Sears' New Internet Strategy: Late to the Party....Again
I do not think Sears’s management ever looks at the past. Recently they created a Market Place – similar to Amazon, Best Buy and Walmart, where small and midsize vendors offer their wares at good prices. The company uses their powerful Internet search engines for third party vendors to offer fashion and hardlines merchandise. Purchases will be shipped directly to customers. It sounds great, except the company does not police or guarantee the offerings, and any complaint that buyers may have must be handled directly with the seller.
Sears has a history of trying new ideas. At one time it had a true leadership role in the retail industry. I recall the early catalogue days – during and after World War II when Sears sold houses. It was a simple – utilitarian – two floor house that was prefabricated and put up quickly and cheaply. More recently, I personally watched Sears introduce the Cheryl Tiegs clothing line. Cheryl Tiegs was a renowned, attractive model, who had been on covers of magazines like Glamour, Seventeen, Sports Illustrated and Elle. She was on the cover of Time magazine (which she autographed for me) and for a 9 year period from 1981 to 1989 Sears sold a Cheryl Tiegs signature line of clothing, footwear and accessories. Nearly $1 Billion of merchandise was sold in the first supermodel venture. But the merchandise and the manufacturer changed and the line no longer had the same appeal so it was dropped.
A few years later Sears tried again to appeal to the female consumer. It started an advertising campaign called “The Softer Side of Sears” which featured fashion merchandise. Created by ad man John Costello, the multiyear ad campaign, which launched in 1993, was supposed to attract more female customers. It had attractive commercials and catchy songs. After about four years it was dropped since the effort did not result in more profits. Sears went back to its hard line roots featuring the trusted names of Kenmore, Craftsman and Die Hard batteries in its ads believing this was the key to success with loyal core customers. However, in the meantime, stores like Home Depot and Lowe’s were growing rapidly and taking away some of Sears’ customer traffic.
Now Sears wants to go upscale on the Internet. The Sears Marketplace is supposed to carry anything a customer may want – famous name watches, Channel handbags, Bongo jeans, and anything else the third party vendors might want to sell. Small retailers need an outlet for their wares. The list of goods for sale is long, it includes fashion and fashion accessories, home furnishing, building materials etc. However, similar to my horrible experience with the Ford Motor Company which does not back up their suppliers, Sears will not back up anything their third party vendors sell in the Marketplace.
The trust that customer have in eBay’s transaction, or in merchandise sold by Amazon that also insures that everything is to customer’s satisfaction is lacking here. I think Eddie Lampert, the CEO and Chairman of the company does not understand that customers build up trust in a company – in this case, over many year’s. Sears had build up confidence by selling high quality reliable products under brand names such as Die Hard batteries, Kenmore appliances and Craftsman tools. These names were exclusive to Sears until Eddie Lampert allowed some of the brands’ products to be sold at Home Depot and other retailers.
The truth is that Sears is losing its franchise with its core customer, and has been for a long time. The last time I was in a Sears store I saw quite a lot of Lands’ End merchandise – which l liked, but it was poorly displayed and therefore unappealing. The home areas were in disarray, with signs not placed properly on appliances while salesmen stood talking with one another in a corner.
The theory is that Sears is a company with very valuable real estate – but is there value if the customer traffic is non-existent and the sales productivity is low? To me, it takes more than the Sears name on the door to create value, in real estate, or otherwise.