RETAIL TRADE: Northward Ho!

In all his aggressive postwar expansion, Sears, Roebuck & Co.’s Chairman Robert Elkington Wood has come a cropper only once. He successfully poured $305 million into new and improved stores throughout the U.S., spent another $25 million to establish Sears as Latin America’s biggest retailer. But when he tried to crack the Canadian market in 1946, General Wood soon had to back out because of customs and currency restrictions. Last week, undaunted, Bob Wood bet $24 million that he could make good in Canada.

After nearly a year of negotiations, he signed a deal with Charles Luther Burton, chairman of 80-year-old Simpsons, Ltd., Canada’s No. 2 retailer. Sears and Simpsons will each put up $24 million to form a new retail and mail-order company, to be known as Simpsons-Sears, Ltd. The new firm will draw an equal number of directors from both organizations (including Wood himself); its president will be Edgar G. Burton, 49, son of Simpsons’ chairman.

Give & Take. Under the deal, the new company will buy Simpsons’ $100 million annual mail-order business outright, then supplement it with a string of Sears-like retail stores to be run by a Searsman exported to Canada. The company will start with 15 such outlets in the next five years, hopes eventually to have 40 (excluding Simpsons’ five existing department stores in Canada’s biggest cities).

Sears and Simpsons both stand to profit handsomely. In addition to getting a firm toehold on the Canadian market with the help of a well-known Dominion name, Sears will cash in on Canada’s lower tax rates (52% maximum v. 69% in the U.S.). For its part, Simpsons will benefit from Sears’s vast retailing and merchandising experience, which has developed such cost-cutting methods as bulk buying and close cooperation with manufacturers (TIME, Feb. 25). The two partners dovetail in another way: Simpsons’ mail-order business has always run two to one in favor of clothing, draperies and other soft goods, while at Sears the ratio has been reversed in favor of major appliances and other “big ticket” items. Simpsons-Sears’s first catalogue, due in January, will take note of this by including an extra 40 pages devoted to such Sears specialties as sporting goods and housewares.

Helping Hand. The one who stands to gain the most from the new partnership is the Canadian consumer, who for years has had to pay high prices for such things as refrigerators and washing machines assembled from U.S. parts in Canada. Last week Edgar Burton cited one example of how he hopes to bring prices down. A Sears washing machine, he said, priced at $249 in the U.S., costs $439 when assembled in Canada. By arranging to have the machine mass-produced in Canada for Simpsons-Sears, Burton hopes to cut the price below $300. Apparently, Burton will have some help along these lines. Already some of Sears’s U.S. suppliers are talking of establishing Canadian branches to supply the new company with completed products, just as they now supply Sears in the U.S.