REST IN PEACE - SEARS - WHERE AMERICA SHOPPED
It was only a matter of time. Well, today it happened. Yesterday, I opened my morning Wall Street Journal and saw the headline, “Sears prepares to file for Chapter 11” with the sub-headline reading “storied retailer hires M-III Partners to help on bankruptcy action; a debt deadline looms.” Today, I read a follow-up stories saying that their creditors were not going to arrange financing for restructuring which ensures foreclosure. How sad, yet necessary. We all anticipated the demise of Sears.
My immigrant parents bought everything from Sears in the 50s and 60s. It was how they felt integrated into American society. From KitchenAid appliances to Craftsman tools, from Weatherbeater paint to replacement DieHard tires and automotive accessories. It was indeed where America shopped. It’s hard not to be a little sentimental and reminiscent.
The lifetime of Sears has spanned and embodied the rise of modern American consumer culture. The many century-old mass merchandiser that was once the largest retailer in the United States is part of the fabric of American society. It played a crucial role in the diffusion of mass consumer culture and commercial values. For better and for worse, Sears was a symbol of American capitalism.
Now it soon will become a memory like Eastern Airlines and Pan Am, F.W. Woolworth Co, Blockbusters, Polaroid, Oldsmobile, and Tower Records. Those were genuinely great brands too.
Anyone who has been around for a while knows what happened to Sears. The demise of downtown urban shopping to expansive suburban malls with anchor department store changed the way people shopped in the 60s and 70s. Then came specialty shopping strip retailers like Best Buy and Circuit City, JoAnn Fabrics, Loehmann’s and Syms that cannibalized the traditional Sears customer.
These new specialty retailers lured Sear’s bread-and-butter customer with discount prices and greater selection. Soon the Sears brand name products Kenmore Appliance, Craftsman tools and DieHard were no longer relevant and didn’t matter. Next came the automotive specialty companies and tire retailers like AutoZone and Pep Boys. You know the story. Each time a specialty retailer opened, it took another bite out of Sears future. They should have adapted to the competitive terrain, but they didn’t.
Then came the big box discount retailers like Walmart, Target, and Kohls. Sears’ outdated real estate footprint in malls, antiquated logistics, and supply chain infrastructure did not allow it to compete. Their brand got tired despite several brand identity refreshes. The company just got old, and it should have been retired sooner.
Finally, the nail in its coffin was Internet shopping, Amazon, free shipping and next day delivery.
Amazon, with the proliferation and customized online shopping model rules in today’s retail world. Several strong competitors like Walmart with its acquisition of Jet.com will give Amazon a run for their money. However, one must wonder who might follow Sears and be next to declare bankruptcy? Macy’s? Walgreens Boots? Family Dollar? Retailers must innovate, disrupt or die.
For retailers to remain relevant in the ever-changing fickle Internet world that we live in today both online and brick-and-mortar retailers must stay in tune with their customers and their employees. Companies that can transition and change in place are the ones that will succeed.
Here are my suggestions as someone who has worked in the retail marketing space for nearly 30 years.
• Always, above everything else, remember that retailers are customer driven businesses. Don’t make the mistake of using the company’s assets as leverage for doing Wall Street leveraged buyouts and acquisitions. Don’t be a Toys “R” Us or Walgreens/Boots that are and were leveraged and burdened with unmanageable debt servicing. Keep your financial management and debt simple
• Maintain up-to-date and current supply chain techniques and channels that are customer-driven and easy and quick to replenish. Walmart and their vast supply chain management systems have allowed it to maintain a competitive positioning over Amazon
• Always strive for low cost and pass the savings on to your customer. Again, Walmart has done an outstanding job positioning itself as the low-cost provider and their long-running brand advertising campaign of “Save Money Live Better.”
• Keep your visual merchandising and displays up-to-date and modern. Target has done an outstanding job at visual merchandising and bringing in lifestyle designers and celebrities, like Martha Stewart into their stores.
• Always change with the times and embrace new technologies such as social media, twitter and anything else that is likely to disrupt traditional forms of shopping and distribution. Consider using proximity marketing and beacon technology to alert shoppers with mobile devices. Modern shoppers enjoy customized experiences and personalized recommendations. Urban Outfitters adopted beacon technology early. The modern fashion and housewares retailer is most popular with millennial shoppers, whom we know are likely to spend the most time on their phones than any other segment of the population.
• Keep your brand image fresh. Don’t let it get tired or out of date. Don’t be Gillette and be threatened by Dollar Shave Club. Just consider what online mattress retailers like Casper are doing to the MATTRESS STORE.
• Understand your customer needs, wants and desires. Always remain purposeful and relevant with customers buying habits and product needs. Hilton is executing this philosophy by their introduction of Tru. Hilton knows success today depends on delivering an authentic experience, and that is what its Tru brand is all about. It is a brand new hotel experience that’s vibrant, affordable and young-at-heart; familiar, yet unexpected. From smaller rooms with more efficient storage to larger bathrooms, comfy beds and bigger TVs. More lobby space for work and entertainment enhance the communal feel with perks such as free, fast Wi-Fi, charging outlets and free wireless printing, as well as 24/7 complimentary coffee, tea, and hot chocolate. If you want a midnight snack, no worries, there is a 24/7 Eat. & Sip. Market. Just launched in January 2016, there are currently more than 420 Tru hotels in various stages of development with more than 50 expected to open in 2018.
• Take care of your employees; they are the face of your brand. How you treat your employees will have a direct correlation with the customer experience. In Fortune magazine’s annual survey of the best places to work, Wegmans always is on the list of the top 10. “Wegmans is genuinely welcoming to a diverse population of employees. It makes a concerted effort to employ older workers, which is refreshing. There is a real atmosphere of giving back to the community throughout the company.” A long-term employee said, “What is unique about Wegmans is the longevity of many employees’ careers. I feel there are not many companies where you can start as a teenager, continue in college, work as an intern in a variety of departments, and ultimately make it into a full-time career. Employees feel safe and satisfied but still challenged. We also can work in a variety of roles throughout our careers, and we don’t have to leave the company to do so.”
• Keep an eye on the big picture. Make sure all the elements of your company operation are aligned to support the overall strategy and your customer needs. Don’t get caught up in the details; always operationalize components back to your overall strategy.
I’m sad to see Sears go out of business. I will always have a nostalgic, sentimental place in my wallet for their brand. They defined retail, and for that, they should be memorialized forever.
Allan Steinmetz CEO - Inward Strategic Consulting 617-558-9770