Will the new plan for Sears work any better than the previous ones?

Discussion
Photo: Getty Images
Feb 13, 2019
George Anderson

Creditors and others who have watched Sears Holdings have contended, some for years, that Eddie Lampert has engaged in a systematic dismantling of the company since he combined Kmart and Sears in 2004. There is evidence to support this assertion. Today, however, the company is once again in the hands of Mr. Lampert who won the right at bankruptcy auction to keep 223 Sears and 202 Kmart stores open. The big question is whether Mr. Lampert is intent on turning the retailer around, as he has promised for years, or if he will finish the job of dismantling what’s left of the two once-great chains, as his critics contend.

Over the years, Mr. Lampert fired back at critics of his plan to turn around Sears, suggesting they simply didn’t get it. History has yet to prove that the “genius” of Mr. Lampert’s plan can be turned into positive results on the ground. But with the auction win now achieved, what’s the plan to keep the retailer going if not growing?

Mr. Lampert, according to a Wall Street Journal report, plans to sell or sublease some of the remaining stores. While he will remain chairman of the still to be renamed company, he plans to hire a CEO to execute his vision, which includes opening smaller stores and reducing the chain’s dependence on apparel. That means Sears will be under even greater pressure to succeed with its appliance business, which faces growing competition from Best Buy, Home Depot, Lowe’s and others. J.C. Penney, one of Sears’ primary competitors, recently announced it is abandoning its appliance business to focus more on apparel and other soft goods.

Craig Johnson, president of Customer Growth Partners, told the Journal that relying on appliances is “long shot” for Sears, but it does have an upside.

“Most of the profits on appliances are made on the servicing side, and Sears still has a good service business,” he told the paper.

DISCUSSION QUESTIONS: Do you think Edward Lampert’s plan to turn Sears around is likely to achieve success? What type of CEO should the company be looking for?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
" A smaller business without some of the severely underperforming stores has a better chance — but Sears needs more than this to survive."
"Sears needs to hire a CEO that never needs another job as this will be his/her last gig."
"Frankly I do not call this “turning around Sears.” He is going to change the name and hire a new CEO. Sounds like a new retail venture to me."

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32 Comments on "Will the new plan for Sears work any better than the previous ones?"


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Mark Ryski
BrainTrust

It’s hard to understand what Eddie Lampert’s true motivation is regarding Sears. He says all the right things about saving the iconic brand, and yet his actions seem to run entirely counter to this. Given the tumultuous history of Sears and Lampert’s erratic maneuvers, I think he’s going to have a challenge hiring a new CEO that has the capability and experience to turn the business around. Whoever the new CEO is, this gig will not be for the faint of heart.

Ed Rosenbaum
BrainTrust

Mark, I agree with you. The only CEO he can hire to fulfill his plan is himself.

Jeff Sward
BrainTrust

And that would be a really bad hire.

Cathy Hotka
BrainTrust

Unfortunately, we know the motivation here … Mr. Lampert’s self-aggrandizement has been at the heart of every business decision. There’s no reason to assume that that will suddenly change. I doubt that Sears will be with us much longer.

Ed Rosenbaum
BrainTrust

You are right Cathy. But how many times have we said that? Yet he continues to sink money in it.

Art Suriano
BrainTrust

I have very little confidence in Eddie Lampert as the person to turn Sears around. Frankly, I am puzzled by many of his actions where at times he looks like he cares about the company and wants to do the right thing and then makes a move that benefits Lampert but hurts Sears. So, the jury is out on this one, and only time will tell, but I am not optimistic. Lampert has sold off many of the assets, and as a majority stockholder, he made a tremendous amount of money so what his real plan here is, is something only he knows. I suspect it will be more of the same and within a year or two Sears will be finished.

Michael La Kier
BrainTrust

To answer the question succinctly: No. Turning around Sears is not something that is likely given the erosion of trust and their shopper base. Looking to sell the assets is perhaps the best plan.

Chris Petersen, PhD.
BrainTrust

The definition of insanity — doing the same thing over and over and expecting a different outcome — most certainly applies to retail. Doing the same things over again will get you more of the same. While Kenmore and Craftsman are the war horses that once made Sears great, there are new players in the race which excel at omnichannel and personalized service, including installs.

Charles Dimov
BrainTrust

There is huge damage the brand has sustained over the years. However, it is one of the most recognized brands in retail. What it is going to take is significant investment in retail technology to give customers what they want, and how they want it. IHL pointed to a 46 percent increase in omnichannel purchases in the 2018 holiday season. Sears’ best bet right now is to ride this new retail trend, promote their omnichannel capabilities heavily (easy, seamless, all one store), and give customers an outstanding experience in-store and online.

This CEO certainly has to be very practical, to figure out the best way to turn things around — that the organization can ACTUALLY make happen. For example, buying the latest and most expensive retail tech isn’t going to cut it. Whoever takes the role will need tremendous grit, sound experience, and luck.

Neil Saunders
BrainTrust

I don’t see anything in the new plans that’s significantly different from what has been heralded before. Sure, a smaller business without some of the severely underperforming stores has a better chance — but Sears needs more than this to survive. The endless chatter about the Shop Your Way program and the lack of focus on the basics of retail does not bode well.

Steve Dennis
Guest

How does being smaller help? It lowers some costs theoretically, but the de-leveraging is huge and Sears competitors have 3-5X the number of stores per metro area.

Richard Layman
Guest
1 month 10 days ago

I am originally from the Detroit area and remember the days of KMART dominance. They had maybe two dozen or more stores in the Detroit area. Partly they overstored to box out competitors. Even so … I was looking at the list of stores in all of Michigan of Sears and Kmart and there is something like one KMART store left. None in the Detroit area.

Jeff Sward
BrainTrust

It’s very tough to predict success based on what little I have read. A smaller footprint focusing on tools and appliances is a good start, but do they understand how far behind Best Buy and the others they are at this point? It all makes for a nice one-paragraph speech, but the competitive environment is formidable. Is Sears really equipped to make all the necessary investments? When and where do they open a prototype “store-of-the-future”? The speech doesn’t mean a darn thing at this point.

Steve Dennis
Guest

What’s your theory on how a smaller footprint helps? Having led strategy at Sears from 2001-03 we knew then that we were losing customers to Home Depot, Lowes and Best Buy because they have stores closer to the customer (among other reasons). I would argue the exact opposite.

Jeff Sward
BrainTrust

Smaller? Smaller contributes to focus and clarity of offering. Smaller contributes to efficiency in sales per square foot. Smaller is on the wish list of many retailers these days. Especially the bigger mall anchors … of every variety. I’ve long thought of “Sears apparel” as an oxymoron, unless it’s workwear. So I think there are lots of apparel categories they could exit and nobody on the planet would lose 5 minutes sleep.

Smaller equals a better focus on the core categories that Sears actually has relevance in, to your point below — relevance. Kenmore, Die Hard, and Craftsman all have reasons for being, or at least did. Still? Who knows? Let them open a new prototype store and show us what the new Sears looks like. Product, path to purchase — all the goodies. Until then, it’s all conjecture. And like I said, “very tough to predict success,” not easy.

Tom Dougherty
BrainTrust

Sears needs to hire a CEO that never needs another job as this will be his/her last gig. The words vision and Eddie Lampert should not be written on the same page. SEARS is a failed retail model headed by failed leadership. Give up the ghost and go away quietly.

Phil Masiello
BrainTrust

Which plan are we speaking about? The stated plan which Lampert hung on to — the “Shop Your Way” methodology — which yielded nothing? Or Lampert’s apparent plan, which seems to be moving the assets from Sears to his companies to return his investment and let the stores deteriorate?

I don’t see much hope for Sears in any form. The merchandising is outdated, stores lack investment and the online business has diminished. Focusing more on appliances could have worked 10 years ago. But today, so many other companies have taken advantage of Sears’ weakness and built a healthy business that Sears will not be able to get back.

Also, much of the appliance business has moved online, which Sears could have done if Lampert had taken advantage of building the online presence about 10 years ago.

I am not sure what type of CEO would want to take that job given the history of how Lampert values others.

Paula Rosenblum
BrainTrust

I cannot believe the courts allowed this to happen. He’s just going to sell off more space. And in the meanwhile, he avoided a major lawsuit.

This is an American embarrassment.

Dick Seesel
BrainTrust

Lampert’s history over the past 15 years suggests that he has no grand strategy to turn Sears Holdings into a viable retail business. On the contrary, he has dismantled the company’s key assets (including its best brands) in order to monetize them. His purpose in maintaining a small — and virtually meaningless — portfolio of sites is probably more of the same.

He’s certainly entitled to do what he wants with his company, but anybody who thinks there is a turnaround strategy hasn’t been paying attention. No wonder the creditors fought this “plan” tooth and nail.

Mohamed Amer
BrainTrust

if you take enough swings, you’re bound to eventually connect. We’ve gone to extra innings and the edge goes to the never tiring pitcher.

In business as in sports, small wins beget bigger ones as confidence is boosted. A history of striking out doesn’t help the morale of the team or the coaching staff. Nevertheless, the death of Sears has been anticipated but somehow it continues in one form or another. Mr. Lampert’s expertise is on the financial and deal-making side of the house and so, the prospective CEO must have strong merchandising experience and be equally adept at designing and executing a connected hybrid strategy across the physical and digital arenas while leveraging the post-purchase service opportunities.

A serious dose of in-store investments and round of sustained marketing that communicates the new value for consumers is necessary to re-establish trust in the brand and the future plan.

Adrian Weidmann
BrainTrust

Embarrassment indeed. Well said Paula. I couldn’t agree more. “What type of CEO … ?” Perhaps the board could vet any of the folks featured almost daily in the first five minutes of the nightly news?

Gene Detroyer
BrainTrust

We can listen to Lampert all we want, but one thing I know, he paid less for the assets than the real estate is worth.

He can talk about turning it around. All it is is talk. He has made a lot of money on dismantling this dying (before he got involved) business. He knows there is nothing to turn around and he knew it from day one.

Ed Rosenbaum
BrainTrust

This has been like watching a pathetic story of a once-successful name brand company go on a self destructive mission. The only problem is it never seems to end. We continue writing Sears’ obituary; but the funeral is not happening. How much money can he continue to pour in to this seemingly bottomless pit? Sometimes the patient is gone and those that loved it have to accept it.

Ryan Mathews
BrainTrust

In a word, no. He’s milking this deal for all it’s worth … and then some.

As to what type of CEO he should be looking for, short of the desperate or the prophetic, my money would be on a lunatic.

Lee Kent
BrainTrust

Frankly I do not call this “turning around Sears.” He is going to change the name and hire a new CEO. Sounds like a new retail venture to me. Will it work? Not based on Mr. Lampert’s track record IMHO and for my 2 cents.

Richard Layman
Guest
1 month 10 days ago

Changing the name … when I was young, there was a regional department store called Federal’s. (If you google it, it was part of a larger company that was one of the consolidators in the Midwest, but all those stores eventually went under.) They owned some other stores like Shiffrin Williams, which survived for a time afterwards. Anyway, going through bankruptcy they were bought up (but still ended up failing), and they changed the name to Deral’s, because it was cheaper to take the F and the E off the signs.

Steve Dennis
Guest

I have been referring to Sears as the world’s slowest liquidation sale for years in my blogs and in several articles for Forbes. When I left the retailer in 2003, the future was highly uncertain. Since the Sears Kmart merger, Lampert has never articulated a remotely viable strategy and has done a number of things to accelerate the decline. Sears never had a too many stores problem. It’s been suffering from a customer relevance problem. As I refer to in this article, the notion that a smaller Sears somehow fixes what is wrong is ridiculous at face value. Dead brand walking.

Bethany Allee
BrainTrust

I’m an eternal optimist, so I have to believe there’s a purpose for Lampert fighting so hard to retain the org vs dissolving. I hope he surprises us all — Sears has a foundation that if properly reconcepted could not only work, it could help shape “the store of the future” everyone is striving for. Real estate and history (especially some super-cool mid-century modern buildings) is Sears’s most powerful asset. I’m seriously surprised Amazon hasn’t snatched them up, because Whole Foods does not have enough real estate to feed the Amazon machine.

Ricardo Belmar
BrainTrust

I think a better question is who will be brave enough and bold enough to accept that new CEO position? Surely it is a hopeless mission doomed to fail for anyone that takes it on. Lampert continually says one thing, does another, and then when criticized for it he claims everyone misunderstands him and his plan. Unfortunately, all of his plans to date are just talk — they simply have not produced. That the court accepted this insanity is an amazing story in and of itself. I see no future here for Sears, and that’s a sad story for all of us to witness.

Craig Sundstrom
Guest

Let’s not waste space on discussing whether Mr. Lampert has any intention other than (further) lining his own pockets; nor — tempting as it may be — should we focus on making sure what happens is worst for him, but rather what is best for everyone else.

Jonathan Brodsky
Guest

Turning around an “iconic” brand is next to impossible. I’ve tried to do it more than once in my career, and each time it’s a failure for one really simple reason — the brand has publicly lost its luster, and no one wants to buy from the losing team if they can avoid it. I’m a Jets fan, but in my heart, I know that if I were a football player, I’d jump to be on the Patriots, even for a pay cut.

Here, Eddie Lampert is still banking on the ever-shrinking portion of the population or that either doesn’t acknowledge or doesn’t care that Sears has lost, which includes the run-off of the appliance/servicing business here. A new name, though, isn’t a bad idea — Andersen Consulting would be DOA almost anywhere today, but Accenture? That’s not so bad.

Rob Gallo
Guest
1 month 10 days ago

As Steve Dennis mentions, Sears has a customer relevance problem. The brand is dead except for the reminiscing. Consumers have moved on and regardless of Mr. Lampert’s intentions, they haven’t yet seen a reason to return. Smaller irrelevant stores aren’t any better than the large ones they have now.

As for a CEO, why not give it a shot? Everybody expects it to be a losing proposition, so I think the risk to one’s career is much smaller than others suggest. If you can magically get a bump in performance, other companies will come calling.

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Braintrust
" A smaller business without some of the severely underperforming stores has a better chance — but Sears needs more than this to survive."
"Sears needs to hire a CEO that never needs another job as this will be his/her last gig."
"Frankly I do not call this “turning around Sears.” He is going to change the name and hire a new CEO. Sounds like a new retail venture to me."

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