Sears Names CEO
It’s probably fair to say that many in and around the retailing
business are wondering what Edward Lampert, chairman of Sears Holdings, was
thinking when he chose Lou D’Ambrosio, a former technology company executive
without any retailing experience, to run Sears.Â
"We were determined to find a leader with information and technology
experience who could catalyze the transformation of our portfolio of businesses
in the context of the evolution of the retail industry that is occurring more
broadly," said
Mr. Lampert in a statement.
Public reactions to Mr. D’Ambrosio’s appointment
were not positive.
Thomas Stemberg, a former CEO at Staples, bluntly told The
Wall Street Journal, "The
whole notion of hiring a high-tech executive to run a retail company is absurd.’
Credit
Suisse analyst Gary Balter told The Associated Press, that Mr.
D’Ambrosio’s experience plays to those areas emphasized in the past by Mr.
Lampert that have failed to turn Sears around. "While Sears has played
the financial game well and has smartly invested in the internet, the store
experience remains one lacking due to underinvestment in the basics of retailing," he
said.
Brian Sozzi, a research analyst with Wall Street Strategies, told the AP, "I
think [the appointment] is just another mistake on top of many years of mistakes."
Another
possible reason behind the appointment was raised by Hank Greenberg of CNBC.
He pointed to a description of Mr. D’Ambrosio’s role in leading Avaya "through
a successful $8.3 billion private equity transaction."
According to Mr.
Greenberg, Sears has been buying back stock at an aggressive rate. Bruce Berkowitz
of Fairholme Capital, the second largest investor in Sears Holdings behind
Mr. Lampert, told CNBC, "At the end of the
day there will be two shares left. Eddie Lampert will own one and we will own
one."
Discussion Questions
Discussion Question: What is your take on Lou D’Ambrosio’s appointment as CEO of Sears? Given Sears’ commitment to digital commerce, is there something to the appointment that critics are missing?
The hiring of a new CEO at Sears is another signal that Ed Lampert is not committed to a long-term merchandising strategy at the company. (You can make a case that this has been true since the Kmart/Sears transaction in 2004.) There have been some tweaks around the edges (layaway as a successful promotional tool, development of a few exclusive brands) but nothing that has changed Sears Holdings’ position as an also-ran in almost every category you can name.
If Mr. Lampert’s only real goal is to maximize his company’s real estate and brand equity as quickly as possible, the talk of a digital strategy is a smokescreen. The reality is that Sears Holdings is saddled with a very troubled bricks-and-mortar footprint with no credible game plan to reverse its fortunes. And anyone who thinks the new CEO will be an independent voice hasn’t been paying attention.
It has always been clear that from DAY 1 Lampert had no intention of turning Sears around. He is a lot smarter than any retail expert who thought there was a chance for Sears. Sears has no reason for being and it hasn’t for years.
The article says it all. “We were determined to find a leader with information and technology experience who could catalyze the transformation of our portfolio of businesses in the context of the evolution of the retail industry that is occurring more broadly.” Be assured, ultimately that doesn’t necessarily include stores. Note the choice of words, “our portfolio of businesses.”
Lampert is a real estate mogul and this has always been a real estate play. If you eliminate the real estate component of the balance sheet, the retail component has a negative net worth. The real estate is what is going to be left and Lampert will own it all.
Why do we continually want to go backwards with our retailing insights? It doesn’t work that way. Woolworth is gone. Sears is done. In 10 years Macy’s as we know it will be obsolete. In 20 years or before, Walmart may start closing stores. Things change, but in retail, we seem to want to hold on.
It is clear what Sears’ new CEO brings to the table in terms of turning the retail ship around. Nothing. It is not the objective and never was.
Is there another hire on the horizon? By partnering Lou D’Ambrosio with a seasoned merchant, Mr. Lampert could enable a yin/yang leadership combination as part of a broader plan. As an industry, we’re so quick to judge based on “short-term lift.” The long-term view of retail does indeed hold promise for those who can capitalize on technology. And it’s no secret that most classic merchants really don’t have the tech savvy background that’s required.
But all that said, both the Sears and Kmart banners continue to struggle with bigger issues. Finding a clear point of relevance with shoppers is perhaps at the root of the problem. Even Walmart finds itself in a similar position.
There’s no way to predict the future of retail. But the ride is going to get faster and riskier, so buckle up!
The idea that a CIO can’t–or somehow shouldn’t–run a retail company is probably wrong on its face, but it’s not clear what Sears’ new CEO brings to the table in terms of turning the retail ship around. Sadly, this looks like yet another chapter in the ongoing saga of trying to figure out how much milk the old cow can give before she finally falls over dead.
First of all, as a former tech executive, I’ve gotta say I find Mr. Stemberg’s comment really offensive. Where was all that righteous indignation when the retail industry was flooded with Jack Welch acolytes from GE? The truth is, 21st century retailing could not exist without a technology infrastructure. Of course, it’s entirely possible that the WSJ took his comment out of context….after all, it’s classic Murdoch in its pure inflammatory-ness.
Having said that, it’s pretty clear that Sears was having a hard time filling the position…and the company finally got an executive to take it.
As was mentioned above, if the company finds a strong merchant to team up with the CEO, it’ll be a good combination. Similarly, if this portends an end to Sears’ endless forays into apparel, it’s also good news.
Let’s see what changes Sears makes.
Do you ever foresee a headline that reads; “Former ‘large retail chain’ CEO is new IBM CEO”? I think not. Companies like Cisco and IBM have CEOs that have grown up in the business and know it inside and out. Why is it then that big retail thinks bringing in a leader from a non-related industry is a good idea? The retail landscape is strewn with retailers who have embraced this strategy and failed. On the other hand, let’s look at a couple of real success stories in retail; Limited Brands with Leslie Wexner at the helm, Gap and J.Crew with Mickey Drexler in charge. Both men have a long history and a depth of retail knowledge along with the leadership capabilities required to run very large retail organizations. They are merchants first! As far as the appointment of Mr. D’Ambrosio to run Sears, it’s either the brilliant strategic move Mr. Greenberg opined to help them through a private equity transaction, or another misstep by the inimitable non-merchant Mr. Lambert. Only time will tell.
This isn’t a head-scratcher. Eddie Lampert is an aficionado of new technologies, and he apparently thinks that his new hire can help him compete. That said, Sears hasn’t been a hospitable environment for CIOs of late, partly because Sears’ retail strategy is so scrambled. Whatever will happen to this company?
It seems to me that Sears will focus increasingly on their online platform “Marketplace at Sears.” That is the only way I can rationalize this, but that also seems to me to have great potential as at this time only Amazon is taking advantage of platform retailing (and to some extent buy.com).
Successful retail leaders have come from merchandising, marketing, operations, financial, legal, and technology disciplines. D’Ambrosio has proven he had the chops to turn around Avaya, which was a mess when he came in.
The shareholders that count are Lampert and Fairholme. They, not the consumer as with most retailers, are the driving force. The new CEO takes his direction from these two major stakeholders.
He’ll get it right for the two stakeholders. Will it be right for the consumer, and will we be talking about Sears as a retailer 10 years from now? Remains to be seen. Watch D’Ambrosio’s moves in the next 6 months, and you’ll know how to place the bet as to their retail position.
I like the move. Technology is a perfectly suitable way to differentiate Sears from Penney’s, Macy’s, Kohl’s and others who are going after the shrinking, time and cash starved, middle class.
Someone with D’Ambrosio’s experience should be able to effect transformation at the scale required at Sears. The biggest obstacle will be the inertia that comes with decades of being a technology laggard. Store associates need to become empowered through technology to serve the ‘networked’ consumer. Buyers and planners need to become empowered to leverage the technology available in the supply chain. People at all levels need to make decisions based on insights gained from business intelligence.
If D’Ambrosio is able to instill this kind of attitude through the entire spectrum of Sears Holding, then Sears will come roaring back.
Like Bill Robinson, I also like this hiring decision. The smart retailers are integrating the local stores with the online world.
I can see that most of the people commenting today have not actually walked into a Sears or Kmart in the last three years. At least they haven’t been to my local Sears and Kmart.
SHC has not only been building an online empire but it has been quietly and systematically rebuilding the brick and mortar stores.
If you walk into my local Kmart you will see that it is bright and clean. Noticeably cleaner than the 4 year old Super Wally-World 2 miles away. Yes, the building is 20 years old and you can still see the outline of the old logo on the front of the building, but inside the floors are stripped and clean, the fixtures are all dust-free. The merchandise is new, all the lights work and the store personnel make you feel welcome. They haven’t spent a lot of cash to fix it up, but they have spent a lot of man-hours cleaning it up.
The Sears store at the mall is in even better shape. Over the last two years it has gotten a new coat of paint inside and a good washing outside. All the carpets and floors are new. The lighting has been all updated to new energy efficient fixtures and bulbs. The merchandise is straight and dustless, the shelves are clean. The outside has been pressure washed, the landscaping updated and the parking lots don’t have one speck of garbage blowing around. It looks good!
Yes, It appears Sears is trying to become the largest online retailer. But unlike my local Macy’s that doesn’t even know there is a Macys.com, when you go into my local Sears there are new high-speed computers in every department and all the store personnel will delightfully help you quickly order items that are not in the store. The terminals feature free shipping, so it is worth your while to walk into the store, order what you want and look at all the new items on display. They will also help you find parts and service for all the Kenmore and Craftsman items that have been sold to date. Sears has not gotten the message that other retailers are trying to pawn–“when it breaks in three years, come on back and we will sell you a new one from China!”
If Mr Lampert’s intention is to run this company into the ground, the personnel that run the day to day operations and set the goals for the future haven’t got the message.
I like it. Mr. Lampert is by no means merchant-phobic (or he wouldn’t have brought in uber-merchant Lana Cain Krauter as president of the apparel division). I see this latest appointment as striking a brilliant balance between high tech and high touch within the organization.
Lampert gets where retail is going (even if others aren’t ready to go there yet):
1. Intellectual property monetization and brand marketing;
2. Site-IN-store or Site-IS-store (vs. just site-TO-store).
Bring it!
I think it’s generally acknowledged that either (1) Eddie runs the show, or (2) nobody is in charge, so this will probably be more of the same; I wish Mr. D’Ambrosio well.
notcom – ditto, you nailed it.
I think it is another brilliant move. Just walk into one of the Kmarts and look at the age of the equipment and technology.
Bad, bad and terrible. What else can you say? Leadership and vision in the retail industry requires some background in how retail merchandising, packaging, product positioning and store brands should be directed. Without this the crown jewels of Sears (Kenmore and Craftsman) will only continue to tarnish and the rest of the stores will fall by the wayside. Expertise is why you choose a leader. Vision and clarity of purpose (based upon some level of experience) is critical for Sears. This new CEO does not fit any of these.
The new CEO is a brilliant (valedictorian at Penn State, Harvard MBA) man, no question.
He has 16 years experience with a company (IBM) that is flexible and has transformed itself many times over and continued to succeed in the fastest changing sector in the world.
He’s a great batter, with the chance to hit successive home runs for shareholders.
If they need a great merchant, he’ll hire one.
Short and to the point…another hiring mistake by someone using Sears as his personal playground. Nine months from now we will be analyzing the next hire. Sears needs a retail person to dig them out of their hole.
IT guys can’t run retail…or revolutionize the music industry. (Insert sarcastic smile here.)
Is Amazon a retailer? Does merchandising matter? Or does the platform matter?
Right or wrong, Eddie’s vision is Amazon with Stores. In this respect, it’s not about being a merchant. Rather, it’s being a platform for others–online selling, brick and mortar fulfillment, offline services. Wait and see….