As Eaton’s, Canada’s once mighty retailer, turns into the biggest bargain centre in the country, retail analysts say Sears and The Bay are preparing to divvy up the market and gird themselves to fight off competition from aggressive niche players.

The Bay and Sears are expected to devote the bulk of their marketing and advertising efforts to attracting Eaton’s customers who were loyal to the end, says John Torella, senior partner and retail analyst at J.C. Williams Group in Toronto.

The biggest battle will be to secure Eaton’s credit card holders, he says.

‘(Sears and the Bay) will try to convert Eaton’s credit card customers over to their own credit cards,’ he says. ‘We’ll see a flurry of advertising activity around that.’

The two retailers will be battling it out for the market share void left by Eaton’s, as well as the defunct retailer’s key locations, says John Winter, a Toronto-based retail analyst.

The Bay will likely be more successful in inheriting the mantle of fashion retailer, he says. However, Sears has already managed to steal much of Eaton’s market share in housewares, white goods and furniture after the company attempted to reposition itself as a high-end fashion retailer.

The Bay, Eaton’s and the Sears had battled each other with advertising and price slashing to keep customers moving through the stores. With Eaton’s gone, the remaining chain stores could have as much as a year of stability, says Richard Talbot, a retail analyst with Thomas Consultants International.

The marketing battle will now centre on obtaining key locations to ensure customer traffic, he says.

‘Take the Toronto Eaton Centre, for example,’ says Talbot. ‘Sears is not in the downtown core, so I’m sure they’d give their eye-teeth to take over the Eaton’s store and be slap-bang in the middle of Toronto.’

After all, who wouldn’t want a location that moves a quarter of a billion dollars in merchandise?

Both Sears and the Bay will see an increase in sales with the absence of Eaton’s from the marketplace, says F. Derek De Leon, an industry analyst with Merrill Lynch.

‘In the near-term, Sears and The Bay will win because Eaton’s didn’t really have any fall merchandise,’ says De Leon. Many suppliers began to cut Eaton’s off three or four months ago, before shipping their fall lines.

‘There’ll be some back-to-school because you still have some merchandise that can float in that area, but beyond that season, it’s not going to be a big threat.’