Executive Moves Continue at Sears Holdings
By George Anderson
Sears has a softer side that most consumers apparently have no interest in. That’s where Lisa Schultz comes in.
Ms. Schultz who helped upgrade the image of Kmart’s fashion line has been named to a new position, executive vice president, Sears Holdings Apparel Design, to oversee clothing design for Sears and Kmart. She will report directly to Sears Holdings’ chairman, Edward Lampert.
In September, Mr. Lampert put himself in charge of running Sears Holdings’ marketing, merchandising, design and internet business.
Announcing Ms. Schultz’s promotion in a released statement, Mr. Lampert said, “In two years, Lisa has assembled a team of talented and enthusiastic designers and has refashioned and defined the Kmart apparel line. She has also been a valuable contributor to the development of our strategy. Lisa’s demonstrated ability to attract, retain and develop creative talent will be critical as she expands our combined design organization and works with our valuable design associates in New York City and Hoffman Estates.”
This recent move appears to signal that Sears Holdings is not content to succeed or fail based on the company’s stronger hardlines business. Last month, it was reported that Sears was experimenting with a store-within-a-store concept featuring the Lands’ End brand. There is no indication, as yet whether that test will be rolled out to other sites.
Moderator’s Comment: What has happened to Kmart’s apparel offerings since Lisa Schultz arrived at the company in the Fall of 2003? What would you expect
to see happen in Sears now that she has been named executive vice president of Sears Holdings Apparel Design? –
George Anderson – Moderator
It seems to me that, instead of a clear strategy, Sears is doing a lot of trial-and-error. So far, I have not seen that bear much fruit. There are only so many costs to cut and assets to sell. Sooner, rather than later, Mr. Lampert needs to find a retail formula that works. Their competition is too strong. They are falling further and further behind as the management team fiddles with new ideas.
What would we expect to see happen in Sears? Probably pretty much the same, which is not much. Sears/Kmart have done a few token remodels but I doubt they will invest their new found fortunes in retail. Every few weeks, they pass out a new executive position to someone with bad hair and a briefcase in order to keep the story of hope alive.
Sears and Kmart have so many locations that it would be easy to test several dozen different apparel strategies simultaneously. Most retailers don’t like to test, since tests might have embarrassing results. Sears Holdings has nothing to lose by forming test alliances with 2 dozen different apparel sources. Let the best strategy prove itself. In apparel, fast clear test results are likely, so little time would be wasted. Apparel development timelines are very short compared to most hard goods so test results could be clear within 2 to 4 months.
I remain hopeful that Ms. Schultz and her team will make a difference in Kmart’s apparel offering yet I have to say, honestly, that I haven’t seen it. Store environment is really working against her. If you hang cashmere on a rack with smudged industrial flooring beneath and glaring lights above, you’re just not going to get cred. I’m one of the few who believes that Target isn’t that hard to chase in apparel (yet?) . . . and Wal-Mart’s apparel-area redesigns have been slow in coming. Kmart should ramp up redesigns and work hard on creating suitable backdrops for the changes to come.
Nothing happens at retail until you decide who you are now that you’ve grown up. Sears and Kmart are still struggling to answer the most basic retail brand questions. And, if they aren’t sure who they are, how are consumers supposed to guess?
Sears has been trying to develop a sustainable soft lines business, and by extension, a comprehensive retail brand positioning strategy, for at least the last 15 years. Arthur Martinez and his team created the “Softer Side of Sears” strategy in the early 1990’s in an attempt to develop a “complete” retail business and to enhance the company’s performance and competitive positioning. His goal was to build a credible, desirable and successful soft goods business — including women’s apparel, shoes, accessories and related categories — to complement Sears’s ongoing strength within hardgoods led by its proprietary brands including Kenmore and Craftsman.
Now in late 2005, Eddie Lampert is trying to accomplish the same mission but in a much more competitive environment than that faced by Mr. Martinez, who was considered to be one of the sharpest minds within the retail industry during his tenure at Sears.
Is Mr. Lampert genuinely sincere in his efforts to remake Sears, or is this mostly a show while he finalizes plans to extract maximum value by selling off its assets? I do not know. His move to assume direct managerial control over the retail business may indicate that he is indeed sincere is his oft-stated desire to re-build the combined companies into retail market leaders. Despite his considerable intellectual prowess, he has no retail operating experience, especially in critical areas such as merchandising, product development, marketing, sales and store operations. This may suggest that he does not expect to run Sears Holdings as a retail operating company for very long. He needs to hire talent to keep the ship running, but his new position allows him to get very close to the business so he can determine the “who, what, when and how (much)” in order to maximize financial returns over the course of selling off all of the assets.
Could Sears Holdings regain the glory of the past? Possibly, but not likely. The sheer number and magnitude of internal issues that must be truly fixed, combined with an extraordinarily competitive marketplace, suggest that glory will be gained only by the financial investors, led by Mr. Lampert.