4/17/2012 7:47 PM ET|
Why Sears is on its last legs
As another way to generate cash, Lampert has sold off several of the better Sears stores, says Columbia Business School professor Mark Cohen, who was CEO of Sears Canada until mid-2004 and chief marketing officer and president of soft lines in the U.S. before that. A lot of the remaining stores are in economically challenged areas, or in older, declining malls. "Most retailers have come out of the recession with some manifestation of recovery," says Cohen. "But Sears continues to decline, and there's no reason why it should show any positive performance because there's been no strategy or investment. This has been an asset strip."
In fairness to Sears, capital spending has picked up 23.4% over the past two years, to $432 million last year, points out David Trainer of New Constructs. Trainer still considers Sears a dangerous stock because of poor returns on investment and because shares look expensive, given the company's prospects, after such strong performance this year.
Sin No. 2: Prices that are too high
Another problem for Sears is that it rarely offers regular discounts and low pricing like Wal-Mart and Target (TGT) do. "Lampert decided that price doesn't matter; he's going to go for profit margin," says Davidowitz. "In retail, you don't start with profit margin, but in Lampert's world you do. So Sears was not price-competitive and still isn't." Again, customers noticed and went elsewhere.
"We believe it is not just solely about price when it comes to value to our customers," responds Sears spokeswoman Kimberly Freely. Sears also provide value through special offers inside a membership program, a guarantee to process returns in five minutes, free shipping on some products at certain times and "best in class brands at both Sears and Kmart."
Sin No. 3: Hiring CEOs without solid retail experience
Sears needs a CEO with solid retail experience to shake things up by clearly defining a direction and trying out new concepts in test stores, says Davidowitz. Instead, the CEO who joined in February 2011, Louis D'Ambrosio, comes from Avaya, a tech company. Before that, he worked with IBM (IBM). "He has no retail experience, and there's no reason to believe he is anything more than the latest puppet," says Cohen, at Columbia Business School.
Before that, Sears had an interim CEO for a few years, W. Bruce Johnson, who was promoted from inside the company, where he was in charge of supply chain and operations -- more of a tactical than a strategic leadership position. Sears has also had a lot of top management turnover in recent years, which also makes it more challenging to set a clear strategy, says Morningstar's Swinand.
In defense of Sears, it recently put Ron Boire, a solid retail veteran, in the position of chief merchandising officer. Boire had been the CEO of Brookstone and the president of U.S. Toys, North America for Toys R Us. He had also worked in Sony's (SNE) consumer division.
Sin No. 4: Regular sales declines
A combination of the sins above, plus a weak economy, has led to the cardinal sin in retail -- regular sales declines. The key metric to watch in retail, says Davidowitz, is "same-store sales." This gauges sales at stores open more than a year, to strip out the effect of store openings and closings. "That is the most important thing in retail. It proves your viability," says Davidowitz.
Unfortunately, Sears' same-store sales have been in decline for six straight years. The trend continued in the fourth quarter, when U.S. same store sales fell 5.2%. "In other words they are shrinking their market share," says Davidowitz. As a result, the company lost $4.52 per share last year, after accounting adjustments.
In its most recent conference call, Sears outlined several tactics it believes will help reverse the negative trends. It's "arming" sales associates with iPads so they can better help customers figure out which products are right for them. This makes sense with big-ticket appliances. Sears is rolling out a shoppers' loyalty program, and new Kenmore and Craftsman products. It's revamping store layouts to mix up merchandise so that customers who go in for one thing pick up other stuff as they move through stores. Work clothes, for example, have been moved closer to tools.
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I've been reading these comments being that I am a Sears employee currently. I've been an employee for 7 years. I was there before the merger with Kmart.We are not happy with no company leadership nor values. I try to give the best service I can for each and every customer that enters my area. I say hello as soon as see someone enter and thank them when they leave. True, working there is a very hostile work environment.For some of us, Sears is all we have for employment. I'm turning 40 this year and where i live, unemployment is through the roof. I apologize to everyone whom has had a bad experience. There's not a company on earth that can please everyone. i read that we employees don't know the products. Sears fires and hire so quickly because the demands for getting numbers is so intense. How is someone supposed to know the stuff if they are new? Plus, if you are asking a cashier about something, then obviously you are going to get a response you will not like. Floor people are the ones to ask.
Sears is dying and we employees know it. I presented ideas on how to change things and it was quickly dismissed. The people in the Sears Tower have no idea what goes on in the stores. But, they care less about the work staff than the consumer. You try to survive on a 14 hour work schedule making $6 plus commision with child support , utilities, and rent. Finally, Sears employees are also customers. So, we understand your points better than most because we get it from both sides of the fence.Consumers come rarely to shop,but we employees are there as our schedule permits. So, if you don't like sears, then I'm truly sorry to lose you as a customer. 130 years of being a retail icon are ending. Without Sears, there wouldn't be Discover card, Kenmore, Craftsman, Allstate insurance, the catalog, etc..What has Walmart provided society but a gateway for the chinese government to grow? I'm not here to defend Sears. I'm here to defend the workers who get beat up , day in and day out, to make $6 and try to make customers feel important when they visit. Instead of trying to be walmart, Sears needs to protect and defend the legacy of 130 years in business.
Sears was the store for young couples starting out, because it was easy to get credit there. It helped a lot of families establish credit. The prices were reasonable and the Sears branded products were reliable.
Sometimes companies just lose their way. It happens when outside managers are brought in who had success as cola managers or in some other unrelated business. There is no incentive for low level managers to excel, because the top jobs will go to outsiders. The fault lies with the company directors, who have zero experience in the business.
Sears used to get a lot of our family's money. Almost all of our tools, appliances and equipment were purchased there. And then like everybody else, they started shipping their jobs overseas, and the quality went downhill.
The first time I noticed it was when a friend of mine and I were stripping down his Cadillac 500 engine. He pulled out his brand new set of Craftsman socket wrenches, and attempted to loosen an exhaust manifold bolt with a 1/2" drive wrench. It broke on the first turn. He switched to his slightly smaller 3/8" drive, thinking the other wrench might just be defective, and that one broke on the first turn. He then got into his toolbox and pulled out an OLD ('50s or '60s) Craftsman 1/4" drive socket wrench that his father had given to him; and wouldn't you know it, we finished stripping down the majority of that engine with that tiny little quality made American product.
I could go on and on about the crappy made snowblowers and lawnmowers, and horrible customer service that they are churning out nowadays, but everybody else seems to be doing a good job of that already.
We all need to start demanding that these companies start bringing these jobs back home. This country was prosperous once, and it was because we manufactured our own goods (we even EXPORTED!!! Can you believe that?!) But we can't just build these things here, we need to give a damn about what we're building. People need to start caring about the effort they put into things again, and they need to re-learn about the true pride of accomplishment in creating quality goods.
And these little pukes behind the service counters need to get off their iphones and start learning about the products they are selling. 'Nuff said.
I worked at Sears over 30 years ago. Back then, a customer could walk into a store and get personal help for as long as he/she needed it... no employee looking at a watch, acting bored, talking with another employee... just flat-out good customer service. We were told our customers paid our salaries, and we sure as heck took that to heart. We really liked helping our customers, seeing them enjoy their shopping time with us, and getting to know them as friends.
I bought a lot of furniture back then, and I still have most of it. Heavy wood, it has really lasted throught the years. I can't find anyone who sells furniture like that now. No one. I also bought some of the most beautiful, well-made clothing then, too. Excellent quality. That was Sears' best selling point... the finest quality. "Satisfaction guaranteed or your money back."
Those in charge of Sears now might as well be conducting business down at the city dump. AND I hate how citibank took over the Sears credit card. The interest rates are sky-high, and if everything isn't followed to the letter, you can be hit with exorbitant rates and fees. I always pay about 5 times the minimum payment, yet, since I made one out-of-town payment one day early and didn't realize I preceded the billing cycle's end by that one day, I was slapped with a non-payment fee, some other kind of fee, and a threat of being turned over to collections. I had the credit card for 35 years!!! Never late, ever, and they treat me like this!
I was going to cut the card up and mail it back, telling them to stick it where the sun doesn't shine, but I figured they would get me on some kind of harrassment thing. So... I am going to use it once a year, to charge the smallest thing I can find. Then, I am going to turn right around and return the item. The card will show activity, but they won't be getting a dime from this old lady. I won't mind seeing the last of the "new" Sears. The sooner, the better.
And now Lampert is buying a $40 million dollar mansion off the coast of FL, he has no care about anyone but himself. He won't listen to complaints, there was one lady on a forum who bravely went to Chicago to one of the annual meetings and she pointed out everything that was wrong and what needed to be done. That lady had worked for Sears for a long time, a lot of good it did her, I admire her for being so brave to confront the top man of the company. Sadly, Lampbert did as he always does, pay no heed to those who are dealing with the customers; because money and being called a so called 'genius' has put him at the head of a company he has no business being in. The lady is no longer working for Sears, because you can't talk to someone who won't listen and make needed changes. Sears is over with and hedge funders are nothing but thieves; taking away the lives of those who really do work hard to take care of customers. Because no will stop them of what use is it?
Someday, it will all catch up and it's not going to be pretty.
As a (thankfully) former Sears manager I was told to make sure that none of my employees reviews were more than meets expectations, this way they got a low raise if any. Sears is notorious for telling employees they are giving them something good while taking something else away. Sears employees live at poverty level if that.
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