sears store to fire up the staff for his three-year "transformation plan."

The first part of the strategy kicked in this week as the chain slashed prices on 5,000 items to compete with discount retailers such as Walmart and Target — to make its Canadian debut next year.

It's a transformation that can't come too soon.

The Toronto-based retailer reported a net loss $46.6 million in the third quarter of 2011 and its share price has dropped from $20 to $12 over the past year.

Along with price-cutting, McDonald said Sears will modify its traditional format of offering a wide variety of products.

He said the chain will focus on it strengths - big-ticket items such as appliances and outdoor equipment as well as women's and children's clothing while trimming back in other categories.

"We have to focus on the things we do very well. We have an opportunity to rationalize our assortment and focus on key categories and ensure customers come to Sears for those items," said McDonald, who took the top Sears job in Canada in June.

McDonald worked at the Loblaw store formerly located in the Masonville Place in London, while earning a degree in biology at the University of Western Ontario.

"I spent my winter pushing carts with one of those big orange parkas on," he said.

His plans to become a homicide detective fell flat when he was turned down by the RCMP.

Instead, he pursued his career at Loblaw applying for a head office job and going back to school to earn an MBA from the Rotman School of business at the University of Toronto.

He spent 18 years with Loblaw steadily rising through the ranks to become executive vice-president of the grocery division before he was recruited away by Sears.

Married with four young children, McDonald builds up his energy level by training for Ironman triathlons.

McDonald said he is also working to energize the chain's 30,000 staff who may be demoralized by years of watching the chain stagnate.

"I've been through a transformation at Loblaw, so the opportunity to get our associates excited about our vision is the best part of my job."

Q and A with Calvin McDonald

What will it take to turn around the Sears brand?

"We need to build life-long relationships with customers based on trust and trust starts with price. That's why we are cutting 5,000 prices.

Will you be changing the layout of Sears stores?

"We have pilot stores that are tackling that. Customers will see some categories getting bigger, some getting smaller. There will be some shuffling and a focus on key categories. Adding basics such as shopping carts for the convenience of customers - All these things will be tested."

How about a central checkout instead of department-based checkouts?

"We have some central checkouts in our pilot. They work well in some categories but customers say they still like decentralized checkouts in other departments. We believe a hybrid model is where we will land."

Where does Sears fit into the increasingly crowded retail market?

"We will have great deals everyday but we will focus on the quality of our goods, differentiating that from competitors who focus on price at the expense of quality . . . We still have a home services division that will take care of you post-purchase."

What will happen to the famous Sears catalogue?

"We will look at our product assortment and distribution costs. We are making changes, but we are committed to an online and a print catalogue."

Twitter: @HankatLFPress