3/13/2012 2:38 PM ET|
Can tracking shoppers save Sears?
The retailer is offering rewards to customers who 'check in,' gathering data on their purchases and even tracking them in stores via GPS.
Lou D'Ambrosio, the chief executive of Sears (SHLD, news), walks through a Sears store in the Chicago suburbs pointing out the new strategies the struggling retailer is counting on to reverse its sliding sales.
Workers armed with iPads and iPod Touches pull up online reviews for customers and check whether items are in stock. Everywhere, banners advertise a loyalty program called Shop Your Way Rewards, which promises customers generous freebies for repeat purchases, as long as they agree to share personal shopping data with the company.
A former IBM salesman whose speech still reflects his native Philadelphia, D'Ambrosio, 47, is blunt about where he wants the parent of Sears and Kmart stores to be in the future: still in business.
"We saw what happened to Borders. We saw what happened to Blockbuster," he says, reflecting on the rapid technological shifts that have undermined once mighty store chains. "You don't change, you die."
While D'Ambrosio, whose previous job was CEO of telecom company Avaya, had no prior retailing experience, he does have a plan. To save Sears from the retail graveyard, he wants to use technology -- and the reams of customer data retailers can mine -- to give shoppers exactly what they want.
Shoppers who "check in" to the Woodfield Mall store using their smartphones are now sometimes greeted by Sears employees, who find them via the global-positioning systems on their devices and steer them to the flat-screen televisions and Kardashian Kollection jeans they ogled earlier online.
"It is the equivalent of walking into a coffee shop and not having to say anything as someone prepares your coffee with just the right amount of cream and sugar," says Michael Archer, who helped design Citibank's American Airlines loyalty cards and now works for management consultancy Kurt Salmon. (He isn't involved in Sears's loyalty program.)
Sears wouldn't disclose how many customers have signed up to Shop Your Way Rewards, although a spokesman put it in the "tens of millions" after loyalty-marketing firm Colloquy estimated 50 million.
Sears executives express frustration that turnaround efforts are being overshadowed by news of the financial turmoil at the Hoffman Estates, Ill., company, which had a loss of $3.1 billion last year. Criticized for allowing stores to get shabby and service to take a back seat, Sears has suffered six straight years of sales declines at stores open at least 12 months.
Some analysts believe the marriage of Sears and Kmart stores arranged by hedge fund investor Edward S. Lampert is headed for a breakup. In December, Sears said it was closing up to 120 big stores out of about 2,200; the company further announced last month that it was spinning off its more than 1,200 smaller franchise locations. Lampert's ESL Investments controls 61% of Sears shares.
Sears leaders insist they remain focused on fixing the store business, not selling it for scrap value. The retailer declined to provide exact figures, but a spokesman says it spent "several hundred million dollars" improving its stores last year, when technological enhancements are taken into account.
"How do you value that versus the extra coat of lemon-white paint?" D'Ambrosio says in comparing the technical upgrades with store renovations. "I don't know, but to ignore it would be a mistake. That's not to say we should have paint that's, you know, falling off."
Retail experts characterized Shop Your Way Rewards as promising, but not very different from what Target (TGT, news), Macy's (M, news) and other retailers already do, adding that such a program alone cannot turn around a company.
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"A good loyalty program, which gives a company better intelligence about what its best customers really want, can be a strategic advantage," said Jim Sullivan, a partner at Colloquy, a loyalty marketing firm. "But it's a truism in our business that even the best loyalty programs can't fix a fundamentally broken brand."
Sears has been unsuccessfully counting on various technology strategies to revive its flagging sales for years. Investments in its website have yet to bolster the bottom line.
"They need to get back to retail 101," says Morningstar analyst Paul Swinand. "This stuff about hounding everyone for their email address, it's never going to move the needle quickly enough."
Sears, though, says the information it is collecting is changing how the sales floor is arranged, like moving workwear over to where tools are sold. It has also altered the way Sears designs promotions to entice shoppers. For instance, after noticing that many jewelry customers were men who bought tools, Sears created a Valentine's Day special for Shop Your Way Rewards members that dangled $100 in credit for $400 spent on jewelry. To drive home the point, an ad featured a necklace strung around a nail and said, "It's Valentine's Day -- You Better Nail It."
"The multiple of what people are spending using the points has exceeded our expectations," said D'Ambrosio. Meanwhile, the company continues to struggle retaining executives: Last week it said that the head of its appliances business, Dev Mukherjee, was leaving after a year and a half.
The well-tended Woodfield Mall Sears, one of several hundred that was recently remodeled, according to store operations chief Deidra Cheeks Merriwether, is an example of what Sears stores can be when they're gussied up.
Outdoor clothing from Land's End, which Sears owns, dominates the area near the main mall entrance. Pastel women's tops from Covington, another Sears brand, line the main hall.
"Think Middle America, minivan, 1.8 kids," says Ron Boire, the former chief executive of Brookstone, who was hired by Sears in January to oversee its merchandising and store formats. With a little more time and customer information, he says he is confident he can make the store experience much better.
Consumers "are descendants of the people who picked the shiny rocks out of the river," Boire says, explaining that people always want a place where they can touch and feel merchandise. "We can tell the story a lot better in stores."
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So let me get this straight; Sears's idea to save itself is to go all "big brotherly" or 1984-like, and get customers to agree to being tracked with GPS; so they can collect more marketing research data on the people walking in the stores. In essense getting the unwitting customer (who perhaps doesn't quite realize what they'd be agreeing to in the terms of marketing research) to become the businesses own research tool....
Hello, anyone home? Perhaps this exemplifies why many don't shop there, or chose to shop elsewhere in part. The retailer's job is to serve the customer, not get the customer to serve the store. Oh gee, can we really be extended the "privellege" to walk in these stores, and get snooped on and tracked, with a complete disregard to the customer's privacy; just so we can do the marketing research for the retailer, in the name of saving it? /rofl
UHHHHH,,, Sears may want to start with some customer service in their stores.. when you have to hunt for someone to help you find a product(they were hiding playing a video game, 3 of them) happened to me 2 times in a row at Sears,,, wont go back again,,, have shopped at Sears for about 40 years,, it wont be 41 years for sure.
the top core of sears is simply exploiting what cash they have to finance their over valued salary before FINALLY declaring chapter 13, 11. sears is a dead store. bringing people on with no retail experience surly will finish them.
sears is dull, lifeless, and checking out is pathetic. k-mart is too. seems the store knows nothing of coming in, buying, and getting OUT! no sales people on the floor. certainly no one who knows their products or who can answer a question.
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