holidaze

Ho Ho Hope: Sears Aims to Avoid Sad Santa Syndrome

Posted by Barry Silverstein on December 22, 2010 12:30 PM

In 1893, Richard Sears and Alvah Roebuck, two young men with a knack for selling watches, started a company that became one of the great direct marketing innovators and retail brands in the US.

The company sold everything imaginable, targeting primarily rural families via a giant mail order catalog. It wasn't until 1925, when American cities grew up, that Sears Roebuck, later to be known simply as Sears, opened retail stores.

Today, it seems, Sears is gradually going back to its direct marketing roots via online sales. While its retail store sales plummet, Sears is ramping up its e-tail offering with the hope of being more (Web)SavvySanta than the sad Santa depicted in its holiday 2010 campaign.

Sears has subtantially beefed up its online operations ahead of this year's holiday selling season, including offering consumers a single sign-in across all of its sites and providing mobile applications to enhance the shopping experience.

In an unusual move for a traditional retailer, it launched the Sears Marketplace earlier this year — a giant portal through which third-party sellers can make more than 18 million products available to consumers, not unlike Amazon.

But online sales are only part of the sales picture, and that picture isn't pretty. Sears Holdings, which runs both Sears and Kmart stores, saw a revenue drop of more than 10% from 2005 through 2009, according to the New York Times. During that same time period, rivals thrived. Walmart experienced a 31% increase in sales, while Target rose more than 24% and Macy's was up around 5%.

Sears' problems don't appear easy to fix. Despite well-known brands such as Craftsman and Kenmore, and the apparel brand Lands' End, Sears is saddled with stores that are, for the most part, pretty run down.

Gary Balter, a Credit Suisse analyst, tells the Times, "If you're Sears, you've got a problem because you're trying to sell a product in a dilapidated building." Balter said that Sears has about 2000 retail locations, but "there's 1,500 that you don't want to be in."

Sears Holdings' marketing president David Friedman counters to the reporter that "the associates and the products drive the in-store experience," indicating that Sears is experimenting with new interior features at some stores.

As for its product line, Sears has long been all things to all people, but today that may be a liability. In appliances, traditionally a Sears stronghold, the company saw sales of about $7 billion plummet more than 8% in 2009. Lowes, with $4.5 billion in appliance sales, was up nearly 4%. In clothing, while it has followed the lead of such retailers as Kohl's and Target in securing exclusive fashion brands, Sears still lags behind the competition. To supplement sales, it has leased space in some stores to Forever 21.

Even the brands that were Sears exclusives are showing up elsewhere. Craftsman tools are being sold by Ace Hardware, and Kenmore and Craftsman brands are available at Kmart.

Kmart, meanwhile, has its own set of problems. The discount chain has "about a quarter the sales productivity of Walmart," says Balter to the Times. "How do you compete?"

As for how will Sears as a sagging retail brand compete as it moves into 2011, chances are all the company wants for Christmas is robust holiday sales — and then it will worry about a happy new year.

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