What’s Next for Sears?

On February 10, 2016, Sears announced the forthcoming closure of 50 of their ‘underperforming’ stores. The closures would happen ‘quickly’, the company said in a printed statement, hoping for asset sales of $300 million as it continues its years-long restructuring and search for a place in the retail market.

Sears’ revenues are down almost a billion dollars from this time last year, and their stock price has been halved over the same period. What was once the world’s largest retailer in the 1970s become a shadow of its former self, in danger of disappearing altogether if leadership doesn’t find a way to restore some of its market appeal. Understanding how the 123-year old retailer got to this stage requires a multi-pronged review, but it boils down to a failure to react to changes in its existing market, including consumer behavior, competition, and the emergence of technology. Strategy 101, many of you are thinking, correctly, yet the losses continue.

The Home Depot, Lowes and big box retailers have changed the way appliances and hardware are sold. Many former Sears customers now look to Target (in the US) and Wal-Mart for apparel and household goods. Their travel agency business has largely migrated to DIY, either on-line or with toll-free call centers. Canadian Tire, Wal-Mart and Pep Boys have hammered their auto service, while furniture sales have also gone big box. The business now resembles a picked-over carcass in many areas.

But, the lights are still on, which means there remain customers who continue to shop at Sears. What is more, you know who those customers are. When asked, ‘Who shops at Sears?’, people respond, ‘my parents’, ‘the in-laws’, or even ‘old people’. Certainly not Millennials or many Gen-X. Can we make a retail business with a demographic that is, well, aging? I think so. These are the Boomers; there are a lot of them, and to a large extent, they have money.

Sears, however, continues to pursue an all-things-to-all-people strategy, which means no one customer group is served well. Some recent articles talk about their target segment as being represented by ‘Amy’, a middle-class woman with children who drives a minivan. While that is more specific than they have been in years, Sears will have to pull Amy away from Wal-Mart, Home Depot, Kroger and Target; once she is done in those stores, perhaps we will see her at Sears.

Could Sears build an operating strategy that supports the customers that come there already? Let’s start with what we know about the Boomer customers. With age comes potential mobility issues, corrective lenses, and less inclination to fix or repair things ourselves. They are less tech savvy, and even intimidated by some technologies such as on-line shopping and bill payment. This group is also very loyal when treated fairly. There are obviously exceptions, but most people born before 1965 will exhibit at least some age related afflictions or behaviors.

For me, the foundation of an effective operating strategy is knowing your customer. The more we know our customer, the better we can tailor our operations to serve these people well. With that foundation in mind, here are perhaps a few ways to accommodate the needs of a boomer retail customer:

Customer Behaviour or Challenge

– Reduced mobility

Operating Tactics

Wider store aisles
Loaner ‘Scooters’ in store
Sitting or rest areas in-store
Pick-up service for non-drivers
Enhanced carry-out, delivery, assembly
Parking lots with larger spaces

– Vision or hearing challenge

Larger fonts on price tags, receipts, labels
Viewing screens at all POS locations

– Technology ‘Readiness’

Continue with paper bills
Offer coaching for on-line sales
Facilitate returns for on-line purchases

– Operating Format

Open earlier; close earlier (7am to 7pm?)
Shop in City A; Deliver to City B (Gifts)

By no means are these inexpensive proposals, so within the older demographic, Sears would have to concede cost-sensitive customers to retailers like Wal-Mart. The product mix could also be reduced. Many seniors no longer do their own home repairs – my father, for example, go rid of his power tools years ago. Those that need a drill will see a larger selection at Home Depot regardless. Electronics and appliances could stay, but Costco and Best Buy are strong in these markets. Store size and related investment could shrink with a simplified product mix. Perhaps introduce a line of mobility aids.

There certainly isn’t a magic bullet for Sears, and even the ideas above would require examination with focus groups and a pilot test. It may be too late, and Sears shortly follows the lengthening list of organizations who lost sight of their customer while markets changed around them. Until they pick a customer, however, and serve, the downward slope is getting steeper.