September 2, 2008
Sears’ Struggles Continue
By Tom Ryan
Another poor quarter has once again proved to many market observers that Sears Holdings has no idea what it’s doing. Some analysts predicted the imminent extinction of Kmart. In a commentary, The Wall Street Journal called for the firing of chairman Edward Lampert.
Earnings tumbled 62 percent in the second quarter ended Aug. 2, to $65 million, or 50 cents a share, from $173 million, or $1.15, a year ago. Revenues dropped 4 percent, to $11.9 billion. Comps dropped 6.7 percent at Sears and 5.6 percent at Kmart, and have continued to decline since the 2005 Sears/Kmart merger.
Sears also lowered its forecast for its fiscal year’s profit but said its efforts to reduce inventories and slash costs will benefit earnings in the second half of this year. In January, Sears began restructuring the company into semiautonomous units.
The poor results also come as Sears Holdings continues to search for a replacement for CEO Aylwin Lewis, who left Feb. 2 after a disappointing holiday season. Several other key executives have left.
Sears has been hurt more than some of its rivals by the tough housing market because of its heavy emphasis on tools and appliances, including in-store brands such as Kenmore, Craftsman and DieHard. But analysts also noted it has lost significant market share to better-run competitors.
“A strategy of retrenching through lower inventory levels and through lower expenses [is] the beginning of a slide down a slippery slope from which there is rarely a return,” Gary Balter, retail analyst at Credit Suisse, wrote in a research note.
Speaking to Bloomberg News, Bill Dreher, senior retail analyst at Deutsche Bank Securities, called Sears’ guidance “completely unbelievable.” He questioned how the retailer could continue to cut expenses “without further impairing the already dismal customer shopping experience.”
In a commentary, The Wall Street Journal wrote that Mr. Lampert’s strategy has called for cutting capital expenditures to improve ROI, but the stores are showing the results of underinvestment.
“The retailer’s trouble getting the right goods to stores in an efficient manner means prices at rivals such as Target often are lower — and the goods more stylish,” said the Journal.
At the same time, poor credit and real-estate markets have limited the ability of Mr. Lampert to capitalize on Sears’ assets, such as real estate.
“Mr. Lampert hasn’t been shy to challenge entrenched managers of poorly performing investments in the past — even when his holdings were relatively insignificant. This time, he should take his own medicine. It is time for Mr. Lampert to get off the retailer’s floor.”
Discussion Questions: What’s the next step for Sears Holdings? Is it time for Edward Lampert to admit he’s not a retailer and step down as chairman of the company?
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I had the misfortune to be around on the inside of the last days of Montgomery Wards, and both the stores and the level of denial going on at Sears seems remarkably similar. Sears stores even smell like Wards–that pervasive smell of tires and polyester.
I don’t like to see a good brand go down, and Sears is an American icon. But there are so many things that so many people could write about what’s wrong with Sears right now that it’s depressing. Kmart as a possible casualty, and don’t forget about Lands’ End either.
I’m not saying that it would be easy to “fix” Sears, but it can’t be as hard as the retailer’s current leadership is making it.
I have worked for Kmart for many years, I remember when the company could do no wrong. Now it is run by people who have no clue, at every level. We get manager after manager that never worked in stores before, they receive very little training, the employee’s hours are cut, how do you give good service when there are only 3 or 4 employees on the sales floor at any time? Not enough people to put out freight so merchandise sits in the stockroom until it is on clearance. I think this company is truly beyond repair at this point and now the real estate isn’t even worth anything.
It is very sad for me and I suspect a lot of us here to see this happen to Sears. It is where I learned the retail trade from some very knowledgeable, qualified and dedicated people, with lessons I still value and use every day. Somehow, that knowledge was lost or more likely ignored. (I still think getting rid of the catalog and catalog agencies was one of the worst business decisions of the last century.)
Finally, I think we can all agree then that Sears has been on a slow decline for many years and that at a time when the company needed a shining knight, the most they got was Mr. Lampert. What a pity.
I know that on paper, Sears is making a small profit. But I would never believe that after being in their stores. At Kmart or Sears Grand do they ever have more than one register open? Cut inventory? What inventory? The stores look so bare. Those cars in the parking lot in the stores–those are employees. Employees have been told to park in front of the store to window dress making it look like there are customers. What’s with never turning on the outside pylon light? I don’t get it.
There have been no meaningful attempts to revive the company. Only press releases and short-lived ideas. But last I checked, they have billions in sales, show a profit, and their stock is over $90 a share. However, when you go into a store it looks like a bankrupt retailer on its last legs. Eventually this scheme will explode and we will be having more discussions.
Eddie Lempert, a fancy dancing finance man he,
Spiritually longed for a legendary retailer to be.
Securing real estate, he put his stamp on stores,
His efforts were gallant but stores remained bores.
Today some folks in Arkansas are shouting, “Oh, Boy.”
But that’s not what one hears in Hoffman Estates, Illinois.
I walk into Sears maybe every two months when I pay off a bill on my Discover card. Each time I go into my local branch, it’s empty; they are lucky if in the entire store there are 20 people. It doesn’t matter if it’s a Wednesday morning or Saturday afternoon, it’s always the same. The entire store is always 50% off or more on the lowest price yet the store is still empty. The clothing at my location is so packed it’s hard to walk around. When the Lands’ End shop opened I complimented Sears on this site at how sharp and tailored the whole department looked. Now it’s just a crowded mess like the rest of the store. In my store, the entire main floor only has 4 registers. This doesn’t make for easy shopping. Honestly, how Sears stays open–at least in the clothing areas–is a mystery to me. The same can be said for Kmart, yet Target across the street is always packed with customers.
No ‘A’s, (what looks like) one ‘B’, only one ‘C’ even…who says there’s grade inflation in America?!
At this point, with no meaningful disagreement about Sears’/Kmart’s future–i.e.: there is none–it seems time to start the post mortem in earnest. Was there ever any hope or not? And does the “Lampert and Company” brand have any equity left?
Their model is in need of revamping, their stores are empty and they continue to advertise and purchase items that are not at the cutting edge of consumer demand. Sears needs to get out of the department store mix, become a true super store and aggressively pursue a discount product approach that makes sense. They need to close their worst performing stores, sell the real estate and revamp upper management to lead the company into the next iteration of retailing. Anything less is a key to failure.
ROEBUCK$, a spin off, a hybrid of a Big Lots, a Lowe’s without the lumber, and a Grocery Outlet, is the answer to Sears Holdings woes.
Take one third of the current Sears store mall and free standing store base, and make the conversions IMMEDIATELY.
In some of two story mall locations, transform the second floor with a mall entrance to another concept, say a Lands’ End store like the Chicago State Street location.
The initial 8 store Kmart test store transformations have been successful. Just tweak them and expand them to one third of the base. Keep the appliance sections, and the office fax/copy services, bring in more food, and continue the blue light promotions with Mr. BlueLight. Keep them fresh and exciting with Joe Boxer and all the brands Kmart customers love.
Dump the Sears Grand format and change all of them to the ROEBUCK$ hybrid.
That’s the answer!!!
David Biernbaum hit it on the head. The ONLY reason that someone with the option to go to Walmart or Target would go to Kmart is that it’s easier to park and there are fewer people in the store. But that’s not a good reason for consumers to choose them.
The original perceived reason for purchasing Kmart and Sears is the most valid. They have some good brands–Kenmore, Craftsman, Lands’ End–and some great real estate. They should spin off the brands and either sell the real estate or convert into a REIT and become a landlord.
There really isn’t a compelling strategic rationale for either Sears or Kmart anymore. They so badly trail the market leader in each of their segments that it’s hard to conceive they could ever seriously compete again. There isn’t anything that either do that isn’t done much, much better elsewhere. They are two once-towering retailers that now seem to lag ever further behind.
I agree that the Craftsman, Diehard and Kenmore brands have value in the market, and that Lands’ End is still viable as a stand alone business, but these alone aren’t close to being enough to forestall the inevitable, once the tipping point arrives.
It’s unanimous…billions in sales and no cars in the parking lot. I’ve been questioning the veracity of their revenue statements for years. The cost to upgrade the neglected infrastructure of these stores would alone bankrupt the company. These stores will not make it to Christmas ’09. Bring out the wrecking ball.
Dilbert says it best: 80% of the challenge is to hire great people and the last 20% is leave them alone so they can do their job.
In this case we have lost most of the great people and great people really don’t get on board a sinking ship.
If Sears cannot find a new captain who will give the right kind of direction and than get out of the way, look for another sinking ship.
The customer service is extremely poor! Customers do not want to return! I thought we are trying to make customers for a LIFETIME! Please take a closer look at your staff at the stores that are suppose to be handling GREAT customer service.
Too bad about Sears. They have some great brands under their name and it would be a shame to see Kenmore and Craftsman get killed because of mismanagement. It sounds like there is a real lack of accountability over there and someone needs to step up and save this name. Sears could easily come up with something new to separate itself from all those direct and indirect competitors. Maybe they should only sell their own brands exclusively? Management should hire the BrainTrust Panel to brainstorm ideas to save Sears!
Sears was dead over twenty years ago when they tried “everyday low prices.”
It’s a shame, etc, but one of the greatest stories of American success was mismanaged by greed at the top long before Lampert and his cronies came to Chicago. Now it is just so much blind leading the blind.
It’s like my advice about employees–when the mind goes, the body should have to follow.
When they originally put together Sears Holdings, many people thought this was a real estate play, and they would milk the company for cash, and eventually liquidate it.
It was a surprise that they actually tried to fix it. Sears and Kmart have each had their own problems for years. Putting them together just made it worse. Now they would seem to have few options left.
They still have some assets to work with such as Lands’ End and the Kenmore Brand. The Sears name in hard goods is still very strong. They need to break this holding company up into more manageable pieces with more focus and competitive strength.
Right now, the remaining viable businesses are being pulled under by the weight of the whole company.
We all agree, and we have all said the same thing over the last couple of years. Sears as a retailer is dead in the water, and they should give up the fight. They should shut ALL of their stores, reduce their cash outlay, and sell the real estate that they own. The should keep the Craftsman brand, and give an exclusive to Home Depot or Lowe’s. They should keep the Kenmore brand, and open up Kenmore branded stores in Best Buy, similar to the Apple store within a store concept. With respect to Kmart, they have no reason to be. They offer nothing of value that the consumer can’t find elsewhere.
It is hard to be so negative, but it is fact, that as retail destinations, Sears and Kmart offer no compelling reason for a consumer to steer their car in the direction of these stores.
We are witnessing the decline and fall of what was once an American icon. Time to start working on that book.
The chain continues to lose its reason for being. Home Depot can sell me a wider assortment of tools. Kohl’s and Target are taking over the lower priced apparel and home goods markets and the appliance business is being run into the ground by mediocre prices and goods and bad, bad, bad customer service. Shame on all of them.
They are trying to milk Lands’ End by devoting half of selling space on some main floors to the label. But it might be too little too late.
I’m baffled that Sears can justify investments such as opening an online boutique featuring back-to-school apparel and dorm-room furniture (on teen site Zwinky.com) while steadfastly refusing to invest in store remodels for BTS!
That said, Mr. Lampert has hinted at future moves that will “monetize” Sears legacy brands (Die Hard, Kenmore, Craftsman) and now is a good time. Despite difficult times, J.C. Penney, Walmart, Kohl’s, Macy’s, Staples, and others are blasting out more new private and exclusive brands than ever; positioning for market share grabs as others stumble or fall (in the case of Staples, they’re all about their HIGH-end own brand, “M”).
What’s in the boxes will be a moot point if/when Sears brands land in a Home Depot or Walmart near you. Sears becomes the next NRDC, Iconix, Cherokee…pure play brand broker!
Regular BrainTrust panelists run the risk of sounding like “broken records” on the subject of Sears Holdings. I have consistently said that Sears Holdings should have pulled the plug on Kmart in 2004, in order to leverage locations for the benefit of the Sears brand. I’ve also commented recently that the restructuring of the company is akin to rearranging the deck chairs on the Titanic.
It’s been evident for a long time that Mr. Lampert is not a retailer, but it’s obvious now that he isn’t a manager either. The sorriest aspect of the Sears meltdown is the total lack of urgency addressing the chain’s problems; as anyone with a background in retail knows, there is no substitute for urgency in the retail business.
“Duh?” Why would consumers choose to shop Kmart instead of Walmart, Target, Meijer, or any other alternatives? Less crowded? Easier to find a parking spot? Honestly, I cannot come up with any other good reasons.
Kmart has tried several different approaches now for so many recent years however none have been substantially unique enough to make a difference. Kmart has seemed aimless now for too many years since its reign of terror ended in the mid 1990s.
Humpty Dumpty (Sears) sat on a wall and then began to fall, many pieces are responsible for the inability to put it back together again. Many disconnected pieces not understanding what the other does, why or communicating goals, etc. Leadership is always a big factor.
The Sears model is unique and could work but needs an overhaul with current trends, demands, new procedures, process and new look, etc. They are doing several things right; the apparel line is impressive, marketing and promotion is not. Parts, services and warranties (maybe part of their demise) is also impressive but marketing and promotion is not. They have not stayed in tune with what the consumer demands. Try to go and purchase an appliance, large electronic item, or home improvement item. They’ll deliver but a week later…sometimes two weeks! Yikes! Consumers want it now!
The supply chain is one of the worst. Expensive acquisitions, failed implementations, millions of wasted dollars. Lands’ End had a very good model but with capital dollars cut off for the past two years, this piece may go with the others.
Fast Eddie is not, nor ever claimed to be a retailer. He is an asset manager. Kmart being larger outlasted Caldor, Jamesway, Bradlees, etc, but the end result was the same. Mass merchants, like food retailers, failed to see the changing consumer.
Mass is dead; target marketing is the future. Sears failed to change when the market changed for department stores. What is sad is that Sears private label was the best.
The future is clear; Kmart and Sears are simply on a death spiral. Continued comp store sales declines tell this story. Timing will be the judge for the asset manager. If he dumped all this real estate on the market today, the majority would not even sell, much less at a market price. The only hope is to feed the the real estate to the market as it can absorb it. Otherwise, it will be just another write off against other profits.
Pack it in and sell the real estate.
The only changes at Sears in recent years have been the bad habits they’ve learned from Kmart. Now both organizations are working and living like it’s the 1970s.
They certainly spend money on advertising. Kmart’s back-to-school ad is on more frequently than Target and Walmart in this market area.
If they really want to cut costs, they should consider spending less on advertising dollars. Ads won’t get bodies in the stores. Quite frankly though, it’s too late. These legendary retailers should close. It’s better to remember them fondly than continue to have them operate in the poor condition they’re in now.
I can appreciate all of those who hate to see a great American icon such as Sears fall, but the ones who bash those of us who used to work there probably just shopped there and didn’t have a clue as to what went on inside that led to their being in the shape they are now in!
It truly is sad because I had hoped to stay there until retirement but they also cut that short in their efforts to stay alive! I’m sorry, but I have no sympathy whatsoever for a company, regardless of their past great achievements, that will take from the people that made them to try and survive when management didn’t keep up with the consumer trends to continue to achieve! It’s the fault of the ones running the company, NOT THE ONES BASHING!
Well, it’s unanimous. Have you ever seen this kind of consensus on RetailWire?
Sears is a favorite topic of discussion for me, because I used to work there, and am fascinated by its slide. I recently asked numerous people why they shopped at Sears, and they all said they don’t; no reason to go there beyond Kenmore and Die-Hard, and perhaps Lands’ End.
Sears should leverage its iconic brands ONLY and shut down the rest.
Shame on all of you that bash the store that started this whole retail phenom. Let’s not forget that Sears was an innovator. All the new stores are nothing but copycats.
Since Home Depot, Menard’s, Lowe’s, Best Buy and all the other electronics companies have added product that a few years ago could only be purchased at stores such as Sears, why in the world doesn’t Sears/Kmart start selling more product that these other stores sell? Maybe then Sears/Kmart sales may rise and the other stores may drop a bit.
Everyone can sit back and bash Sears Holdings all they want. Bottom line, we all learned a lot from a great AMERICAN COMPANY.
I wish my best to Sears Holdings and I hope Eddie and Crew can get back on track.
Our world is full of insult. Everyone bashes the competition. I’ve been in all of the stores that are talked about on this site. Guess what! They all lack customer service. Visit a Home Depot or any of the Home stores. Visit any store in this great country and you will find that Customer Service is a thing of the past.
As a once upon a time, saw the writing on the wall, got smart and got out while the getting was good manager at Sears, I saw the big problem being built like a brick wall–one brick at a time! The foundation of Sears’ demise was built on forgetting that the consumers are the ones who write the checks! Sears lost total focus on having the products customers wanted, having them available when the customer wanted them and following through to make sure the customer was satisfied after the sell!
When they saw they were running low on bricks while building this great wall, instead of fixing the problem that caused the shortage, they simply took the bricks they promised back from their employees by cutting off the pension plan, lowering benefits, cutting hours, etc. Now the only old faithful employees that are left have very low morale and just want to make it to retirement, and just don’t care any more! Now the consumers are leaving and the foundation of this wall is crumbling! The bricks were laid with bad mortar (management) and the faithful employees are gone and the bricks are falling!
The only way to fix this great wall is to tear it down and start over with a solid foundation, but it’s too late for that–all of the good masons they had are all gone and they’ve run out of materials!
Over the past 4 quarters, Sears’ operating cash flow was $1.4 billion. Cash flow after investing (capital expenditures, for example) was slightly less than $1 billion. Although most folks writing for RetailWire are Ed Lampert haters, and think Sears is a dead company, the financial facts don’t look so bad. Sears stock was $70 in July and now it’s over $90. Not bad for a company that was bankrupt (stock price = zero) in 2002 (Kmart).
Everyone’s been expecting Ed Lampert to sell off the real estate, but he didn’t. He’s tried to turn around the company, with multiple fresh ideas. Yes, they didn’t work, but in the meantime he’s run one of the largest retailers in the world profitably, in spite of killer competition and an awful economy. Ed Lampert might not be running Sears and Kmart the way RetailWire contributors would, but the company is doing way better than many other retailers and way better than the pre-bankruptcy era less than 10 years ago.
I worked for Sears for many years, including the first three of the “Eddie” era. He’s an incredibly smart guy, who will probably eventually find a way to get out of this with an acceptable return on his original investment in Kmart.
But Sears will die in the process, and it didn’t have to be that way. Sears had a real reason for being, probably still does, as a place consumers can get real value on the things they need to enrich their everyday lives. Eddie’s biggest sin has been hubris–he thought he was smarter than anyone who ever ran a retailer before, and he quite literally chased away an enormous number of talented retailers from the company–people who now play leading roles at many of his competitors, and failed to attract strong talent to replace them. The final straw for me was the realization that as long as Eddie ran the company there would never be a successful retail solution–the only possible way out for him would be some kind of asset rationalization. As a retailer, I couldn’t stick around for that. He constantly complained both in his letters to shareholders and internally that he was being accused falsely of planning to strip the company as opposed to making it work as a retailer, and that may be true…except that by refusing to allow professional retailers be part of the solution, he guaranteed himself only one way out.
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I had the misfortune to be around on the inside of the last days of Montgomery Wards, and both the stores and the level of denial going on at Sears seems remarkably similar. Sears stores even smell like Wards–that pervasive smell of tires and polyester.
I don’t like to see a good brand go down, and Sears is an American icon. But there are so many things that so many people could write about what’s wrong with Sears right now that it’s depressing. Kmart as a possible casualty, and don’t forget about Lands’ End either.
I’m not saying that it would be easy to “fix” Sears, but it can’t be as hard as the retailer’s current leadership is making it.
I have worked for Kmart for many years, I remember when the company could do no wrong. Now it is run by people who have no clue, at every level. We get manager after manager that never worked in stores before, they receive very little training, the employee’s hours are cut, how do you give good service when there are only 3 or 4 employees on the sales floor at any time? Not enough people to put out freight so merchandise sits in the stockroom until it is on clearance. I think this company is truly beyond repair at this point and now the real estate isn’t even worth anything.
It is very sad for me and I suspect a lot of us here to see this happen to Sears. It is where I learned the retail trade from some very knowledgeable, qualified and dedicated people, with lessons I still value and use every day. Somehow, that knowledge was lost or more likely ignored. (I still think getting rid of the catalog and catalog agencies was one of the worst business decisions of the last century.)
Finally, I think we can all agree then that Sears has been on a slow decline for many years and that at a time when the company needed a shining knight, the most they got was Mr. Lampert. What a pity.
I know that on paper, Sears is making a small profit. But I would never believe that after being in their stores. At Kmart or Sears Grand do they ever have more than one register open? Cut inventory? What inventory? The stores look so bare. Those cars in the parking lot in the stores–those are employees. Employees have been told to park in front of the store to window dress making it look like there are customers. What’s with never turning on the outside pylon light? I don’t get it.
There have been no meaningful attempts to revive the company. Only press releases and short-lived ideas. But last I checked, they have billions in sales, show a profit, and their stock is over $90 a share. However, when you go into a store it looks like a bankrupt retailer on its last legs. Eventually this scheme will explode and we will be having more discussions.
Eddie Lempert, a fancy dancing finance man he,
Spiritually longed for a legendary retailer to be.
Securing real estate, he put his stamp on stores,
His efforts were gallant but stores remained bores.
Today some folks in Arkansas are shouting, “Oh, Boy.”
But that’s not what one hears in Hoffman Estates, Illinois.
I walk into Sears maybe every two months when I pay off a bill on my Discover card. Each time I go into my local branch, it’s empty; they are lucky if in the entire store there are 20 people. It doesn’t matter if it’s a Wednesday morning or Saturday afternoon, it’s always the same. The entire store is always 50% off or more on the lowest price yet the store is still empty. The clothing at my location is so packed it’s hard to walk around. When the Lands’ End shop opened I complimented Sears on this site at how sharp and tailored the whole department looked. Now it’s just a crowded mess like the rest of the store. In my store, the entire main floor only has 4 registers. This doesn’t make for easy shopping. Honestly, how Sears stays open–at least in the clothing areas–is a mystery to me. The same can be said for Kmart, yet Target across the street is always packed with customers.
No ‘A’s, (what looks like) one ‘B’, only one ‘C’ even…who says there’s grade inflation in America?!
At this point, with no meaningful disagreement about Sears’/Kmart’s future–i.e.: there is none–it seems time to start the post mortem in earnest. Was there ever any hope or not? And does the “Lampert and Company” brand have any equity left?
Their model is in need of revamping, their stores are empty and they continue to advertise and purchase items that are not at the cutting edge of consumer demand. Sears needs to get out of the department store mix, become a true super store and aggressively pursue a discount product approach that makes sense. They need to close their worst performing stores, sell the real estate and revamp upper management to lead the company into the next iteration of retailing. Anything less is a key to failure.
ROEBUCK$, a spin off, a hybrid of a Big Lots, a Lowe’s without the lumber, and a Grocery Outlet, is the answer to Sears Holdings woes.
Take one third of the current Sears store mall and free standing store base, and make the conversions IMMEDIATELY.
In some of two story mall locations, transform the second floor with a mall entrance to another concept, say a Lands’ End store like the Chicago State Street location.
The initial 8 store Kmart test store transformations have been successful. Just tweak them and expand them to one third of the base. Keep the appliance sections, and the office fax/copy services, bring in more food, and continue the blue light promotions with Mr. BlueLight. Keep them fresh and exciting with Joe Boxer and all the brands Kmart customers love.
Dump the Sears Grand format and change all of them to the ROEBUCK$ hybrid.
That’s the answer!!!
David Biernbaum hit it on the head. The ONLY reason that someone with the option to go to Walmart or Target would go to Kmart is that it’s easier to park and there are fewer people in the store. But that’s not a good reason for consumers to choose them.
The original perceived reason for purchasing Kmart and Sears is the most valid. They have some good brands–Kenmore, Craftsman, Lands’ End–and some great real estate. They should spin off the brands and either sell the real estate or convert into a REIT and become a landlord.
There really isn’t a compelling strategic rationale for either Sears or Kmart anymore. They so badly trail the market leader in each of their segments that it’s hard to conceive they could ever seriously compete again. There isn’t anything that either do that isn’t done much, much better elsewhere. They are two once-towering retailers that now seem to lag ever further behind.
I agree that the Craftsman, Diehard and Kenmore brands have value in the market, and that Lands’ End is still viable as a stand alone business, but these alone aren’t close to being enough to forestall the inevitable, once the tipping point arrives.
It’s unanimous…billions in sales and no cars in the parking lot. I’ve been questioning the veracity of their revenue statements for years. The cost to upgrade the neglected infrastructure of these stores would alone bankrupt the company. These stores will not make it to Christmas ’09. Bring out the wrecking ball.
Dilbert says it best: 80% of the challenge is to hire great people and the last 20% is leave them alone so they can do their job.
In this case we have lost most of the great people and great people really don’t get on board a sinking ship.
If Sears cannot find a new captain who will give the right kind of direction and than get out of the way, look for another sinking ship.
The customer service is extremely poor! Customers do not want to return! I thought we are trying to make customers for a LIFETIME! Please take a closer look at your staff at the stores that are suppose to be handling GREAT customer service.
Too bad about Sears. They have some great brands under their name and it would be a shame to see Kenmore and Craftsman get killed because of mismanagement. It sounds like there is a real lack of accountability over there and someone needs to step up and save this name. Sears could easily come up with something new to separate itself from all those direct and indirect competitors. Maybe they should only sell their own brands exclusively? Management should hire the BrainTrust Panel to brainstorm ideas to save Sears!
Sears was dead over twenty years ago when they tried “everyday low prices.”
It’s a shame, etc, but one of the greatest stories of American success was mismanaged by greed at the top long before Lampert and his cronies came to Chicago. Now it is just so much blind leading the blind.
It’s like my advice about employees–when the mind goes, the body should have to follow.
When they originally put together Sears Holdings, many people thought this was a real estate play, and they would milk the company for cash, and eventually liquidate it.
It was a surprise that they actually tried to fix it. Sears and Kmart have each had their own problems for years. Putting them together just made it worse. Now they would seem to have few options left.
They still have some assets to work with such as Lands’ End and the Kenmore Brand. The Sears name in hard goods is still very strong. They need to break this holding company up into more manageable pieces with more focus and competitive strength.
Right now, the remaining viable businesses are being pulled under by the weight of the whole company.
We all agree, and we have all said the same thing over the last couple of years. Sears as a retailer is dead in the water, and they should give up the fight. They should shut ALL of their stores, reduce their cash outlay, and sell the real estate that they own. The should keep the Craftsman brand, and give an exclusive to Home Depot or Lowe’s. They should keep the Kenmore brand, and open up Kenmore branded stores in Best Buy, similar to the Apple store within a store concept. With respect to Kmart, they have no reason to be. They offer nothing of value that the consumer can’t find elsewhere.
It is hard to be so negative, but it is fact, that as retail destinations, Sears and Kmart offer no compelling reason for a consumer to steer their car in the direction of these stores.
We are witnessing the decline and fall of what was once an American icon. Time to start working on that book.
The chain continues to lose its reason for being. Home Depot can sell me a wider assortment of tools. Kohl’s and Target are taking over the lower priced apparel and home goods markets and the appliance business is being run into the ground by mediocre prices and goods and bad, bad, bad customer service. Shame on all of them.
They are trying to milk Lands’ End by devoting half of selling space on some main floors to the label. But it might be too little too late.
I’m baffled that Sears can justify investments such as opening an online boutique featuring back-to-school apparel and dorm-room furniture (on teen site Zwinky.com) while steadfastly refusing to invest in store remodels for BTS!
That said, Mr. Lampert has hinted at future moves that will “monetize” Sears legacy brands (Die Hard, Kenmore, Craftsman) and now is a good time. Despite difficult times, J.C. Penney, Walmart, Kohl’s, Macy’s, Staples, and others are blasting out more new private and exclusive brands than ever; positioning for market share grabs as others stumble or fall (in the case of Staples, they’re all about their HIGH-end own brand, “M”).
What’s in the boxes will be a moot point if/when Sears brands land in a Home Depot or Walmart near you. Sears becomes the next NRDC, Iconix, Cherokee…pure play brand broker!
Regular BrainTrust panelists run the risk of sounding like “broken records” on the subject of Sears Holdings. I have consistently said that Sears Holdings should have pulled the plug on Kmart in 2004, in order to leverage locations for the benefit of the Sears brand. I’ve also commented recently that the restructuring of the company is akin to rearranging the deck chairs on the Titanic.
It’s been evident for a long time that Mr. Lampert is not a retailer, but it’s obvious now that he isn’t a manager either. The sorriest aspect of the Sears meltdown is the total lack of urgency addressing the chain’s problems; as anyone with a background in retail knows, there is no substitute for urgency in the retail business.
“Duh?” Why would consumers choose to shop Kmart instead of Walmart, Target, Meijer, or any other alternatives? Less crowded? Easier to find a parking spot? Honestly, I cannot come up with any other good reasons.
Kmart has tried several different approaches now for so many recent years however none have been substantially unique enough to make a difference. Kmart has seemed aimless now for too many years since its reign of terror ended in the mid 1990s.
Humpty Dumpty (Sears) sat on a wall and then began to fall, many pieces are responsible for the inability to put it back together again. Many disconnected pieces not understanding what the other does, why or communicating goals, etc. Leadership is always a big factor.
The Sears model is unique and could work but needs an overhaul with current trends, demands, new procedures, process and new look, etc. They are doing several things right; the apparel line is impressive, marketing and promotion is not. Parts, services and warranties (maybe part of their demise) is also impressive but marketing and promotion is not. They have not stayed in tune with what the consumer demands. Try to go and purchase an appliance, large electronic item, or home improvement item. They’ll deliver but a week later…sometimes two weeks! Yikes! Consumers want it now!
The supply chain is one of the worst. Expensive acquisitions, failed implementations, millions of wasted dollars. Lands’ End had a very good model but with capital dollars cut off for the past two years, this piece may go with the others.
Fast Eddie is not, nor ever claimed to be a retailer. He is an asset manager. Kmart being larger outlasted Caldor, Jamesway, Bradlees, etc, but the end result was the same. Mass merchants, like food retailers, failed to see the changing consumer.
Mass is dead; target marketing is the future. Sears failed to change when the market changed for department stores. What is sad is that Sears private label was the best.
The future is clear; Kmart and Sears are simply on a death spiral. Continued comp store sales declines tell this story. Timing will be the judge for the asset manager. If he dumped all this real estate on the market today, the majority would not even sell, much less at a market price. The only hope is to feed the the real estate to the market as it can absorb it. Otherwise, it will be just another write off against other profits.
Pack it in and sell the real estate.
The only changes at Sears in recent years have been the bad habits they’ve learned from Kmart. Now both organizations are working and living like it’s the 1970s.
They certainly spend money on advertising. Kmart’s back-to-school ad is on more frequently than Target and Walmart in this market area.
If they really want to cut costs, they should consider spending less on advertising dollars. Ads won’t get bodies in the stores. Quite frankly though, it’s too late. These legendary retailers should close. It’s better to remember them fondly than continue to have them operate in the poor condition they’re in now.
I can appreciate all of those who hate to see a great American icon such as Sears fall, but the ones who bash those of us who used to work there probably just shopped there and didn’t have a clue as to what went on inside that led to their being in the shape they are now in!
It truly is sad because I had hoped to stay there until retirement but they also cut that short in their efforts to stay alive! I’m sorry, but I have no sympathy whatsoever for a company, regardless of their past great achievements, that will take from the people that made them to try and survive when management didn’t keep up with the consumer trends to continue to achieve! It’s the fault of the ones running the company, NOT THE ONES BASHING!
Well, it’s unanimous. Have you ever seen this kind of consensus on RetailWire?
Sears is a favorite topic of discussion for me, because I used to work there, and am fascinated by its slide. I recently asked numerous people why they shopped at Sears, and they all said they don’t; no reason to go there beyond Kenmore and Die-Hard, and perhaps Lands’ End.
Sears should leverage its iconic brands ONLY and shut down the rest.
Shame on all of you that bash the store that started this whole retail phenom. Let’s not forget that Sears was an innovator. All the new stores are nothing but copycats.
Since Home Depot, Menard’s, Lowe’s, Best Buy and all the other electronics companies have added product that a few years ago could only be purchased at stores such as Sears, why in the world doesn’t Sears/Kmart start selling more product that these other stores sell? Maybe then Sears/Kmart sales may rise and the other stores may drop a bit.
Everyone can sit back and bash Sears Holdings all they want. Bottom line, we all learned a lot from a great AMERICAN COMPANY.
I wish my best to Sears Holdings and I hope Eddie and Crew can get back on track.
Our world is full of insult. Everyone bashes the competition. I’ve been in all of the stores that are talked about on this site. Guess what! They all lack customer service. Visit a Home Depot or any of the Home stores. Visit any store in this great country and you will find that Customer Service is a thing of the past.
As a once upon a time, saw the writing on the wall, got smart and got out while the getting was good manager at Sears, I saw the big problem being built like a brick wall–one brick at a time! The foundation of Sears’ demise was built on forgetting that the consumers are the ones who write the checks! Sears lost total focus on having the products customers wanted, having them available when the customer wanted them and following through to make sure the customer was satisfied after the sell!
When they saw they were running low on bricks while building this great wall, instead of fixing the problem that caused the shortage, they simply took the bricks they promised back from their employees by cutting off the pension plan, lowering benefits, cutting hours, etc. Now the only old faithful employees that are left have very low morale and just want to make it to retirement, and just don’t care any more! Now the consumers are leaving and the foundation of this wall is crumbling! The bricks were laid with bad mortar (management) and the faithful employees are gone and the bricks are falling!
The only way to fix this great wall is to tear it down and start over with a solid foundation, but it’s too late for that–all of the good masons they had are all gone and they’ve run out of materials!
Over the past 4 quarters, Sears’ operating cash flow was $1.4 billion. Cash flow after investing (capital expenditures, for example) was slightly less than $1 billion. Although most folks writing for RetailWire are Ed Lampert haters, and think Sears is a dead company, the financial facts don’t look so bad. Sears stock was $70 in July and now it’s over $90. Not bad for a company that was bankrupt (stock price = zero) in 2002 (Kmart).
Everyone’s been expecting Ed Lampert to sell off the real estate, but he didn’t. He’s tried to turn around the company, with multiple fresh ideas. Yes, they didn’t work, but in the meantime he’s run one of the largest retailers in the world profitably, in spite of killer competition and an awful economy. Ed Lampert might not be running Sears and Kmart the way RetailWire contributors would, but the company is doing way better than many other retailers and way better than the pre-bankruptcy era less than 10 years ago.
I worked for Sears for many years, including the first three of the “Eddie” era. He’s an incredibly smart guy, who will probably eventually find a way to get out of this with an acceptable return on his original investment in Kmart.
But Sears will die in the process, and it didn’t have to be that way. Sears had a real reason for being, probably still does, as a place consumers can get real value on the things they need to enrich their everyday lives. Eddie’s biggest sin has been hubris–he thought he was smarter than anyone who ever ran a retailer before, and he quite literally chased away an enormous number of talented retailers from the company–people who now play leading roles at many of his competitors, and failed to attract strong talent to replace them. The final straw for me was the realization that as long as Eddie ran the company there would never be a successful retail solution–the only possible way out for him would be some kind of asset rationalization. As a retailer, I couldn’t stick around for that. He constantly complained both in his letters to shareholders and internally that he was being accused falsely of planning to strip the company as opposed to making it work as a retailer, and that may be true…except that by refusing to allow professional retailers be part of the solution, he guaranteed himself only one way out.