Company Case Sears: Why Should You Shop There? After working late one evening, Joan stopped off at Sears to return some items she had purchased online from Lands’ End—a Sears-owned brand since 2002. She couldn’t remember the last time she’d set foot in a Sears store, instead usually shopping at other department stores or discount retailers. As she walked in, she noticed that the store felt old and a bit run down. She also noticed that she was one of the few people in the entire store. The store seemed to stock a hodgepodge of products and brands, arranged in a pedestrian way. On her way out of the store, she wondered to herself, “Who shops at Sears? Why?” Younger shoppers might find it hard to believe, but until the 1980s, Sears was America’s largest retailer—the Walmart of its day. It’s once famous slogan, “Where America Shops,” wasn’t just a clever tagline conjured up by Madison Avenue. It was a positioning statement with power. Sears catered to all, selling merchandise in just about every category to just about every customer segment. But the once dominant Sears has since fallen so hard, and so fast, that some analysts are now predicting its demise within the next few years. Its once famous slogan seems almost comical now, as its stores are often deserted, even during peak times. What caused this decline? Sears lost its focus. Whereas many retail brands have forged strong positioning strategies targeting specific segments, Sears no longer stands for much of anything. Mention Walmart and people think “Save money. Live better.” Bring up Target, and they know to “Expect More. Pay Less.” At Macy’s you get “the magic of Macy’s,” and Nordstrom promises to “take care of customers no matter what it takes.” But say Sears and most customers draw a blank. The chain has neither an image nor an apparent value proposition that gives people a compelling reason to shop at its stores.

The Fall of an Icon

Founded in 1886, Sears grew to become America’s iconic retailer during the 1900s. It began as a mail-order catalog company in the 1880s, grew into a national chain of urban department stores during the early- to mid-1900s, and became an important anchor store in the fast-growing suburban malls of the 1960s and 1970s. Through the 1980s, Sears was the nation’s largest retail chain. Almost every American relied on Sears for everything from basic apparel and home goods to appliances and tools. But during the past two decades, as the retail landscape has shifted, once-mighty Sears has lost its way. And Sears has failed to refresh its positioning to make itself relevant in today’s marketplace. A look at Sears advertising or a visit to the Sears Web site testifies to the retailer’s almost complete lack of current positioning. Headlines scream “Buy more, save more on appliances,” “50% off your favorite apparel brands,” “Lowest prices on Craftsman lawn and garden,” and “Big brand sale: great values, top brands.” It seems that about the only thing Sears has going for it these days is that everything it sells is always on sale. However, price is not a convincing value proposition for Sears, which has trouble matching the low prices of competitors such as Walmart, Target, or Kohl’s. In 2005, a struggling Sears merged with an even more distressed Kmart to become Sears Holding Corporation. The merger of the two failing retailers left analysts scratching their heads and customers even more confused about the value propositions of the respective chains. Following the merger, the corporation jumped from one questionable tactic to another. For example, Kmart stores began carrying well-known Sears brands such as Craftsman tools, Kenmore appliances, and Diehard batteries, diluting one of Sears’s only remaining differentiating assets. Sears Holding Corporation has also tried a variety of store formats. For instance, it converted 400 Kmart stores to Sears Essentials stores, which it later changed to Sears Grand stores—Walmart-like outlets that carry regular Sears merchandise plus everything from health and beauty brands, toys, and baby products to party supplies and groceries. It has also dabbled with a confusing assortment of other formats carrying the Sears name, such as Sears Hometown stores (a franchised smaller version of full-sized Sears stores), Sears Hardware stores, Sears Home Appliance Showrooms, Sears Outlet stores, and Sears Auto Centers. Despite all the new store formats, Sears has done little to refresh its positioning. “A lot of traditional department stores have reinvigorated themselves through merchandising. You haven’t seen that from Sears,” says one analyst. To make matters worse, whereas most competing retailers have invested heavily to spruce up their stores, Sears has spent less than one-quarter of the industry average on store maintenance and renovation, leaving many of its outlets looking old and shabby. “There’s no reason to shop at Sears,” concludes a retailing expert. “It offers a depressing shopping experience and uncompetitive prices. ” Once a Retailer, Now a Hedge Fund

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