Are Profits Following Sales in Sears’ Grand Format?

Jun 29, 2004
George Anderson

By George Anderson

More open space is one of the improved shopping experience features Sears has in store for shoppers in its new Grand format units.

Industry analysts are wondering whether that improved shopping experience will translate into stronger sales and profits for the retailer and greater returns for investors.

So far, according to the retailer, sales have performed about 30 percent above its expectations. The profit question has yet to be answered.

An easier to shop big box would appear to be what many consumers are looking for, based on research from Kurt Salmon and Associates. Reuters reports the firm did a survey, which
found “58 percent of consumers prefer to shop in big stores to save time, yet 45 percent feel that stores today are simply too big and difficult to navigate. Four in 10 said it’s
hard to find what they want in megastores because of the vast merchandise selection.”

By making itself easier to shop than Wal-Mart, Sears Grand is hoping to attract those who have a problem with the typical big box experience.

The retailer is also looking to differentiate the experience by offering slightly more upscale merchandise than its discount competitors. It is hoped this will help negate any
direct price comparisons with the likes of Wal-Mart, while improving Sears’ return on the merchandise it sells.

Moderator’s Comment: Is Sears on the right path to differentiation with its Grand format stores?

The Reuters piece correctly pointed out that Sears has built nice to look at and shop stores for its Great Indoors format, yet is still losing money on
the concept. Sears’ lack of information on the profitability portion of the equation plus the slow pace of new unit construction has us wondering if it isn’t having a similar
experience with its Grand stores.

George Anderson – Moderator

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