Imagine a world where Steve Jobs announced the first iteration of the iPod and never evolved the product any further.
Imagine if Amazon stopped innovating after 1-click ordering.
Imagine Nike capping its success with the Air Jordan line of sneakers and never produced another line beyond the originals.
As preposterous as these examples sound, this is the conundrum facing some of the largest retailers in the world today. Somewhere in the planning process they closed their eyes, resulting in consumer indifference and a correlated sharp decline in revenue. Can these big box retailers be rescued or is the evolution of shopping forcing them to extinction?
Paradise Lost in a Parking Lot
There may not be a brand in graver danger today than Sears. Yesterday, they announced they were closing their flagship Chicago location in April. A multitude of experts – from marketers to financial analysts have opined on the 120-year-old brand’s woes. From the shuttering of stores to being cited for urban blight, Sears didn’t move with enough agility when marketing trends shifted and they’re paying for it, literally. According to Mamta Badkar of Business Insider, for the full year ending February 1, 2014, Sears managements expects a net loss between $1.3 billion and $1.4 billion.
It’s gotten so bad that independent retail analyst Brian Sozzi all but closed the doors on the brand when he published a recent article that Sears exerts an extremely low retail capital expenditure of 0.9% (In contrast to Macy’s ratio of 3.4% in 2012.), complete with empty store shelves, randomly placed sales items without context, and mannequins wearing drab outfits that seemed to convey a feeling of submission to good fashion.
Sozzi’s drive to paint a dreadfully bland picture of the retailer may have stemmed from the company disputing his 2011 proclamation that, “There’s no reason to go to Sears. It offers a depressing shopping experience and uncompetitive prices.”
Sadly, Brian Sozzi is right.
Despite the company taking exception to finger pointing, offering a rebuttal that included listing assets such as inventory, real estate and “valuable proprietary brands such as Kenmore and Craftsman”, consumers have failed to connect with a brand that once proclaimed that it “serves as a mirror of our times, recording for future historians today’s desires, habits, customs, and mode of living.”
As Sozzi points out through editorial and photographs, a brand can be quickly undermined with a series of negative occurrences.
Substantiating this point, Scott Deming explores the concept of defining a brand n his book “The Brand Who Cried Wolf” through aggregated experiences – the collected impressions of a number of experiences. One bad experience can do more damage than a series of good ones. As Deming explains “After all, our ability to survive is connected not just to learning over time what’s good for us, but more important, to learn very quickly what to avoid.”
Despite a mountain of negativity, the retailer is attempting to reverse the shopper Diaspora with a creative way of both poking fun of itself while hoping to entice shoppers to once more give Sears a chance through an ad that made light of the ample parking available in the empty lots that surround their stores. The ad is memorable but quite possibly for all the wrong reasons. Highlighting the Kardashians line of fashion, one has to ask, is their declining star power a contributing factor for the lack of shopper’s attention? Their merchandise isn’t moving, leading to steep price cuts and further placing the brand out-of-touch with today’s shoppers. Why dress like Kim when you can wear Peter Pilotto and Christopher De Vos via Target’s collection?
I’m not exclusive to opining on the topic of Sears. As marketer Valeria Maltoni references in her blog post on the topic, when prompted with the question would you miss Sears? I can only assume most would shrug their shoulders and move on to the next retailer.
But it shouldn’t be this way.
A History of Greatness
To the surprise of a generation of shoppers, Sears was great once. Renowned for recording the changing scene in America through its catalogs, Sears was a pioneer upon its inception. Scoff if you like, but there would be no Jeff Bezos if not for Sears. Amazon may have caused a stir by delivering a Nissan recently, but the concept of buying anything through a catalog including automobiles started with Sears, Roebuck and Company. Between 1908 – 1912, Lincoln provided vehicles under the name “Sears Motor Buggy” for delivery via railroad. And in 1953, Sears offered a badge engineered Kaiser – Frazer sedan called the Allstate to its customers.
Sadly, that spirit of the entrepreneur has long been forgotten, replaced by an expectation that relevancy be based on their long historical relationship with consumers. However, the competitive nature of today’s retail environment casts a perception of lumbering old brick and mortar where nimble, insight driven online savvy shopping sites can flank anchor stores through hyper-aggressive pricing, instant rewards, and social shopping experiences.
In order for Sears to have a fighting chance at survival, they must think differently.
Reinvention or Reclamation?
CEO Edward Lampert has nothing to lose. With shareholders and media/analysts targeting his company’s demise, it’s time to take a radically new approach and part ways from decades past. I’m a firm believer that the best ideas come out of the most desperate of times and Sears should challenge the very conventions of the shopper experience today.
My goal is to extrapolate the great ideas I’ve discovered during my due diligence on the topic of saving this once iconic brand.
Introduce a Culture Shift
I’ve admittedly never worked for Sears so I can’t comment on direct experiences as an employee of the company. I can however use social networks such as Glass Door to gain insights into the mindsets of those who have. Currently based on input from Sears employees, both current and former, Edward Lampert has an approval rating of 17% with just 31% of Sears employees willing to recommend Sears to a friend.
Conversely, Macy’s CEO Terry J. Lundgren has a 65% approval rating on Glass Door. Target’s CEO Gregg W. Steinhafel? A 72% approval rating.
Thomson Dawson pointed out in his piece on the retailer that “Retail knowledge is not the core problem for Sears – it’s the investment banker management culture that has over time sucked the value out of these brands. Profit has been placed above serving people with experiences they care about.”
This may sound familiar. In the early 2000’s, Six Sigma CEO practitioner Bob Nardelli led Home Depot down the long road to eliminate the company’s most valuable capital: its orange-apron employees. Empty aisles, deplete of passionate subject matter experts removed the one variable that drove Home Depot’s revenues for so long: trust. Trust equaled revenue and it was an unaccounted for, unpredictable asset that was quickly replenished once Frank Blake took the company over.
As Business Insider’s Paula Rosenblum explains in her article Home Depot’s Resurrection: How One Retailer Made Its Own Home Improvements, the home improvement retailer used the recession to retool its business, paying close attention to economic trends – targeting women more frequently verses contractors of past, and understanding the projects that most home owners were undertaking during hard economic times. Most importantly, they put a focus on helping people, going so far as sales associates assisting a customer through the purchase process all the way to the cash register. Is it laborious? Yes. Does it impact positive brand affinity? Absolutely so!
It’s been noted that the parts may be more valuable than the whole at Sears. Brands such as Kenmore Appliances, Craftsman tools, and Lands End apparel have stronger brand equity in the eyes of consumers than the parent company. Sears needs to consider this a significant competitive advantage and reinvent itself through those three core brands. Focus efforts on areas of strength and diligently work to converting brand apologists into brand advocates. While it’s difficult to change the mentality of a part-time, sometimes transient workforce, the example to serve customers should be embraced top-down.
Take Craftsman tools as an example. With a reputation for being some of the best in the industry, Sears should take a page out of Home Depot’s playbook and offer how-to instructionals on the weekends. Consumers are keeping their cars an average of 11 years, and as such, are starting to find ways to keep their cars on the road while undertaking basic automotive maintenance work in their own garages. Sears has the opportunity to sell product (Craftsman tools), service (Sears Auto Center) and advocacy (Sears taught me how to change my oil). Lowes and Home Depot haven’t infiltrated the automotive space yet. Sears still owns it and can continue to own it by making subtle shifts in their approach while putting their product, people and presence in the community front and center.
To reiterate, service is the differentiator – just look at Nordstroms, Zappos or Starbucks. In fact, preserving a culture meant so much to Starbucks that when Howard Schultz returned as CEO, he shut all of his stores down for three days to retrain his baristas and thus, through his employees, convey his commitment to the quality and consistency Starbucks built its reputation on.
I should walk into a Sears and be met consistently with the most knowledgeable, passionate experts in each respective department. That tone is set at the top but executed flawlessly at a local level.
Let Data Be Your Guide
It’s no secret Sears is transitioning from physical stores to online retail. That shouldn’t deter the brand from leveraging its stores in ways online-exclusive competitors can’t.
British design firm FITCH has gone through a reinvention of sorts itself over the last few years to adjust for what they refer to as a SPLINTERED customer purchase journey. By dividing the consumer experience into three areas: Locating, Exploring and Dreaming, they have identified a way to unify the customer experience.
This means assuring that marketing, retail and real estate teams work collectively rather than in isolation, or worse still, in competition with each other.
For example, I think we’d all be in agreement that today’s consumer is ‘always on’. The discovery of a new outfit no longer takes place in-store. In fact it may not transpire on a PC or laptop. It’s more likely to take place on a mobile device. In a cohesive SEAMLESS experience, a customer may begin their journey browsing their favorite fashion blog on their iPhone while on a commute. Through contextually placed content, Sears uses relevant cues (geographical, cultural, emotional, etc.) to entice our customer to click on a promotion for a new outfit. Based on geotargeting, we discover the outfit is on sale and in stock at a local location, which is five minutes and one bus stop away. Our customer is presented with an option of placing the outfit on hold and as an added incentive, is provided an offer for a percentage off if purchased within the hour.
Entering our local Sears, our customer sees a radically different yet intuitive layout in a store with a much smaller footprint. As they enter, iBeacon recognizes our shopper using micro-location context, welcoming and informing them as to where in-store they can pick up their outfit. Unbeknownst to our customer, she discovers an up-and-coming local designer designed the outfit with roots in their hometown. The sterile mannequins Brian Sozzi shot photos of have been replaced with brand based installations that offer to share the story of our designer and the impetus behind their collection. There’s even a barcode scan option to share the video with friends. All of this is designed to establish a direct relationship with the customer.
Prior to purchase, our sales associate is informed of our customer’s check-in and is prepared to offer accessories that compliment the outfit through an e-commerce suggestion engine such as Aggregate Knowledge, which compiles aggregate consumer data to analyze consumer e-commerce purchases.
Post-purchase, Sears social media CSR’s monitor for positive posts on popular social networks, prepared to share with the broader Sears online community. As a thank you for posting a photo of the outfit on Instagram tagged #SearsFashion, our customer receives a bogo coupon for their next purchase.
Believe it or not, this is not a pie in the sky approach. Marketing and advertising executives have been chiming in on the flat retail experience, voicing for a change in thinking. Lee Carpenter, CEO of Interbrand North America was quoted as saying, ”E-commerce brands use data to create a one-on-one relationship with shoppers that can scale through technology. This model must translate to physical stores, and blend together into an omnichannel experience with the brand as the consistent thread.”
It’s no longer about online verses offline shopping, it’s just shopping and Sears should be at the forefront of this amalgamation.
Conclusion – Be More Like Lewis & Clark
Large anchor stores like Sears are not and should not go extinct, but the business model that sustained them is out-dated. Today’s retail customer wants to be stimulated. They need retailers to offer them the breadcrumbs necessary to spark constant reinvention. Macy’s would call this “Magic”, Lowe’s would call it “Never Stop Improving”. Sears needs to reach deep down and decide how it wants to communicate its values to its customers. This should be a time of rebirth for Sears and that means a deep dive into exploration – new consumer targeting models, new store layouts, new ways of achieving customer satisfaction. It’s never easy to evolve, and in the past Sears has opted to buy verses build, first attempting to acquire Home Depot in the early 1980’s and most recently an attempt to purchase Restoration Hardware in 2007.
After decades of remaining stagnant, we’re now at a cross section of DIY culture meets Americana. It should be cool to shop at Sears. They just have to give us a reason to do so.