With profits expected to be less than half what they were this time last year, Sears has announced plans to restructure itself out of the department store business.
Chairman Edward S. Lampert will divvy the company into 50 or more separate operating businesses, each with its own operating exec and structure. Some famous Sears brand names, like Kenmore and Craftsman, will be among the new, stand-alone businesses.
This new structure will create "greater control, autonomy, and authority," and, according to the Wall Street Journal, breathe new life into a slow-moving Sears' culture that Lampert has characterized as "inefficient."
Now, I'm a dim bulb, but this move seems bass-ackwards.
Sears has lost customers to specialized retailers. Not only can people buy electronics at Best Buy and clothing at Abercrombie & Fitch, but Wal-Mart has assumed the role of one stop shop for people shopping on price.
Successive waves of traditional brand "repositionings" have give us slogans ("the softer side of Sears"), celebrity clothing lines (Cheetah Girls), and store inventories that seem at once filled to excess, yet fail to include the one item you're looking for. Many millions have been squandered on advertising, Internet sites, and the other standard tools of marketing communications, in hopes of convincing consumers to overlook these limitations and toothless inventions
So what does Sears do? Break up its brands and departments into separate companies. The new corporate strategy is to disconnect the dots that gave consumers a department store concept, albeit a dysfunctional one.
It's unclear how or by whom the actual stores will be managed, nor how these various independent entities will coordinate, let alone cooperate, to fill them. It's quite possible that one or more businesses might look elsewhere to reach consumers, or get spun-off altogether.
Lampert could make a ton more money on the move, as you can almost see the 'ol corporate raider nonsense about "unlocking shareholder value" lurking in the shadows of the as-yet unreleased deal details.
But if there wasn't a compelling reason to visit Sears before, it's highly unlikely there's going to be one now.
I have a radical plan it could follow instead. With the benefit of no inside knowledge, and certainly no accountability, here's my wild recommendation:
Become the geophysical front-end for the Internet.
Make Sears stores the places where people can peruse a variety of products, order and than take delivery of any products available online, and provide the service and support for those transactions.
Yup, I know. Nuts. But think about it.
Sears was founded in the late 1880s as the on-stop shop for the material aspirations of entire generations of Americans. The Sears, Roebuck & Co. catalog was a de facto search engine, delivering a guide to what consumers believed were not just the best things available to them, but effectively everything that they could buy.
Lampert bemoans the risks of predicting consumer trends long before there's enough information to qualify those estimates as anything better than guesses. So imagine Sear skipping the predicting entirely, and redefining itself as the gateway to whatever is hot.
Sears as the bricks-and-mortar access-point for today's online shopping experience:
- Could host branded boutiques for the right price
- Provide not just Internet shopping access sites in-store, but create intellectual capital that provided context, ratings, whathaveyou (how about marshalling its customers to become the ad-hoc raters of all things buyable? Talk about managing social networks with a purpose...it might even be able to charge for such access and info)
- Offer some easy payment options that were an improvement on PayPal and/or your credit card of choice? Maybe some sort of insurance, or accrual points?
- Add delivery and storage options, so there was a reason to buy things and have them shipping to the Sears store. Maybe create some easy attachment sale option, so taking delivery of, say, a stereo receiver meant that consumers got a great, one-time deal on cables
- Serve as the sales & support venue. This is potentially the biggest opportunity, I think, as no matter how "easy" it is to return stuff bought online, it's still kinda hard. Also, when it comes to gizmos, lots of people want to bring devices to repair vs. ship them. Could Sears become the sales & support advocate for consumers buying online?
Oh, and by the way, all of the above behaviors would drive people to its stores, so it could also sell loads of merchandise that had nothing to do with Internet shopping (with the right price/value strategy, it could use the Internet services to draw consumers, and then flip them to Sears purchases)
It would be a reach. A radical proposition. A risky venture. Maybe it's the wrong idea entirely.
But I can pretty much for sure tell you that tearing apart the company so it can "better compete" is a cover story for dissolving the company, piece by piece. That's what equity people do best.
What brand marketers do best is inspire and motivate customers. They should stop throwing good money after bad, and coming up with lame branding campaigns, and get their heads around a truly radical proposal.
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