The news that Sears Holdings Corp is closing 120 Sears and Kmart stores is disturbing, but not surprising.Once America’s largest retailer, which began as a catalogue company in 1886, Sears seems to have lost its way.
With increasing competition from other bricks and mortar giants, such as Wal-Mart, Home Depot, Target and Best Buy, and online alternatives, such as Amazon, Sears and Kmart have failed to distinguish themselves from their newer competitors.
In other words, they have not given buyers good reasons to buy from them.
What are good reasons?
For retailers, good reasons to buy usually include the following: exclusive products, convenient locations, better in-store experiences, reasonable prices, and a clear brand image.
Sears had some exclusivity with product lines such as Craftsman tools and Kenmore appliances. K-Mart had a relationship with Martha Stewart. They developed good reputations with these lines, and Sears added the Kardashian Kollection in 2011 to attract younger, hipper buyers. K-Mart alienated Martha Stewart who took her business to Home Depot in 2009. Many that formerly went to Sears for tools, now go to Home Depot because they can get everything they need in one place.
Kenmore is made by Whirlpool and similar models can be found at almost any retailer online and off that sells appliances. Sears is also contemplating selling their Craftsman line out of other resellers to beef up sales, which is likely to put the nails in the exclusivity coffin for Craftsman. It is too early to tell if the Kardashian Kollection will be a success for Sears.
It may depend on the staying power of the Kardashian brand. Also, for many that know what these brands represent, the images of Sears and the Kardashians clash. Sears is known for selling branded appliances and Craftsman tools mainly to men. The Kardashian brand is associated with hip, young, and fashionable young women. This clash is likely to cause confusion, and marketers know that confused buyers don’t buy.
Before the announced closures, Sears Holdings had nearly 2,200 full-line locations in the US and 4,000 locations in the US and Canada. That’s pretty convenient, but most of these stores do not have the size or scope of those owned by Walmart, Target or Home Depot. As a result, Sears lost its “one-stop shop” cachet to these big box competitors, and it is hard for them to match the online convenience and product breadth of Amazon.
Martha Stewart said one of the reasons she parted ways with Kmart after 22 years is “It is not the nicest place to shop.” Another reason she gave is Kmart let the quality of her Martha Stewart Everyday line slip. Customers have had similar experiences in Sears stores. There are numerous complaints about messy, shabby-looking stores, and rude sales associates.
In USA Today, Credit Suisse analyst Gary Balter said the company “effectively ask(s) customers to pay for a poorer shopping environment than available at competitors and online.” In the old days, many people bought products at Sears because of their service reputation. No longer. Sears continues to lose customers because of their decline in service. As any business knows, once customers leave, it is difficult or impossible to get them back. And smart marketers know that you don’t just lose a customer, you lose their entire word-of-mouth referral pyramid.
Sears has reasonable prices, but that has not been enough to draw business away from competitors that offer similar prices along with better shopping experiences. As a result, same store sales at Kmart have been down 5.2% in the latest quarter that includes the Holiday shopping period that was pretty good for competitors. For Sears, the decline in same store sales was 6% over the same period.
Image of Sears and Kmart
The remaining way that Sears Holdings can give buyers good reasons to buy is brand image. Unfortunately, brand image is perhaps the company’s biggest challenge. Walmart has taken both the price and one-stop shop advantage. Target is positioned as the aspirational trendy choice. Home Depot is the place to go for home improvement. Amazon has the online convenience advantage, and Best Buy has done a good job with appliances and electronics. What is Sears to do?
Talk with customers
Rather than sit in a conference room and decide what should be done, Sears Holdings executives need to go out and talk with customers, and ask them what they would like to see in Sears and Kmart stores and Web sites that they do not get from competitors. Then they have to create unique brand images and plant them into the brains of the target audience identified.
If that audience is not big enough, Sears Holdings, needs to find out from the customers it lost what it needs to do to regain their business. Most likely the answer is to focus on unique products, improve the look and feel of stores and Web sites, better train sales and customer service associates, and provide the service customers want and need.
Is there hope?
While many believe that Sears is slowly dying, good marketers are always optimistic. If Sears executives ask the right questions, listen to the answers, and properly implement the strategies that will set them apart (in a positive way) from their competitors, there is no reason why they can’t be a successful retailer for another 125 years.
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