My wife and daughter recently read an article about #BoycottSears on the CBC website. As a result they felt we should Boycott Sears and told me so. I explained why I felt we should #SaveSears. After listening to my explanation, they asked me to write this article to explain why we should #SaveSears.
Let me first explain the rationale for the boycott. Sears has given $7.6 million dollars in retention bonuses to 43 executives, but has laid off 2,900 workers without severance. Classic case of the the big guy beating up on the little guy right? Rise up great and powerful Internet and right all the wrongs! Understandable that you might think so, but it’s never that easy.
The first thing you have to understand is that Sears is Bankrupt. It does not have enough assets to pay all of it’s liabilities. The creditors that have supplied sears with products to sell in it’s stores, and the banks that gave given them cash to continue operation are rightfully worried that Sears won’t be able to pay them, Sears said as much over a month ago. They have to pay their employees, and they don’t want to go bankrupt either. In addition Sears has thousands of other employees, just like the employees who have lost their jobs at Sears each with their own set of challenges to overcome, and they are grateful to still have their jobs.
Sears’ decision, while difficult in the sense that it hurts the employees who are being laid off, is not difficult in the sense that they are choosing between everyone losing their jobs, or some people losing their jobs. While it hurts for some people to lose their jobs, the harm is less than everyone losing their jobs, and the harm to those that lost their jobs would not be any less if everyone lost their jobs, making the decision the right thing to do, even if not perfect. Not to mention all the suppliers, the malls and everyone else.
If Sears closes, I guess you will just take your business to Walmart right? Who other than Walmart, is that going to help? It hurt us when Target left, and it will really hurt if Sears goes. It’s not going to help the suppliers much (Walmart won’t stock many brands Sears carries, and if they do they will press them to cut their margins even more), it won’t help the consumers much as Walmart will have less competition, and it won’t help the malls.
If you’ve read this far you may have forgotten about the $7.3m in retention bonuses given to the executives, or maybe, you thought I’d forgotten about it, I haven’t. The bonuses are a necessary evil, and I will try to explain why.
Every store has it’s key products or services, a tire store for instance needs Tires to stay in business. Even if they have to lay off workers, they still have to buy tires so they can sell them to the consumers for a profit, so they can pay the remaining workers.
Sears is in a process called ‘restructuring’. The fact that a Judge has given the creditors protection and appointed a Trustee has allowed Sears to continue to get their products, and has assured the creditors that they won’t lose any money from that point on. If that’s all that happened, Sears would continue to do business as they currently are doing it, unfortunately Sears is currently losing money, and everyone would be fired when they ran out of money and couldn’t pay their bills anymore. So the critical portion of Sears business right now is the ‘restructuring’, the changes that they have been making to become profitable are the key to employees keeping their jobs, and paying creditors and suppliers.
The people who ensure those changes take place are the 43 executives who designed the changes and are carrying them out. The retention bonuses are only given to those executives that see the changes out and don’t jump ship. It’s like giving bonuses to the people repairing a sinking ship. The people repairing the ship could stop repairing it and make their own boat to carry them to safety, or they could stay on the ship, and repair it before it sinks saving everyone else on board. It makes sense to keep them around.
Why did the employees not get severance? They are under bankruptcy protection and the creditors wouldn’t have accepted the deal if the company doled out millions more of their money on employees, millions more that would make the difference from the ship sinking and everyone losing their jobs or keeping the ship afloat. Sears had no choice, and your Boycott doesn’t give them a choice either.
If you do boycott Sears, know that it won’t get those people any severance. It will just result in thousands of more people losing their jobs with no severance, it will mean big openings in your local mall already trying to cope from the loss of Target and Zellers, it will mean suppliers and brands that are currently sold at Sears just won’t be available to you unless you are willing to take your business out of the country to shop, it will mean higher prices as a result of less competition, it will mean giving your business to Walmart, and Walmart will push your suppliers for lower costs, which will mean lower margins, lower wages and lower bonuses for them.