Fears for Sears: Lessons from a Dying Brand
Ah, Christmas! It’s a magical time of year for family, tradition and gift-giving! And with an estimated $465.5 Billion spent (in November & December) on holiday gifts this past year, Christmas also serves as a significant barometer for the economy and the success of retail companies everywhere. Although sales were predicted to increase over 2% from 2010, not every store experienced growth. One retail outlet in particular…
Sears.
While listening to the radio this morning, I heard this statement,
“There’s no reason to go to Sears.”
That’s not exactly the kind of statement any retailer wants to hear, right? Especially when it comes from retail analyst Brian Sozzi, who also commented that “It (Sears) offers a depressing shopping experience and uncompetitive prices.” OUCH! This is what Sozzi and many others are pointing to as the reason why Sears Holdings Corp announced today its decision to close anywhere from 100-120 stores this year.
It’s strange don’t you think? Here’s a company with roots that go back to 1888, built upon a reputation for offering quality products, competitive prices and priding itself on consumer satisfaction. Sears grew as a direct result of their willingness to innovate and adapt to mail order catalog sales. Yet some might conclude that it’s impossible for a company to last over a century and still see growth!
But what about Macy’s? Here’s a store which dates itself back to 1850, yet I’m sure at least a few of the boxes or bags under your Christmas tree were purchased from this retail giant!
So what can we learn from all of this?
Lesson #1 Don’t Forget to Take Care of the Goose
I’m sure all of us remember “The Goose that Laid the Golden Egg?” It’s a classic story about a poor husband and wife that find themselves owning a goose that lays a golden egg each day. They figure that there must be a stockpile of gold inside of the goose, so they decide to kill it and open it up in order to retrieve all the gold at once. Unfortunately, they end up discovering that there was no gold inside of their goose. This action completely cut them off from their daily gold supply.
What does this have to do with the 120-stores-less Sears?
Simple, Sears forgot to take care of the Goose! Unknown to most was the desire of Sears’ leadership to operate more as a hedge fund than a retailer. This focus diverted a substantial amount of funds that would have gone into things like renovation and advertising, but instead were placed into non-retail investments. Slowly but surely, this golden goose began to starve as it was being neglected.
There really is no such thing as a “sure thing” is there? Creating a business and brand is not like cooking with a crock pot where you can “set it and forget it.” It requires continual vision, objectives and supervision – which actually goes for anything in life. Anything of value in life requires that we do NOT take it for granted and give it the proper care it deserves. I thought I’d make a list of a few other things that can benefit from this principal: Health, relationships, our top clients, retirement accounts, gardens…and of course your Businesses!!
Lesson #2 Name your Goose
Correct me if I’m wrong, but I don’t remember the goose having a name in this bed time story. I’ve just always known the goose to be called “The Goose that laid the golden eggs.” The point I’m trying to make here is that both this goose and Sears did not have an identity. Sure the goose laid eggs of gold, but who was this goose? Apparently there was no connection, who knows, he (or she) might have lived longer if it was named – just a thought.
The same goes for Sears. Who is Sears? What makes them stand out? When I think of Walmart I think of a wide variety of products at extremely low prices. When I think of Target I think of quality clothing, toys, electronics and even food. But what do I think of when I hear Sears? Hmm.. I think of tires and screwdrivers. Not exactly the kind of place I want to browse around, in fact I can’t even remember the last time I’ve been into a Sears.
Now here’s the thing, I’m sure I’m wrong. I’m sure Sears has a lot more than tires and screwdrivers to offer, but how would I know? Why waste my time on a store that has not taken the time, money and vision to give me a clear picture of their identity? I and millions of others don’t have time to waste on a No Identity retail store.
The same goes for you and your goose (aka your business). Do you have an identity? If I were to survey 10 of your past clients/customers would there be a common theme to way they would describe your position in the market place?
Lesson #3: Remember the Customer Experience
Sears also neglected to improve upon the Customer Experience. In fact, while Macy’s spent $505 million to improve it’s stores & those of Bloomingdale’s last year, Sears only spent $441 million, despite having more than three times as many stores. Analyst Gary Balter was even quoted as saying, “Sears is effectively asking customers to pay for a poorer shopping environment.”
Ironically, the numbers are showing a dramatic increase in online shopping this year. It was estimated that 90% of consumers used the Internet is some way to research, review or purchase gifts this holiday season. 58% of Smart Phone users admitted to visiting “offline” retail stores to survey products before finding better deals online. Did Sears give people a reason to visit their store this year? I guess not!
Even if your business is 100% virtual, the experience you deliver for your customer needs to be nothing short of remarkable. How can you make doing business with you more fun, enjoyable, effortless and exciting?
That’s all I’ve got to say on my end, but I’d love to hear your feedback about what lessons you think we learn from this as well as why you personally think the Sears brand lacks identity…or does it? Let’s get a conversation going.
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Agree with you, James! Sears has always been last choice of destinations when visiting the mall, if visiting the mall at all. For me, Sears has always been about large appliances. When those same appliances showed up in KMart, the perceived value dropped. Also, tools like Craftsman brand, which always promised quality or replacement. That too faded over the past 5 years, learning from personal experience that when a tool doesn’t even stand the test of 6 months wear, and try to get it replaced, the effort to accomplish that is primarily on the buyer’s end and no longer equates to a good customer relationship.
The Sears announcement was not surprising, yet just another sign of the times. When focus is taken away from the consumer in any industry, whether retail, banking, healthcare, it doesn’t matter, it will be to the detriment of the business. And so it goes…
Happy Holidays James!
You make some wonderful points here – love the article. Unfortunately, I think we are going to see a lot of retail outlets closing some of their stores. Between online shopping and the economy, it’s bound to happen.
As far as Sears, I think they totally gave up on any sort of brand building. When I think about Sears, I think about washers, dryers and other appliances. I’m sure they have a lot of other great buys in the store but they are not “selling” them. Originally I believe Sears started as a catalog company – please correct me if I’m wrong. Maybe they need to think about going back to that.
Thanks for your insight,
Holli
EmpoweringWomenMonthly.com/blog
Hi James,
From personal experience, I think one of the reasons Sear’s and K-Mart are closing stores is lack of customer service and competitive pricing. The haven’t kept up with the trends and latest methods of shopping and customer service.
I think instead of trying to invest in advertising and customer awareness, their management has tried to find ways to cut corners and decrease spending.
I have a daughter that worked for K-Mart for 20 + years and when they downsized she was terminated. She went to work for another retail outlet that later hired some of K-mart/Sears former management team and the same thing happened to some of those stores.
Thanks,
Reuben
Sears is family to many of us. In the day Sears’ catalog was our internet, and the Christmas catalog was the no. one reference for toys etc. I think that somewhere back in the the 80′s or 90′s they could have seen the writing on the wall and moved their business into a digital world with relative ease but it was not to be. They’ve now lost so much ground that it’ll be impossible to catch up. America needs Craftsman tools and Kenmore appliances so I hope that a few of the pieces can survive. A smart cookie could still turn this into something, but I’d bet the real estate will just get turned into more hedge fund profit.
James, Great insight and review of the 2011 Christmas season. It’s amazing when you start to think about some of the companies that were cornerstones in their industry who have been toppled over the last 5 – 10 years. Blockbuster, K-mart, Sears and the list goes on. They all seem to be companies that did not make changes in time to deliver their goods and services to the consumer while other companies were finding new and more creative ways to deliver the same thing in a more efficient, less expensive and classier way.
Change is inevitable and in this day and age it is a lot quicker then it has been over the last 100 years or any other time in history. I love watching CNBC for business insight. They have a couple of great shows about WalMart and Target and Home Depot and how they started or made changes to be the companies they are today.
I also think about the books by Jim Collins – “Good to Great” and Gary Vaynerchuck – “Crush It” as priceless guides to keep you focused on good leadership and utilizing the tools of our day to impact your business and keep you on the cutting edge. Happy New Year.
James,
Sears has been chasing their own tail for a VERY long time. And, at the risk of mixing metaphors, they are constantly getting in their own way.
I look at Sears as the Keystone Cops of the retail sector. They espouse having a purpose and pursuing said purpose, however all they do is bumble about and look – dare I say – a bit slapstick.
This is their public persona.
My wife and I have purchased many appliances from them. They offer one of the best – if not THE best – service contracts in the marketplace.
I grew up browsing the venerable Sears catalog and my memories are primarily of them as a place to purchase clothing and Craftsman hand and power tools.
I thoroughly enjoy your posts and appreciate your insights and how they relate to IM.
Branding (focus+marketing) and quelling greed are vital in any for-profit venture: lose sight of either and you are like a kite without a string – floating around aimlessly until gravity takes you down.
Thanks for your insights and perspective…
Wayne
Hey James..
Every time I read something like this, I selfishly thank God that I found internet marketing where I can create a business on my terms. And even Barnes and Noble.. they’ll probably be next to fold.
Talking about Lesson #3, the customer experience, I’m having fun interacting more and building community rather than depend on Google for traffic. I think every business, whether it’s bricks and mortar like Sears, or virtual like ours, has to stay up on what the people want.. and then deliver it.
dee
Good post James. I was sad to hear that Sears is having a rough go of it, but I am not at all surprised. I recently went into a Sears/Kmart store for the first and last time. It was a very strange shopping experience. A vast retail facility with lots of stuff, a few very disinterested employees and no customers. It had no energy, no vibrancy, no nothing.
Its too bad really. Sears was a huge part of my life growing up. Tools, appliances, bikes, mowers. All of that came from Sears.
I even live in a Sears house! No kidding! I own a 101 year old Sears kit-built farm house. It was ordered from the Sears catalog, delivered by rail car and assembled in 1910.
Looks like this old house will outlive Sears. Maybe somebody can salvage the good parts of Sears (Craftsman and Kenmore) and build a new-age Internet mode. Or maybe not.
I worked in the Sears retail business over the last two years. Floor traffic had decreased primarily, because Delivery costs were higher than the competion for appliances. Electronics sales also decreased because of Best Buy competion next door.
Sears also cut it’s own throat by offering more savings online than in the local store. This put more pressure on the sales staff, and people resisted with their feet.
Sad but true, James. As an interior designer, I have done more than a few kitchen and bath remodels. Sears had the reputation of having horrible customer service. Their delivery and installation service was unreliable – missed dates, wrong product, and inept technicians who usually were not Sears direct employees. I grew up in a town that had a Sears. It’s been a sad turn of events to watch a brand so linked with my childhood turn into a company that no longer seemed to care.
Your goose analogy was right on and a good reminder for all of us business owners.
When JCPenney was making their big changes in their retail offerings, bringing in some designer names 10-15 yrs ago, and switching things up a bit, appealing to the buying public looking for a more visually, environmentally satisfying retail experience, Sears should have taken notice.
JCP had been feeliing “old and tired” but got smart quick and revamped their image just in time. Sears stayed the same ol’ same ol’. Boring in a word. Oh and don’t get me started on the lighting in their stores…horrific.
People wanted more of an organic retail buying experience, aong with all the other changes happening in our lives.
Retail should always reflect those changes the buying public is experiencing and be part of the change.
After 30 yrs in retail I’ve seen my share of change required to stay fresh. Especially these past 3 yrs OMG, my retail store has had to keep up and make changes every 6-12 mo’s as needed, more than ever in our 22 brick and mortar years.
Sears is a very huge reminder once again, are you in touch with the buying needs of your clients or are you just showing up and hoping your past history will keep the lights on…………………
James, great summation points regarding this change in the Sears World. You hit the nail on the head; anything that lives and breathes requires constant care and maintenance, just like the human being who desires to have positive energy and good health. I like what you wrote regarding this fundamental principle:
“It requires continual vision, objectives and supervision – which actually goes for anything in life. Anything of value in life requires that we do NOT take it for granted and give it the proper care it deserves. I thought I’d make a list of a few other things that can benefit from this principal: Health, relationships, our top clients, retirement accounts, gardens…and of course your Businesses!”
Overall, it is interesting to see the challenges facing a giant like Sears Holdings. This illustrates many challenges that we, as businesses, all face to various degrees. So much has been changing in these past decades. When you re-assess and re-formulate, taking the right action-steps help to re-invent and/or re-store what has been declining.
I like the question you posit, “How can you make doing business with you more fun, enjoyable, effortless and exciting?”
My father was a 30-year employee of Sears when their only real competitor was Montgomery Wards. Sears had a very strong brand identity then, and my family was proud of the affiliation. By the time I got a job at Sears in their retail advertising department in the late ’70′s, things were going downhill. Sears was considered a good job to have while you were going to school at night because their philosophy was, “If you have to stay past 5:00 to get your work done, you weren’t doing it right.” Most of the employees were lifers, which meant very little injection of new blood and ideas from outside.
People were starting to talk about JC Penney’s, but Sears’ management were too complacent to consider them a threat. By the time they woke up and realized they actually had serious competition, it was too late. They spent the ’80′s swinging back and forth with serious brand identity issues.
Sears’ current troubles are no surprise when you know the history. It can be traced back to the kind of insular corporate culture that helped them in the ’50′s and ’60′s, but never evolved with the rest of the world.
Once upon a time the US demographic spectrum looked like the python that just swallowed an elephant in “The Little Prince.” There was a small lower economic class, a small upper economic class and an enormous middle class. That was when we were a manufacturing powerhouse. Sears, which was wonderfully positioned to serve middle economic class tastes, stood out as the preeminent retailer of that time.
In the late 1960s a shift started–the information age began and the middle class bulge began to shift. Both the lower class and upper class began to grow. But the middle started to shrink, slowly at first and then quite rapidly. Sears kept its focus on serving the vanishing middle class. Target shifted toward the upper class with smart design and promotion; Walmart focused on the lower class with a low price strategy. Sears bounced around using Cheryl Tiegs fashion to capture the upper class and purchasing K-Mart to capture the lower class. It was, and remains, a schizophrenic strategy. This disaster was enhanced by the current ownership’s desire (as mentioned in James’ excellent post) to use the company as a hedge fund.
Sears is not the only company dealing with the shifts caused by the emergence of the information age. The music industry, the publishing (books, magazines, newspapers) industry, television and soon cinema, have all been drastically effected by the new technology.
James points out another fundamental point: even if you’re not taking advantage of, or paying attention to, new technology, you can at least deliver quality goods in a delightful way. Sears still has the quality as Randy states in his comment above, but they’ve let their delivery become dismal. Dismal Delivery will wreak havoc with customers, as Sears’ end of quarter sales have shown.
Thanks, James for reminding me of the story of the goose that laid the golden eggs– it’s a powerful message.
I think the missing ingredient for Sears and so many of us is that we don’t actually LOVE the goose. The founders of many enduring businesses put their hearts and souls–love–into their businesses, That love is often lost as new generations take over the businesses, and it shows on every level, including the bottom line. Thanks for a great reminder!
Great write-up James… love the thought about naming your Goose, so many businesses don’t know what they do! Or why they’re doing it! Hope this post finds its way onto every businesses’s reading list.
The last time I was in a Sears was for tires in 2002. Once I found out that I overpaid for tires to the tune of $150 over Wal-Mart’s pricing, I never went back. Oh, I bought a pair of gloves there the following winter.
Kmart, I’m much more familiar with have two stores within driving distance. Both are dimly lit, dated, and seem to never have any workers around to help. Sure Kmart may be a few cents cheaper on a few things over Wal-Mart but I’d much rather spend a few cents more and shop in a more comfortable environment.
Wal-mart definetly has it’s issues but they pale in comparison to K-Mart’s overall look.
I think of K-Mart like Magic Mountian and Target like Disneyland. Sure they both have somewhat the same things, but the presentation is totally different and makes all the difference. There’s just that fresh, feeling in Target where I don’t wonder if I’m getting a quality item or feel gross just being there.
Happy Holidays James and Everyone!
James,
You make some very interesting and timely observations about Sears’ lack of attention to key ingredients of sustained success… Yes they’ve been around for more than 100 years, but as we all know, they’ve lost considerable market share, in the last few decades.
Like yourself, some of your readers are too young to remember going to Sears in the 1960′s and 70′s and having a GREAT shopping experience! The stores were always clean, well lit and the workers were helpful, happy, and plentiful… And who could forget walking into the Department that sold fresh popped popcorn, frozen Cokes, cashews & peanuts? It was great!
Although over the years we trusted the Auto Repair shops with our vehicles, religiously, we also purchased a great deal of our clothes there, too… It was because we trusted Sears, and we knew that the people that worked there would take care of our shopping needs, by answering questions and helping us find the items that WE wanted.
We must also remember that during those days, the employees were more mature (older) and they generally had a stake in how well the stores performed… Nowadays, a lot of the Retail Stores (not just Sears), restaurants, and other places we frequent for entertainment or our everyday needs are over-run with kids, pretending to be employees, and displaced workers who resent having to work in Retail, because they lost their previous jobs, due to being downsized. These things do have a negative impact on the “Customer Experience” as a whole.
For the most part, these two groups of employees do NOT care about enhancing the “Customer Experience” in a positive way… They know that they’re going to get a check, irrespective of whether someone buys something or not. Moreover, they tend to only take their jobs seriously, when a supervisor is monitoring their work. This poor work ethic, combined with disrespect of a customer’s needs will negatively effect the bottom-line of any business.
All that aside…
Yes, Sears has dropped the ball, and times have definitely changed, relative to the “Customer Experience” at Sears. The one-time Giant of the Retail Industry became sloppy, arrogant, and hired irresponsible kids to do grown-ups work, while their competition grew leaner, smarter and more responsive to the “Customer Experience” over the last few decades…
Remember this, too everyone…
Sears has pretty much grown into a provider of “Commodities” that aren’t the best quality anymore. And they relied on their Size and History in the Industry to set the path for their future. Combine that with the fact that Walmart does what Sears used to do well, at a lower price point, and that spells disaster for Sears.
And DON’T get me started on Kmart…
Good post James:-)
Take care!
Dr. Michael (The D.O.C.)
“Keep On, Keeping On…)
These are definitely some great observations and comparisions to things we should think about in our own business.
I work in the Chicago area (where Sears is headquartered) and from what I’ve heard, I think Sears is changing its business model a bit. They do have alot of stores right now, but I think they see the future of sales being more online and immediate. So they have a lot of online initiatives going on right now trying to be more like Amazon. The difference Sears can have over Amazon is to leverage those Sears and Kmart stores for things like Store pickup the same day. I know people who do that alot and really like it because they consider it time saving and cost effective. They launched a Marketplace last year so anyone can sell items through Sears.com. They have won some tech awards in retail just this month for their mobile initiatives.
Maybe Sears will be closing stores that are redundant in a location or something like that. Guess we’ll see. Are they changing in ways we can’t see yet? Or is it really “death to Sears”?
Rachel
I recently went to Sears to pick up a zig saw I ordered online. Was a good deal. Got the saw with no problem.
I was shocked in the store. Had not been in several years. Shelves empty or having one of an item only. Merchandise not straight and orderly. Based on what I saw I do not see how Sears can servive 2012. There is no way the store I saw had enough trafffic to support it.
Very sad and depressing to see this special piece of Americana run into the ground.
Being an associate for SHC, I get a little bit of a better perspective of this company not only as a worker, but as a consumer. One thing I think is bringing Sears down, they aren’t competing where it matters. Day in and day out, I get hassled by manager after manager about my “metrics”. These are just numbers we need to obtain on a daily basis. These metrics determine whether I am going to continue working for this company. From time to time, the thought crosses my mind that Sears isn’t worried as much about the customer experience. To any high up manager, on paper, I don’t seem to be the best associate. But I come to work everyday FOR THE CUSTOMER. Hard to believe, but if I could do this for free and survive, I would. Each and every customer I work with comes back to see me. In my opinion, no, getting credit card sign ups will not keep our business alive. If anything, it’s just possibly setting a customer up for debt with our 25%+ interest rate. Shop Your Way Rewards, a good idea but not as good as they may think. Who wants junk email? Who wants $1 for every ONE HUNDRED spent. Customers need to be reminded why we WERE at one point the largest and most respectible retailer. Bring back products that can’t be found a Walmart such as: Guns and ammo(Texas especially), swing sets for kids(IN STORE). Bring back passed removed products like paint, MORE mens clothing, further tools like welding equipment. We have exactly the same products as pretty much any major department store…If anything, less. Customer service and product assorment/abundance. THAT