Tuesday, January 03, 2012

Can Sears be Saved?

The Wall Street Journal reports that Sears has hired Brookstone CEO Ron Boire as its new chief merchandising officer and president of the Sears and Kmart store formats.   Boire told the newspaper, "My focus will really be on creating more and better theater in the stores."  He also will attempt to better integrate Sears's stores, website and mobile-phone application.  ,He has a major challenge ahead of him.  According to the Wall Street Journal, "Sales at stores open at least a year have declined every single year since Mr. Lampert created the Hoffman Estates, Ill., company by merging Sears and Kmart in 2005."

What can and should Boire do to reverse Sears' fortunes?   Rather than proposing a specific answer, I would recommend an approach that might be fruitful.  I don't think Sears will turn itself around simply by making changes in the store experience, or in its ability to appeal to cross-channel shoppers more effectively.  Sears needs to take a top-to-bottom look at its entire business model.  Such an analysis would ask some fundamental questions to begin:

1.  Do Sears and Kmart belong together?   Do they help each other?  Are they truly more valuable together than apart? 

2.   Does Sears belong in all the product categories in which it competes?  Which categories are money-makers and which are money-losers?   What products still draw people into Sears stores?  (consider tools, appliances, etc.) 

3.  How many stores does Sears want/need in its network?  What's the optimal size of its store network?

4.  What's the optimal size/layout of a Sears store? 

5.  What are the right kinds of locations for Sears stores?  Does its mall-based strategy work effectively or not?

These kinds of questions must be addressed if Sears is to survive.  The firm has been on a long-term downward trajectory for years.  Minor adjustments won't save the company.  

1 comment:

james said...

I believe that sears could be saved if the company were separted into Kmart and sears. Sears is the better part of the company combining Kmart and sears was the worst decision in retail history.