Lampert Takes Over Marketing, Merchandising and More at Sears
By George Anderson
Edward Lampert has a few new jobs. The chairman of Sears Holdings Corp. removed Alan Lacy as CEO of Sears and put himself in charge of running Sears Holdings’ marketing, merchandising, design and Internet business (includes Lands’ End).
“Our goal is to build one company with multiple ways of connecting with our customers, including our various store formats, on-line offerings, service relationships, and credit products,” he said in released statement explaining the changes.
Aylwin Lewis, who had been running Kmart, will now serve as CEO of Sears Holdings with responsibility for running the company’s 3,900 stores and its home services, finance, legal, supply chain, information technology, and human resources functions.
CFO William Crowley will also assume new duties in the newly created position of Chief Administrative Officer.
In becoming more directly involved, Mr. Lampert told shareholders in a letter that he was looking for the company to be “more responsive to customers” and “raise the bar of our expectations and standards.’
Despite the optimistic nature of Sears Holdings’ press release on the personnel changes being made, not all see Mr. Lampert’s direct involvement as a positive sign for the company.
“Even the greater involvement of Eddie Lampert can raise some concerns that the story is not playing out for him,” wrote Gary Balter, an analyst covering the company for Credit Suisse First Boston.
Some, such as Howard Davidowitz, chairman of Davidowitz & Associates, have an even bleaker view.
“Lampert is going to go through all sorts of concoctions of reorganizing, but at the end of the day, Sears won’t be able to compete,” said Mr. Davidowitz.
While CSFB’s Balter saw positives when visiting Sears’ stores earlier this summer, there are some very big concerns that Mr. Lampert will need to address in his new role. “The two weak links in the store are apparel and consumer electronics,” he wrote. “One could have had a nice nap in the consumer electronics section given the light traffic. Conversely, appliances were buzzing.’
Moderator’s Comment: What is your reaction to the executive changes made at Sears Holdings? What do the various divisions
of the company (Sears, Kmart, Lands’ End) need to do to get their businesses turned around? –
George Anderson – Moderator
- Sears Ousts Chief Executive; Lampert to Take Control – Bloomberg
News - Sears Holdings Corporation Reports Second Quarter 2005 Results and Announces
Leadership Changes – Sears Holdings Corporation/ PRNewswire-FirstCall - Sears’ Lacy to take 33% salary cut – Crain’s Chicago Business
- New role for Lampert at Sears – Chicago Sun-Times
- Lampert dumps Lacy – Chicago Tribune
- Sears Shuffles Its Management Team – The Wall Street Journal
I’m sure his focus will bring something to the table…but if you’re not sure as to what you are looking at; the great chance is to do damage. I would go out and find the best merchant I could find, and Target would not be a bad place to start looking.
How could he do worse than Lacy – also a money man? If he wants to be more responsive to customers–go out and talk to them at the stores himself. He might learn something. I do not think he ever shopped at Sears or even tried to call a store himself.
Just doing those two things will give him enough to fix for a while.
Isn’t it interesting that Mr.Lampert and the Sears management team are unable to move these two retail companies in the right direction? After buying Kmart and now Sears, Mr. Lampert says all the right things about improving the stores and the merchandise along with providing customers with a better in-store experience. But, Kmart and Sears stores continue to be poorly run, offering a barely adequate customer experience.
While Mr. Lampert is a very savvy guy with great credentials as a deal maker and financial guru, his ability to run the company’s marketing and merchandising is highly questionable. This looks like a desperation move by someone who needs to be in control. It’s hard to believe he can’t find some competent, highly experienced retail merchants and marketers to fix and run these all-important functions at Sears Holdings!
This appears to me to be just more of the same. Nothing meaningful is really happening. Kmart is still operating hundreds of $2 per sq. ft. per week ghost towns, void of inventory and customers. We see a lot of upbeat press but, so far, only empty promises of remodels and upgrades.
There is really no point in talking about what Kmart needs to do to turn around its business. That discussion is worn out. Sears/Kmart is too far gone for resurrection. I don’t think Sears/Kmart has any intention of turning around its business. By the way, when was the last time anyone saw a Kmart commercial on TV?
Reaction: So what’s new at Sears Holdings and how many consumers care? Demoted CEO, Alan Lacy, who’s become a multi-millionaire during all “this” has had his base salary deeply cut to only 1 million dollars a year instead of $1.5 million. Eddie Lampert, like the dedicated little Dutch boy, is now sticking his magic finger in the Sears Holdings dike as its chief “holder” and will direct marketing, merchandising, design and online businesses of Sears Holdings and its Lands’ End clothing unit. Is Eureka now in sight for Sears Holdings or is this the classic modern day Rube Goldberg business maneuver? One wonders what the next episode in this unique money drama will be … but one doesn’t anticipate much retail resurgence at Sears while Kmart flops like a flounder on a hot sidewalk.
Well, I am going to take a different positive approach to the Sears Holdings executive suite senior management reorganization.
Those who say that Lampert is a hedge fund guru and not a retailing guru, at least in the short term, are correct, and AutoZone isn’t Sears Holdings, however, Lampert is rectifying that by rolling up his sleeves and taking on these responsibilities.
Must disagree with those who profess that the merger of Sears and Kmart is the final product of Lampert’s extreme makeover of the former Kmart. Be advised that Lampert right now has a small stake in Circuit City (electronics – one of the areas cited as being a weakness). And don’t be surprised if Lampert doesn’t have stakes in other up and coming “trendy” retailers such as Pacific Sunwear or GAP Inc., thus keeping Lands’ End in the holdings while everybody suggests it would be a more favorable situation if it were sold.
It’s going to take time for the merging of workforces to settle in and begin some approach to cohesiveness in Hoffman Estates, and during this time Lampert in his new positions will be learning the mass retailing business from the inside. When the time is right, look for Lampert to go shopping for other businesses to bring into the holdings. Don’t lose site that by the end of 2005, Lampert will have sold Kmart headquarters in Michigan. thereby bringing in around $50 million. which can and will be applied to 4th quarter earnings. The only thing that I am suggesting here is that Lampert isn’t running his company like other retailers.
Lacy is being phased out, as I understand his contract, in order for him to collect his $10 million shares bonus he must remain with the company thru June, 2006. If Julian Day is an indicator, Lacy will be given his golden parachute sometime subsequent to that.
The fact that Lampert is taking a more significant role in day-to-day operations may be a critical part of revitalizing Sears Holdings. At his level, we should be looking less to tactical programs and more to the decision-making environment he will create.
Take a look at Allan Questrom. I don’t believe Mr. Questrom made very many if any day-to-day decisions or specific functional strategic plans. He created an environment in which success could occur. A clear, simple, and precise business strategy was articulated. A highly competent merchant and leader (Vanessa Castagna) was empowered. And many, many things happened at lower levels.
What Mr. Lampert CAN do is insure consistency, dedication to a vision, and clarity. All of those things begin at the top. Retail management rarely stays disciplined. Rarely are functional strategic and tactical activities reviewed for consistency and alignment with higher level business strategies.
Being in the business day-to-day offers Mr. Lampert an opportunity to provide this type of leadership. Right now, I have no doubt, Sears Holdings is NOT one large ship with a carefully charted course through tough waters. It is a loose armada of independently captained smaller ships, each in varying stages of disrepair, each with a different set of maps.
Both top line executives at Sears Holdings have really one job. Establish a vision, articulate it clearly, and then align everything and everyone behind it. Will the vision work? Who knows? Without this, Sears Holdings has no chance.
I see the day-to-day involvement of high energy, charismatic and focused forces such as Mr. Lampert as a positive and important move for Sears Holdings.
The “easy part” is over: the financial restructuring and the cost cutting. Now comes the difficult part; taking two sick businesses and making one good business. This would be a challenge for Sam Walton, but for someone who is not a retailer (read Lampert), this is virtually impossible. Few successful retail chains are run by financial people. It is just not in their make-up. Fewer still are run by financial people with no retail experience. With low retail sales growth nationwide, Sears must take market share away from its competitors to be successful. I am trying to figure out who that might be. Wal-Mart? Target? Home Depot? Best Buy? J.C. Penny? Lowe’s? Kohl’s? Family Dollar? I don’t think so. Mr. Lampert may have been able to fool the pack animals of Wall Street to date, but knowledgeable retail people have not been caught up in the hype. Mr. Davidowitz and others have been predicting the demise of this merger since its announcement for all of the right reasons. Mr. Lampert’s vision is beginning to become a hallucination.
He better have a crack lieutenant that knows and has retail marketing experience! It will take more than Lampert’s focus on these critical areas, to move Sears upward. Or, is this his way of cleaning up the house, if you will? Hmmmmmmmmm
Needed: winning, quantum-leap strategies with fast-track testing and implementation. Contact Edward Lampert at Searsmart, ASAP. My suggestions: emphasize items likely to need financing, service or have annuity revenues, such as furniture, white goods, home improvement, auto care. Lease out anything with low margins and low price points, such as grocery, toys, housewares, and clothing. Examples: for home improvement, sell dual fuel (gasoline/natural gas) generators, installed by licensed electricians, with a service plan; for cars, sell extended warrantees good for 100,000 miles or 10 years; install natural gas conversion kits and sell natural gas home filling appliances.
Lease space to Whole Foods, Pep Boys, Bed Bath & Beyond and Aeropostale. Collect rents and percentages of sales instead of worrying about merchandising issues for money-losing categories.
Which one is the bigger bubble: The tech bubble of the 90’s; the current real estate market – the biggest bubble in history; the SHLD stock price.
As I so prophetically asked in a previous Kmart article–Can Eddie Lampert make it as a merchant???
I believe this chief should stay out of the trenches and focus on being the leader. This decision is hard to comprehend.
Back in 1997, I remember that Target had decided to differentiate to have their niche in the market. Now we see Wal-Mart putting ads in Vogue…? Wasn’t the whole point eight years ago that being unique gave consumers a reason to shop at your retail store? Wal-Mart has amnesia and they’re falling right into Target’s trap. Oh yes, Kmart tried to compete on price with Wal-Mart by taking the Blue Light special out of mothballs…the rest is history.
Eddie, differentiate and you’ll prove me wrong. Sears and Kmart still have severe baggage so it will be next to impossible to right the ship.