Sears Goes for Mall Makeover
By George Anderson
While it seems clear that Sears Holdings sees its future outside of mall locations, the simple fact is the company has 900 or so Sears stores inside facilities located around the country.
The company hired former Target executive Luis Padilla as merchandising president to help it remake its image and “win back middle- to upper-income moms ages 35 to 50,” reports the Chicago Tribune.
Mr. Padilla has been leading the remake with changes being made from “merchandise displays to lighting,” according to an unidentified source who recently attended a meeting held by the retailer to introduce planned changes for its stores.
The meeting was held in Westfield Hawthorn in Vernon Hills, Ill. The retailer views this as a laboratory location where it can test new concepts with consumers.
Among the changes Mr. Padilla and company have planned is a greater emphasis on “hard lines,” including appliances, tools and furnishings.
According to the Trib report, Sears has conceded “its softer side won’t save it” and that it needs to change the space ratio of “soft lines” to “hard lines.” Sears has been giving 60 percent of its floor space to apparel, although the category only produces 20 percent of its sales.
Sears also plans to make better use of the reduced space it will give to clothing and accessories with lines such as children’s Toughskins and Winnie the Pooh.
Moderator’s Comment: What must Sears do to win back “middle- to upper-income moms ages 35 to 50”? Do you have confidence that Luis Padilla and his team
will succeed?
– George Anderson – Moderator
The emphasis on hard lines is smart, because AFAIK [as far as I know] that’s the only thing Sears still has a positive brand image for. As Carol noted, fast-growing kids clothing is also an appropriate focus. All the middle and high income Moms around here buy lots of children’s clothing at Target. No fashion issues; reasonable quality and low prices are the key with kids clothing.
Sears should re-establish its reputation for hardware and appliances, drop nearly all the adult fashion (keep name brand jeans and hard-wearing clothes and workout clothing to complement the focus on the hard lines), and introduce a line of baby-to-pre-teen clothing. Reintroduce a new generation of men and women to Sears, then slowly, if practical, reintroduce the “softer side” based on a new trust relationship with the customer.
And sprucing up the terribly drab stores sure won’t hurt. The inside of our Sears here is almost as boring as the beige brick and brown signage on the outside.
I usually try, in these spaces, to project possible options, and to identify possibilities. The reality for Sears is that I see no viable possibilities. Many of the comments posted today are extremely apt. And yet none of them actually offers a viable solution.
If one were to inventory Sears’ assets, a cold observer might conclude.
1. Limited and focused specific hard line brand equity
2. Locations and real estate.
3. Negative fashion/trend equity in soft lines
4. Negative brand equity in apparel
5. No positioning in consumer electronics
6. Niche positioning in small volume categories without super-store competition (exercise equipment)
The problem is that Craftsman and Kenmore can’t carry a store even remotely the size of Sears, and that hardware as a category owned by big box players like Home Depot. Outside of Craftsman and Kenmore, what does Sears actually have in hard lines? Consumer electronics are dominated by other players with better positioning and established location equity. Furniture is a very difficult play (see the list of failures), with low margins and low turnover. Home is dominated by specialists.
Which leaves us location. And no immediately identifiable consumer needs being met poorly or not at all by the existing players.
Sears Essentials can be effective at attenuating the life span of a dying entity. It is not, in my opinion, the birth of a new life form. Sears stock, in my opinion, becomes the playground of short term opportunists.
I think several previous commentators have each nailed pieces of the puzzle:
1. Stores are not conveniently located
2. Younger generations don’t view Sears as a destination, even if shopping the Malls
3. Softlines (clothing particularly) fail both the value/quality equation and the fashion forward test
4. Hand tools are still the best, but pricey and Home Depot/Lowe’s have bridged the gap in perception on quality/value/location on power tools
5. Appliances are no longer a draw and furniture shopping choices abound with nothing in either department that really defines Sears as a must visit destination (sorry Kenmore has lost the cachet it once had)
What defines Sears? WM is price/value + groceries (one stop shop); Target is fashion forward softlines; Kmart lost its identity and we know what happened there. Although Sears was an icon at one time, I no longer know what reason I would have to enter their store. (I will exchange a Craftsman Hand Tool if necessary.)
That is the challenge for Sears. Who are you and why should my wife or I make the trek to one of your stores? The longer I go without a visit, the bigger the hurdle you have in convincing me as a shopper that you have something I want or need. Barring that, why should I ever change my shopping habits?
Sears is still falling into the “push” strategy of retailing. Notice how everything is about what they’re going to sell (product mix and pricing) and the conditions they’ll use (lighting, etc.)? There’s no “pull” strategy mentioned, i.e., customer service, invitation, and care. That’s because they’re a control-oriented retailer, not a sales-oriented merchant. All the hard goods/soft goods “strategery” in the world won’t make up for absence of service.
I recently had occasion to visit the local Sears; the purchase of a tool. The temp inside the store was so warm, that I had sweat over my lip in about 30 seconds. The Staff were very young and had little or no product knowledge. When, finally, I found the tool on my own, there wasn’t one register that would process my credit/debit card. I HAD to pay cash. Considering the trouble I had in going there (to the mall, and parking on the edge of the earth), and the disappointment I had while in the store, I don’t expect a return visit. Lowe’s and Home Depot will get my business in the future.
Research my firm has conducted indicates that many moms make their first trip to Wal-Mart after having a baby. This visit is driven by Wal-Mart’s low prices on diapers and other baby-related commodities but usually ends with her checking out baby clothes and accessories. (Mom’s indicate that they hit the baby department on every visit to any store that has one regardless of the original purpose of the visit.) From there, if the experience was positive, many “graduate” to testing out women’s apparel. Back to Sears. . .they may find that offering a few baby basics as loss leaders would build a “bridge” to moms, showcase their already-good baby/children’s department, and initiate moms into the softer side of Sears altogether.
I have always shopped at Sears for their “hard” goods. And, when my two boys were toddlers and grade school age, I shopped there for their clothes. Now that they are teenagers, Sears’ clothes aren’t “cool” enough for them, and I don’t even try to convince them otherwise, because the truth is that I think Sears’ adult clothing line leaves a LOT to be desired. The quality is lacking and it’s not even remotely “fashion forward.” I don’t believe I’ve ever bought myself an outfit there and I quit looking several years ago. When I go into Sears now (heading for the appliances/tools/electronics), my sense is that their adult clothing buyers are still completely missing the mark.
I’ve only been to Sears about a half dozen times since high school 30 years ago. I think we have a whole new generation of people who have never been to Sears. Sears was where Grandma shopped. One of Sears’ problems is most stores are just not accessible to a lot of people. Wal-Mart is on the edge of town in many rural communities. Sears is often stuck in some regional mall that requires more time and gas to get to. Since they don’t really offer anything that can’t be purchased more conveniently and cheaper from a competitor, what’s the point in going to Sears? There are not many comeback stories in retail. With Sears/Kmart reinventing itself every two weeks with some new plan, it’s very hard to take seriously any news that comes out of the company.
If Sears wants to emphasize hard lines, one major opportunity would be furniture. The margins, particularly on upholstered items and bedding, would be relatively high. The opportunity for finance profits on the Sears credit card would also be excellent. If the Sears name is not strong enough, perhaps an alliance could be made with Ethan Allen or another respected brand. I wonder if Sears might also use the Martha Stewart license for furniture.
Sears could also give greater emphasis to Sears Home Improvement, its construction division. New kitchens, bathrooms, etc. all are good margin, big ticket, financeable items. And expanded display space would help sales.
For years, Sears made money in insurance and its credit cards, and only minimal profit from the merchandising. The credit card profit opportunity is still there.
Successful retailers are run by merchants who have vision and can execute that vision, not finance people. The easy part is over…acquisition, merger, cost reductions. Now Sears needs to establish a coherent competitive strategy and find a niche in the marketplace, and they need to do it quickly. I have yet to see or hear a viable strategy to compete with the likes of Wal-Mart, Target, Kohl’s, Home Depot, Lowe’s, Best Buy, Circuit City, et. al. Moving the deck chairs around on the Titanic doesn’t do it for me.
A friend of mine some time ago had the occasion to observe the process Sears used for selecting an appliance for its Kenmore line. He was really impressed by the Consumer-Reports-like testing methodology and the value metrics they used to select the OEM.
I think the germ of a branding idea lies therein. If Sears can build on the idea that they put a lot of time, money, and effort into testing and evaluating each product they carry, whether it carries a Sears brand or retains its own, and they train their sales staff to provide good service and knowledge about their products, they may find a unique proposition again. Carry a good, better, best selection in the hard goods categories, and help consumers make the best decision, then stand behind what you sell.
It’s a value play. Not lowest price, not the fanciest goods, but the best value in each category at a given price point. That saves consumers time, money, and gives them peace of mind.