May 22, 2008
Sears in Amazon.com Impersonation
Flying somewhat under the radar in the last week was Sears’ announcement that it was going to greatly expand the product offerings on its website (ala Amazon.com) to include books, customizable artwork, DVDs, music and software.
“We want Sears.com to become a key online resource for all entertainment and home needs, in addition to the quality appliances, tools and apparel for which we are already known,” said Imran Jooma, vice president of e-commerce for Sears, in a company press release. “The expanded offering allows us to better serve our customers and offer a lot more products than we’re able to provide in our stores.”
Sears’ new expanded assortment nearly quadruples the number of items sold on the company’s website. To achieve this growth in selection, Sears has partnered with a number of companies including:
- Alliance Entertainment Corporation (AEC) for movies and music;
- ArtSelect.com for art and framing services;
- Baker & Taylor for books;
- Digital River for software.
“As a multi-channel retailer, we want every customer’s experience with us to be seamless,” said Mr. Jooma. “For example, if a customer is in a Sears store and is looking to buy a DVD, and the product is not available, the customer can order the DVD from a computer kiosk in-store, and the shipping fees are waived.”
Sears received kudos from industry watchers for its online strategy.
Howard Davidowitz, chairman of Davidowitz & Associates, told the Trib, “It’s the fastest growing channel in retail. And Sears has two advantages: First, they understand the catalog business. They ought to do well with online fulfillment. Second, they have stores everywhere. That is a huge advantage for people who may want to do store pick-ups or returns.”
Sears website expansion comes at time when the retailer is gaining some traction online. According to ComScore, Sears’ online traffic jumped 16 percent last month compared to the same period a year ago. A total of 9.6 million visitors went to Sears.com in April. As a point of comparison, Amazon.com attracted 58 million visitors.
Kelly Cutler, chief executive of Marcel Media, said, “This will be interesting to watch. Wal-Mart has been successful online. And look at Amazon. It used to be just books, but now they sell everything.”
Discussion Question: What do you think of Sears’ Amazon-like strategy for Sears.com?
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Many RetailWire contributors hate Sears. They focus on the difficulties, the failures, and the refusal to invest major capital into renovation. Ed Lampert brought a discipline to Sears and Kmart that’s often lacking in retailing: capital allocation. He won’t invest capital unless the venture can be tested and proven to be a winner.
Sears’ online supplier/partners in new merchandise categories (new to Sears) enable Sears to leverage its investment and reduce its risk. Ed Lampert brought Kmart back from the dead, when nobody thought it was worth anything. If he never achieves anything else, that single triumph had greater impact than all the achievements of every RetailWire contributor for all time put together.
Much remains to be determined if this initiative has the infrastructure and resources to be successful. However, from almost any angle, it offers the greatest short term upside potential for the online business, and for Lampert in getting his investment back.
The reality is that Sears has a really good website. The tools, navigation, and construction are solid and leveragable. They have existing traffic and the ability to generate more. Why NOT try to do what unfocused retailers have tried forever: if you have footsteps, try to sell them more stuff!
The critical question will be the ability of Sears to invest in the marketing mechanisms to become a portal of choice in these new product categories.
At Sears’ May annual meeting, Mr. Lampert commented, “If by interacting with others, we are able to drive more innovation, more awareness, it may help the performance of that brand in our own stores.” Think he was commenting on the Company’s “Amazonian” ambitions? Nope. He was teasing (again) about the possibility of Sears exploring “alternative distribution” for its exclusive brands. Die Hard at Wal-Mart? Craftsman at Home Depot? Why not?
Clearly, the Sears-as-multi-channel-bazaar concept isn’t just about creating a seamless experience for consumers; it’s yet another out of the big box strategy for monetizing brands; Sears’ own and those incubated and marketed by others. While the competition wrestles with whether to be a store that has brands or a store AS brand, this demo-defying strategy has Sears playing both roles. Brilliant move and a big nod to the new retail reality: brand marketing is where the margin is (just ask Iconix, Cherokee…).
As always with Kmart and Sears, the potential always looks promising…Sears Essentials, Sears Grand, Sears merchandise in Kmart, etc, etc.
And as always, at least until the present, Sears Holdings’ potential has by far exceeded actual performance, and sadly, I expect this to continue.
This is just the latest attempt from management to show the consumer that the company remains relevant. Insiders and knowledgeable outsiders will advise that the company is slowly morphing to a Service Merchandise existence.
Kmart and Wal-Mart put Service Merchandise out of business. Target and Wal-Mart are putting Sears Holdings out of business, and an exclamation point will be seen upon the next Sears Holdings earnings release.
Clearly, Sears possesses resources and motivation to succeed as a leading multi-channel retailer. At this point, it’s all about execution (as proven by the ups-and-downs at Wal-Mart). Current economic conditions also favor consumer interest in Sears.
Sears would do well to stop trying to move into new businesses and fix their core retail business. Yesterday I drove past a Sears Essentials store, which I believe only exist here in Southern California. The building was drab and hadn’t been painted in years. Since I hadn’t been in one of these stores for a couple of years, I stopped and went in only to find a pathetic store with poorly displayed merchandise, dirty floors, and few associates to actually help a customer.
Essentials is a concept they rolled out a few years ago as a sort of combination Sears/Kmart and have done little to promote or fix.
Like many other consultants who criticize Sears, I have never wanted to do business with a company that has so little regard for their customers and the retail industry. Their current retail business is surviving solely on a name that has been built over many years. Can you imagine what Sears could be if management actually invested in the long-term success of the business?
All of the Sears detractors are consultants who have never been able to get Sears to buy anything! Sears is a powerful brand and they do know how to manage catalog sales. The internet is a catalog on steroids. The amount of information that can be conveyed is enormous.
Sears price match policy makes a trip to the Sears web site an end of research proposition. Go to Sears, enter the item you are looking for and get a price. If it isn’t the lowest then enter the URL of the page where the price is cheaper and Sears will match the delivered price. I don’t believe even Amazon can keep up with this.
Having the B&M locations to back up the internet should be viewed by consumers as a great backup. My experience with Sears is that they stand behind their products and their prices. How many others can say that?
Amazon spent a lot of years and money pioneering the mass-market online business, and they have clearly established the dominant position. Like store-based retail, where competition has devastated most of the me-too secondary players, there’s simply not enough room for Sears to be successful as a leading online player.
When it comes to Sears or Kmart it’s always difficult to predict anything too amazing because most of the ideas come too early or too late for impact or relevance, and no matter what the case, Sears usually does whatever it does, second best. Sears continues to operate full circle but not on purpose. Ironically, Sears built its business originally on catalog sales which, of course, is today’s e-commerce. Even more ironically, in the early ’80s, Sears owned Prodigy which was for all practical purposes the first of the “AOL’s” in that era. In this case, Sears wants to be an imitator and it’s probably too little too late for any type of real success.
As I wrote a year ago, Sears is going to make up for lost time in its efforts to become a fully integrated multi-channel retailer, and it’s about time. There are many strategic, operational and competitive reasons for doing so: growth, profitability, market share, customer service, efficiency, share of customer — as you know, I could go on.
When they are talking in terms of a seamless customer experience, and buy-online-pick-up-in-store, etc., I pronounce myself impressed. Sears may have lost some relevance over time, but the company has set out in a new direction to regain some of the great market share it used to command. The store has a long retail history. They are now recognizing the new multi-channel environment, taking a new approach, and reinvigorating a brand that so many people still trust.
Sears has never been known for selling DVDs, music, software or framing. Past efforts to sell these items in-store have not met with success. They are late to the online party. Unless they are prepared to offer loss leader pricing or free shipping without minimum purchase, I don’t see how this initiative will succeed.
Although online retailing is growing fast, it typically only works for companies who have success in retailing. Sears/Kmart has been Midas in reverse for quite some time. In my opinion, if you can’t get customers to come to your store, it’s unlikely they will have a compelling reason to visit your website. This appears to just another grandiose announcement from Sears which will soon be forgotten. With Sears’ nearly 100% failure rate for every new idea, I think we can predict the outcome of this venture with a large degree of certainty.
To all the Sears detractors who want Sears to “stick to their Knitting” I would say you know little about Sears. This is their knitting.
During Sears’ best years, they were never a retailer, they were a catalog company with retail outlets. The did business where competition was limited and built a huge brand on quality and service. Each retail store had a minimum of 10-12 catalog order stations in store. Sears became a retailer when they expanded from dry goods into major appliances.
The internet has the ability to pull Sears back to its roots. Heck, if you [can visualize] it, Amazon is a 21st century version of 20th century Sears.
Mark; well said.
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Many RetailWire contributors hate Sears. They focus on the difficulties, the failures, and the refusal to invest major capital into renovation. Ed Lampert brought a discipline to Sears and Kmart that’s often lacking in retailing: capital allocation. He won’t invest capital unless the venture can be tested and proven to be a winner.
Sears’ online supplier/partners in new merchandise categories (new to Sears) enable Sears to leverage its investment and reduce its risk. Ed Lampert brought Kmart back from the dead, when nobody thought it was worth anything. If he never achieves anything else, that single triumph had greater impact than all the achievements of every RetailWire contributor for all time put together.
Much remains to be determined if this initiative has the infrastructure and resources to be successful. However, from almost any angle, it offers the greatest short term upside potential for the online business, and for Lampert in getting his investment back.
The reality is that Sears has a really good website. The tools, navigation, and construction are solid and leveragable. They have existing traffic and the ability to generate more. Why NOT try to do what unfocused retailers have tried forever: if you have footsteps, try to sell them more stuff!
The critical question will be the ability of Sears to invest in the marketing mechanisms to become a portal of choice in these new product categories.
At Sears’ May annual meeting, Mr. Lampert commented, “If by interacting with others, we are able to drive more innovation, more awareness, it may help the performance of that brand in our own stores.” Think he was commenting on the Company’s “Amazonian” ambitions? Nope. He was teasing (again) about the possibility of Sears exploring “alternative distribution” for its exclusive brands. Die Hard at Wal-Mart? Craftsman at Home Depot? Why not?
Clearly, the Sears-as-multi-channel-bazaar concept isn’t just about creating a seamless experience for consumers; it’s yet another out of the big box strategy for monetizing brands; Sears’ own and those incubated and marketed by others. While the competition wrestles with whether to be a store that has brands or a store AS brand, this demo-defying strategy has Sears playing both roles. Brilliant move and a big nod to the new retail reality: brand marketing is where the margin is (just ask Iconix, Cherokee…).
As always with Kmart and Sears, the potential always looks promising…Sears Essentials, Sears Grand, Sears merchandise in Kmart, etc, etc.
And as always, at least until the present, Sears Holdings’ potential has by far exceeded actual performance, and sadly, I expect this to continue.
This is just the latest attempt from management to show the consumer that the company remains relevant. Insiders and knowledgeable outsiders will advise that the company is slowly morphing to a Service Merchandise existence.
Kmart and Wal-Mart put Service Merchandise out of business. Target and Wal-Mart are putting Sears Holdings out of business, and an exclamation point will be seen upon the next Sears Holdings earnings release.
Clearly, Sears possesses resources and motivation to succeed as a leading multi-channel retailer. At this point, it’s all about execution (as proven by the ups-and-downs at Wal-Mart). Current economic conditions also favor consumer interest in Sears.
Sears would do well to stop trying to move into new businesses and fix their core retail business. Yesterday I drove past a Sears Essentials store, which I believe only exist here in Southern California. The building was drab and hadn’t been painted in years. Since I hadn’t been in one of these stores for a couple of years, I stopped and went in only to find a pathetic store with poorly displayed merchandise, dirty floors, and few associates to actually help a customer.
Essentials is a concept they rolled out a few years ago as a sort of combination Sears/Kmart and have done little to promote or fix.
Like many other consultants who criticize Sears, I have never wanted to do business with a company that has so little regard for their customers and the retail industry. Their current retail business is surviving solely on a name that has been built over many years. Can you imagine what Sears could be if management actually invested in the long-term success of the business?
All of the Sears detractors are consultants who have never been able to get Sears to buy anything! Sears is a powerful brand and they do know how to manage catalog sales. The internet is a catalog on steroids. The amount of information that can be conveyed is enormous.
Sears price match policy makes a trip to the Sears web site an end of research proposition. Go to Sears, enter the item you are looking for and get a price. If it isn’t the lowest then enter the URL of the page where the price is cheaper and Sears will match the delivered price. I don’t believe even Amazon can keep up with this.
Having the B&M locations to back up the internet should be viewed by consumers as a great backup. My experience with Sears is that they stand behind their products and their prices. How many others can say that?
Amazon spent a lot of years and money pioneering the mass-market online business, and they have clearly established the dominant position. Like store-based retail, where competition has devastated most of the me-too secondary players, there’s simply not enough room for Sears to be successful as a leading online player.
When it comes to Sears or Kmart it’s always difficult to predict anything too amazing because most of the ideas come too early or too late for impact or relevance, and no matter what the case, Sears usually does whatever it does, second best. Sears continues to operate full circle but not on purpose. Ironically, Sears built its business originally on catalog sales which, of course, is today’s e-commerce. Even more ironically, in the early ’80s, Sears owned Prodigy which was for all practical purposes the first of the “AOL’s” in that era. In this case, Sears wants to be an imitator and it’s probably too little too late for any type of real success.
As I wrote a year ago, Sears is going to make up for lost time in its efforts to become a fully integrated multi-channel retailer, and it’s about time. There are many strategic, operational and competitive reasons for doing so: growth, profitability, market share, customer service, efficiency, share of customer — as you know, I could go on.
When they are talking in terms of a seamless customer experience, and buy-online-pick-up-in-store, etc., I pronounce myself impressed. Sears may have lost some relevance over time, but the company has set out in a new direction to regain some of the great market share it used to command. The store has a long retail history. They are now recognizing the new multi-channel environment, taking a new approach, and reinvigorating a brand that so many people still trust.
Sears has never been known for selling DVDs, music, software or framing. Past efforts to sell these items in-store have not met with success. They are late to the online party. Unless they are prepared to offer loss leader pricing or free shipping without minimum purchase, I don’t see how this initiative will succeed.
Although online retailing is growing fast, it typically only works for companies who have success in retailing. Sears/Kmart has been Midas in reverse for quite some time. In my opinion, if you can’t get customers to come to your store, it’s unlikely they will have a compelling reason to visit your website. This appears to just another grandiose announcement from Sears which will soon be forgotten. With Sears’ nearly 100% failure rate for every new idea, I think we can predict the outcome of this venture with a large degree of certainty.
To all the Sears detractors who want Sears to “stick to their Knitting” I would say you know little about Sears. This is their knitting.
During Sears’ best years, they were never a retailer, they were a catalog company with retail outlets. The did business where competition was limited and built a huge brand on quality and service. Each retail store had a minimum of 10-12 catalog order stations in store. Sears became a retailer when they expanded from dry goods into major appliances.
The internet has the ability to pull Sears back to its roots. Heck, if you [can visualize] it, Amazon is a 21st century version of 20th century Sears.
Mark; well said.