Sears pushes technology but fails at sales

Why is the historic retailer struggling to connect electronically with consumers?

By Benzinga May 29, 2013 5:03PM
Sears store on in Milford, Connecticut Spencer Platt/Getty ImagesBy Jim Probasco

If, as is often said, catalogs were the precursor to online selling, then Sears Holdings (SHLD), in the form of Sears, Roebuck and Co. set the standard in 1894 with the introduction of its “Book of Bargains.”


So why, with all this history behind it, is the company struggling to connect with customers in an increasingly online (electronic catalog) world? And more importantly, why is Sears unable to be profitable in any form? Wall Street, according to The Wall Street Journal, wants answers to these and other questions.


Sears CEO Edward Lampert has said he wants to attract "hyper-connected" shoppers with tablets and mobile phones. Lampert sees the need for bricks-and-mortar retailers like Sears to accommodate a seismic shift in consumer buying habits. And he is pushing the company to embrace technology in a big way.


Investors. simply put, want the company to make a profit. After reporting a $279 million quarterly loss May 23, Sears stock dropped 14%. Shares fell an additional 2.5% on Tuesday, closing at $48.98.


On a conference call with Lampert last week, Morningstar analyst Paul Swinand said "We're all interested and view the online and technology investments positively. I guess we're trying to bridge the gap of how we get to a profitable company from where we are today."


Lampert provided iPads to Sears store associates, and has ordered the development of online and mobile apps to improve communication with tech-savvy customers. One app even allows customers to text store employees with product questions, according to The Wall Street Journal report.


Other improvements include reducing delivery time for online shipments to an average of two days from the five days it took previously. In addition, like Amazon.com (AMZN), Sears now allows third party retailers to sell to Sears customers through its marketplace.


Finally, a loyalty program called 'Shop Your Way Rewards' lets Sears track customer buying habits, according to Lampert,  to better target promotions in a way that could lead to higher margins.


Despite all these technology-oriented efforts, the Wall Street Journal reports that online sales, according to analysts, account for only about 2% of revenue.  At that rate, e-commerce is years away from making a meaningful impact on Sears’ bottom line.


Meanwhile, the company has 2,000 physical stores -- and has not been keeping up with the competition when it comes to upgrading the bricks-and-mortar part of the business. Sears spent $378 million on capital expenditures last year. Kohl’s (KSS) spent $785 million, J.C. Penney (JCP) dished out $810 million and Macy’s (M) spent $942 million on store upgrades, according to regulatory filings. 


More From Benzinga
1Comment
May 29, 2013 8:00PM
avatar

I have and still do purchase sears appliances, just recently I purchased  four new appliances, frig, stove, washer and dryer. I've always had good luck with their products,

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

120
120 rated 1
268
268 rated 2
439
439 rated 3
709
709 rated 4
641
641 rated 5
609
609 rated 6
640
640 rated 7
516
516 rated 8
272
272 rated 9
152
152 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
EXCEXELON CORPORATION10
TAT&T Inc9
VZVERIZON COMMUNICATIONS8
CTLCENTURYLINK Inc8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.