January 19, 2007
Customer-Centric Exec Joins Sears
By George Anderson
John Walden has a big job ahead of him. Yesterday, he was named to the newly created position of chief customer officer (CCO) at Sears Holdings, making him responsible for getting the struggling Sears and Kmart chains to become more responsive to consumers’ needs.
Mr. Walden has a track record in this area, no doubt. Most recently he served as executive vice president of Best Buy’s customer business group and was intimately involved in the chain’s heralded customer-centricity efforts. Before joining Best Buy, Mr. Walden was chief operating officer at the online grocer Peapod.
In a press release, Sears Holdings chairman Edward Lampert said, he was looking to Mr. Walden to help “accelerate the company’s journey to become more entrepreneurial and customer-driven.”
The new CCO comes to a company that has seen sales consistently drop quarter after quarter under Mr. Lampert’s leadership.
Mr. Walden arrives one week after Joan Chow, the chief marketing officer of Sears, left the company. Her departure marks another in a number of high profile exits in recent years.
As to the new chief customer officer position, Torrey Foster Jr., managing partner at Heidrick & Struggles, told the Chicago Tribune, “With retail as competitive as it is and as cutthroat as ever, you’re seeing companies create these uber-marketing and customer roles as a way to acknowledge they need a depth of understanding of their customers.”
Discussion Question: Edward Lampert is looking for John Walden to create a “more entrepreneurial and customer-driven” company. In practical terms, what would that mean at the headquarters and store levels at Sears and Kmart?
BrainTrust
Recent Discussions
Discussion Questions
Poll
Well, at least Lampert recognizes that they’re on a journey, not a hippity-hop to the barber shop. We’ll see if he, and Walden, have the stamina and conviction to make it.
There IS a loyalty base for Sears, which is comprised of customers who insist on Craftsman, Lands’ End, Kenmore, DieHard, and Martha Stewart (and even Sears Portrait Studios). Competitors would kill for these brands. If you can’t make a successful business out of these brand icons, you’ve got serious problems. I’m firmly with Mary Baum on this one, except I’d keep Lands’ End inside the Sears stores, strategically positioned just inside the main entrance.
The chief customer officer should start by finding what it is like to be a customer of Sears and Kmart. Go shopping in lots of stores, both inside and outside of the company. He’ll find lots of very useful innovations in the industry and should copy and adapt them. Sears can’t afford to let its opportunity slip away.
The new Chief Customer Officer must transform the culture of Sears Holding as it learns how to be an excellent innovator. Focus on methods for approving and testing innovations, however small. Get your datawarehousing systems to measure what works for Sears and Kmart’s loyal customers. Organized feedback is required. These loyal customers bases must be solidified. Develop metrics to measure “comparative customer” and “frequency.” Without a secured loyal customer base, Sears is doomed.
Next, with the same vigor, learn how to draw in new customers that fit Sears profile. What do they want? Service? Selection? Fun? Convenience? Price? Reward? Experience? Once this is clear, Sears must tweak its operational model to deliver what they want across all channels.
Good luck.
1. Spinoff Lands’ End
2. Close Kmart
3. Sell Sears
It’s been over two years since the Kmart/Sears combination, and the company hasn’t done a great job articulating its strategy as a retail company. (As an investment, it’s been a different story as Lampert finds the underlying value of some of the combined companies’ assets.) Making a visible hire to turn the company into something “more entrepreneurial and customer-driven” is a clear admission that the company is failing to drive top-line sales or any real synergy.
So where does Walden begin to position the two brands (Sears and Kmart) as anything but also-rans? Does he tweak the marketing and merchandise direction? Does he accelerate the cross-breeding of brands between the two chains? Or he may need to undertake a more radical rethinking of the business model, such as killing the Kmart brand altogether. His experience at Best Buy is certainly relevant to Sears’ strengths in big-ticket home goods if it ever decides once and for all to focus on its core franchise.
What’s the strategy here–I mean, beyond making a public admission that a new marketing approach is needed at Sears/Kmart?
This company is trading on its momentum and languishing in the big middle–trying to sell a little bit of everything to just about everybody. Adopting a customer-centric approach would imply recognizing the differences between customers and shaping merchandising and service practices to meet their varied needs.
This must happen while S/K simultaneously attends to operational challenges (personnel and aging physical plant) and to the care and feeding of its valuable portfolio of house brands (Craftsman, Lands’ End, Martha Stewart, Kenmore). Mr. Walden will certainly have his hands full. Does he (does anyone) possess the courage and will to tackle the overhaul this company needs?
Oh boy, another newly created position at Sears! This is probably the last we will hear of it and we will continue to see quarter after quarter of declining sales.
Let’s keep in mind that Sears Holdings is an asset management company first and a retailer second. Any moves they make from a retailing perspective are only going to be done to help them maximize their return on investment, which for Sears Holdings means doing whatever they can to reduce the $ value of physical assets such as property/buildings that they own.
Kill Kmart. Identify exactly who you want as your targeted market. Then get in touch with this market. And most importantly, go back to standing for something, backing your brand…loyalty needs to be recaptured. He has a big job ahead of him.
A couple of comments from above jump out at me–first, the one about spinning off Lands’ End and selling/killing Sears and Kmart, and second, the one about Sears being a real-estate holding company first and a retailer second.
I agree that there’s no point in keeping Kmart alive. It has clearly lost whatever battle it’s been trying to fight.
If Sears is serious about becoming more customer-centric, it’s going to have to give John Walden unprecedented resources and authority.
One place he could start is to leverage the Lands’ End brand.
If I were he, I’d take immediate steps to replace the Sears soft goods business with the Lands’ End offering. That would mean starting with a thorough analysis of the Lands’ End product line and sourcing/manufacturing, plus getting a full understanding of the Lands’ End customer-service culture.
At that point he would have a good idea of how to replicate the Lands’ End experience at the store level and how to scale up the LE culture to the bigger organization (if at this point Sears is still the bigger fish–I haven’t looked at figures lately.)
One move Sears has made that would fit with this rebranding effort is that the Lands’ End stores would probably work best as specialty stores in a mall or newer-format (a la The Boulevard in St. Louis, MO) setting.
(As a customer, I can tell you that if there had been a Lands’ End store at the Boulevard or anywhere in the central inner-ring suburbs of St. Louis, I would have spent several hundred dollars there.)
Naturally, a culture change/rebranding like what I’m proposing is a huge undertaking, but it can be done, and there are organizations out there with the expertise to put together everything from the research and the needs analysis to the multilevel training and incentives at every level of the organization to make a change like this work internally. (Disclosure: one such organization, Maritz Inc., is a client of mine.) But like that old joke about the psychologist and the light bulb, Sears is going to have to decide it really wants to change.
OK, here we go again. I’ve “tried” working with Kmart and could go on but the past and current executive set at Kmart have little motivation–there’s no help for them so let’s eliminate Kmart for starters. Sears has (had?) a chance but the story seems not to change. Will this CCO be allowed to do anything big and disruptive enough to turn them around? A couple years ago, I might have said they did have a chance, but they’ve done essentially nothing to differentiate positively. Plus, don’t you need a loyalty base for strengthening their core concerns? This is window dressing and I believe it will not change the end result of this slow but steady train wreck.
“One move Sears has made that would fit with this rebranding effort is that the Lands’ End stores would probably work best as specialty stores in a mall or newer-format (a la The Boulevard in St. Louis, MO) setting.”
Oops–didn’t finish my thought there–in other categories, Sears has already moved into smaller stores in big-box centers, so opening Lands’ End stores in centers that feature specialty stores wouldn’t be a completely novel concept for them.
A retailer like Sears has many products, product categories, time/location/channel contexts, customer segments (behaviors and expertise), use cases, stakeholders, etc. These are components of the complex world of making innovation routine. They have been covered in the world of product design where certain firms live and die in product categories that become obsolete in 6 months (can you say Zara?) In the retail world and in the consulting world all we hear from pundits is basically: “We need to be more innovative.” Please!
My advice to John Walden would be to study the few companies that know how to routinely turn the crank from learning to trying to implementing innovation. The store can be a great lab for learning and given the degree that Sears relies on private label merchandise and services, this position was a long time in coming. If he is given the power to try things, he may create legitimacy in a role that retailers need as we move from Customer Centricity as rhetoric to something that is real. That is the big if.
And to finally address your question regarding what this could mean at the headquarters and store level, I anticipate that there will be more formal process around learning within the store. I anticipate that customer learning and the reporting of insights will become part of the rewards system at Sears. Sears will become more adept at trying ideas–prototyping services and products in selected stores will become routine. Customer surveys will be replaced by deeper interviews with customers who may have purchased high involvement items. Service innovation will occur more rapidly. That is If….
The first step involves understanding the consumers of Kmart, of Sears, of Lands’ End. That means doing what was already suggested–visiting the stores to see what is there and who is there. It also means doing what was done at Best Buy–spending time analyzing who the current customers are–where do they buy, what do the buy, when do they buy?
The rest of the decisions about which stores to keep or close, which lines to keep or close, what positioning strategy to use can only be meaningful if step number one is done well.
When all of the pluses to both banners are obvious and all of the negatives are even more obvious–obvious for years. Yet, year after year the downward slide continues. It’s sort of like watching General Motors continue to self destruct for decades–it’s painful.
When consumers have lost confidence in you as a retailer, it’s nearly impossible to regain it. It is possible but extremely difficult. Best Buy was headed in that direction, yet not even close to the position either of Sears or Kmart.
Even so, a recent survey showed that while an overwhelming number of consumers continues to believe that the Japanese and Germans make better cars–even though they do not today–they continue to be willing to indicate that they would give the American manufacturers a chance once again. While that’s possible, I am not holding my breath. The same is holds true for Kmart and Sears.
I do believe that consumers like redemption. They believe in second chances. What they don’t believe in is lip service and continued failure.
The great old brands within both of the major banners are enough to hang a single hat on. It may be time for this “two banner” retailer to become a totally new “one banner” retailer. A new name–a new retailer.
Like most of my age, I grew up on Easy Living Paint, Kenmore, Craftsman, etc., and even Lands’ End. Finding a new way to shine with what you once had that was great and on top may be the only chance. A completely new way–a completely new place to house the great brands that have such an identity on their own.
In the meantime, it’s painful. And, I fear that it will continue to be.
Edward Lampert pleases Sears’ investors by (1) focusing on the profit statement, not the image or the sales and (2) allowing the company to test and reject anything that doesn’t clearly add profits. Investors want profits. It’s easy to raise sales by sacrificing profits. Retailers who sacrifice profits in the long run don’t last. Great customer service, renovating stores, building new locations, witty advertising, the best technology… all mean nothing if profits are mediocre. Comp sales increases mean nothing if profits stay flat. John Walden’s job, like everyone’s job at Sears, is only secure if profits are robust.
Inventive title for Mr. Walden’s new role at Sears/Kmart. Beyond the title and intent there is incredible work to be done to actually identify the retailer’s customers and build a strategy that keeps those shoppers coming into their stores. I don’t think this is a one-man job. This is a culture…and right now, I’m not sure anyone can specifically define the Sears/Kmart culture, nor describe its vision. If he is indeed the change agent the retailer needs, well good luck and we will all watch with heightened interest.
Most comments are extremely harsh on Kmart. If you have an opportunity to see any of the revamped Kmarts with Kenmore appliance departments, you are in for an amazing experience.
These stores are customer centric, clean, well stocked, with friendly and courteous staff, not untidy and cluttered like most Wal-Marts.
So what the new CCO guy has to do is focus on the positives. Sears and especially Sears Grand, are far more the basket cases.
Sears Grand locations need more than tinkering. I suggest they turn them into Home Depot clones with Lands’ End merchandise, Roebuck jeans and work boots.
Sears mall locations need to be redeveloped. Sears Holdings needs several acquisitions, Kohl’s and Best Buy or Circuit City would be a great fit. Then they can redevelop a majority of mall anchors into these stores.
For the remaining Sears locations, fashion clothing needs to be phased out. More weekend, Lands’ End/Bobs type format is needed and combined with leisure hard goods. Sears can play up the one-stop leisure store concept, turning these locations into a Cabelas or Gander Mountain, with Craftsman tools, sporting goods, camping equipment and Lands’ End clothing.
Even for the worst performing Sears stores, trying the closeout concept with lifestyle merchandise, might be the way to go.
A makeover is desperately needed at Sears. The sooner the better.
More Discussions
Is Five Below Poised For Even Greater Growth?
Five Below is hitting serious growth numbers. Can this trend continue?Should IKEA Be Flattening Management?
Should IKEA be trimming down its management headcount?Is Legislation the Answer on Visa, Mastercard Swipe Fees as ~$200 Billion Record Is Set?
Is lawmaking the way forward on swipe fees?
Well, at least Lampert recognizes that they’re on a journey, not a hippity-hop to the barber shop. We’ll see if he, and Walden, have the stamina and conviction to make it.
There IS a loyalty base for Sears, which is comprised of customers who insist on Craftsman, Lands’ End, Kenmore, DieHard, and Martha Stewart (and even Sears Portrait Studios). Competitors would kill for these brands. If you can’t make a successful business out of these brand icons, you’ve got serious problems. I’m firmly with Mary Baum on this one, except I’d keep Lands’ End inside the Sears stores, strategically positioned just inside the main entrance.
The chief customer officer should start by finding what it is like to be a customer of Sears and Kmart. Go shopping in lots of stores, both inside and outside of the company. He’ll find lots of very useful innovations in the industry and should copy and adapt them. Sears can’t afford to let its opportunity slip away.
The new Chief Customer Officer must transform the culture of Sears Holding as it learns how to be an excellent innovator. Focus on methods for approving and testing innovations, however small. Get your datawarehousing systems to measure what works for Sears and Kmart’s loyal customers. Organized feedback is required. These loyal customers bases must be solidified. Develop metrics to measure “comparative customer” and “frequency.” Without a secured loyal customer base, Sears is doomed.
Next, with the same vigor, learn how to draw in new customers that fit Sears profile. What do they want? Service? Selection? Fun? Convenience? Price? Reward? Experience? Once this is clear, Sears must tweak its operational model to deliver what they want across all channels.
Good luck.
1. Spinoff Lands’ End
2. Close Kmart
3. Sell Sears
It’s been over two years since the Kmart/Sears combination, and the company hasn’t done a great job articulating its strategy as a retail company. (As an investment, it’s been a different story as Lampert finds the underlying value of some of the combined companies’ assets.) Making a visible hire to turn the company into something “more entrepreneurial and customer-driven” is a clear admission that the company is failing to drive top-line sales or any real synergy.
So where does Walden begin to position the two brands (Sears and Kmart) as anything but also-rans? Does he tweak the marketing and merchandise direction? Does he accelerate the cross-breeding of brands between the two chains? Or he may need to undertake a more radical rethinking of the business model, such as killing the Kmart brand altogether. His experience at Best Buy is certainly relevant to Sears’ strengths in big-ticket home goods if it ever decides once and for all to focus on its core franchise.
What’s the strategy here–I mean, beyond making a public admission that a new marketing approach is needed at Sears/Kmart?
This company is trading on its momentum and languishing in the big middle–trying to sell a little bit of everything to just about everybody. Adopting a customer-centric approach would imply recognizing the differences between customers and shaping merchandising and service practices to meet their varied needs.
This must happen while S/K simultaneously attends to operational challenges (personnel and aging physical plant) and to the care and feeding of its valuable portfolio of house brands (Craftsman, Lands’ End, Martha Stewart, Kenmore). Mr. Walden will certainly have his hands full. Does he (does anyone) possess the courage and will to tackle the overhaul this company needs?
Oh boy, another newly created position at Sears! This is probably the last we will hear of it and we will continue to see quarter after quarter of declining sales.
Let’s keep in mind that Sears Holdings is an asset management company first and a retailer second. Any moves they make from a retailing perspective are only going to be done to help them maximize their return on investment, which for Sears Holdings means doing whatever they can to reduce the $ value of physical assets such as property/buildings that they own.
Kill Kmart. Identify exactly who you want as your targeted market. Then get in touch with this market. And most importantly, go back to standing for something, backing your brand…loyalty needs to be recaptured. He has a big job ahead of him.
A couple of comments from above jump out at me–first, the one about spinning off Lands’ End and selling/killing Sears and Kmart, and second, the one about Sears being a real-estate holding company first and a retailer second.
I agree that there’s no point in keeping Kmart alive. It has clearly lost whatever battle it’s been trying to fight.
If Sears is serious about becoming more customer-centric, it’s going to have to give John Walden unprecedented resources and authority.
One place he could start is to leverage the Lands’ End brand.
If I were he, I’d take immediate steps to replace the Sears soft goods business with the Lands’ End offering. That would mean starting with a thorough analysis of the Lands’ End product line and sourcing/manufacturing, plus getting a full understanding of the Lands’ End customer-service culture.
At that point he would have a good idea of how to replicate the Lands’ End experience at the store level and how to scale up the LE culture to the bigger organization (if at this point Sears is still the bigger fish–I haven’t looked at figures lately.)
One move Sears has made that would fit with this rebranding effort is that the Lands’ End stores would probably work best as specialty stores in a mall or newer-format (a la The Boulevard in St. Louis, MO) setting.
(As a customer, I can tell you that if there had been a Lands’ End store at the Boulevard or anywhere in the central inner-ring suburbs of St. Louis, I would have spent several hundred dollars there.)
Naturally, a culture change/rebranding like what I’m proposing is a huge undertaking, but it can be done, and there are organizations out there with the expertise to put together everything from the research and the needs analysis to the multilevel training and incentives at every level of the organization to make a change like this work internally. (Disclosure: one such organization, Maritz Inc., is a client of mine.) But like that old joke about the psychologist and the light bulb, Sears is going to have to decide it really wants to change.
OK, here we go again. I’ve “tried” working with Kmart and could go on but the past and current executive set at Kmart have little motivation–there’s no help for them so let’s eliminate Kmart for starters. Sears has (had?) a chance but the story seems not to change. Will this CCO be allowed to do anything big and disruptive enough to turn them around? A couple years ago, I might have said they did have a chance, but they’ve done essentially nothing to differentiate positively. Plus, don’t you need a loyalty base for strengthening their core concerns? This is window dressing and I believe it will not change the end result of this slow but steady train wreck.
“One move Sears has made that would fit with this rebranding effort is that the Lands’ End stores would probably work best as specialty stores in a mall or newer-format (a la The Boulevard in St. Louis, MO) setting.”
Oops–didn’t finish my thought there–in other categories, Sears has already moved into smaller stores in big-box centers, so opening Lands’ End stores in centers that feature specialty stores wouldn’t be a completely novel concept for them.
A retailer like Sears has many products, product categories, time/location/channel contexts, customer segments (behaviors and expertise), use cases, stakeholders, etc. These are components of the complex world of making innovation routine. They have been covered in the world of product design where certain firms live and die in product categories that become obsolete in 6 months (can you say Zara?) In the retail world and in the consulting world all we hear from pundits is basically: “We need to be more innovative.” Please!
My advice to John Walden would be to study the few companies that know how to routinely turn the crank from learning to trying to implementing innovation. The store can be a great lab for learning and given the degree that Sears relies on private label merchandise and services, this position was a long time in coming. If he is given the power to try things, he may create legitimacy in a role that retailers need as we move from Customer Centricity as rhetoric to something that is real. That is the big if.
And to finally address your question regarding what this could mean at the headquarters and store level, I anticipate that there will be more formal process around learning within the store. I anticipate that customer learning and the reporting of insights will become part of the rewards system at Sears. Sears will become more adept at trying ideas–prototyping services and products in selected stores will become routine. Customer surveys will be replaced by deeper interviews with customers who may have purchased high involvement items. Service innovation will occur more rapidly. That is If….
The first step involves understanding the consumers of Kmart, of Sears, of Lands’ End. That means doing what was already suggested–visiting the stores to see what is there and who is there. It also means doing what was done at Best Buy–spending time analyzing who the current customers are–where do they buy, what do the buy, when do they buy?
The rest of the decisions about which stores to keep or close, which lines to keep or close, what positioning strategy to use can only be meaningful if step number one is done well.
When all of the pluses to both banners are obvious and all of the negatives are even more obvious–obvious for years. Yet, year after year the downward slide continues. It’s sort of like watching General Motors continue to self destruct for decades–it’s painful.
When consumers have lost confidence in you as a retailer, it’s nearly impossible to regain it. It is possible but extremely difficult. Best Buy was headed in that direction, yet not even close to the position either of Sears or Kmart.
Even so, a recent survey showed that while an overwhelming number of consumers continues to believe that the Japanese and Germans make better cars–even though they do not today–they continue to be willing to indicate that they would give the American manufacturers a chance once again. While that’s possible, I am not holding my breath. The same is holds true for Kmart and Sears.
I do believe that consumers like redemption. They believe in second chances. What they don’t believe in is lip service and continued failure.
The great old brands within both of the major banners are enough to hang a single hat on. It may be time for this “two banner” retailer to become a totally new “one banner” retailer. A new name–a new retailer.
Like most of my age, I grew up on Easy Living Paint, Kenmore, Craftsman, etc., and even Lands’ End. Finding a new way to shine with what you once had that was great and on top may be the only chance. A completely new way–a completely new place to house the great brands that have such an identity on their own.
In the meantime, it’s painful. And, I fear that it will continue to be.
Edward Lampert pleases Sears’ investors by (1) focusing on the profit statement, not the image or the sales and (2) allowing the company to test and reject anything that doesn’t clearly add profits. Investors want profits. It’s easy to raise sales by sacrificing profits. Retailers who sacrifice profits in the long run don’t last. Great customer service, renovating stores, building new locations, witty advertising, the best technology… all mean nothing if profits are mediocre. Comp sales increases mean nothing if profits stay flat. John Walden’s job, like everyone’s job at Sears, is only secure if profits are robust.
Inventive title for Mr. Walden’s new role at Sears/Kmart. Beyond the title and intent there is incredible work to be done to actually identify the retailer’s customers and build a strategy that keeps those shoppers coming into their stores. I don’t think this is a one-man job. This is a culture…and right now, I’m not sure anyone can specifically define the Sears/Kmart culture, nor describe its vision. If he is indeed the change agent the retailer needs, well good luck and we will all watch with heightened interest.
Most comments are extremely harsh on Kmart. If you have an opportunity to see any of the revamped Kmarts with Kenmore appliance departments, you are in for an amazing experience.
These stores are customer centric, clean, well stocked, with friendly and courteous staff, not untidy and cluttered like most Wal-Marts.
So what the new CCO guy has to do is focus on the positives. Sears and especially Sears Grand, are far more the basket cases.
Sears Grand locations need more than tinkering. I suggest they turn them into Home Depot clones with Lands’ End merchandise, Roebuck jeans and work boots.
Sears mall locations need to be redeveloped. Sears Holdings needs several acquisitions, Kohl’s and Best Buy or Circuit City would be a great fit. Then they can redevelop a majority of mall anchors into these stores.
For the remaining Sears locations, fashion clothing needs to be phased out. More weekend, Lands’ End/Bobs type format is needed and combined with leisure hard goods. Sears can play up the one-stop leisure store concept, turning these locations into a Cabelas or Gander Mountain, with Craftsman tools, sporting goods, camping equipment and Lands’ End clothing.
Even for the worst performing Sears stores, trying the closeout concept with lifestyle merchandise, might be the way to go.
A makeover is desperately needed at Sears. The sooner the better.