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Sears Is In Big Trouble – And The Kardashian’s Are Part Of The Problem

01/16/2012

Sears, the venerable retailer, had a rather unlikely beginning over 160 years ago and is possibly going to have an unlikely ending soon.

Picture America in the late 1880s. The states were only 38 in number. Their total population was 58 million and about 65 percent of these people lived in rural areas. Only a dozen or so cities had 200,000 or more residents. This was the scene when, one day in 1886, a Chicago jewelry company shipped some gold-filled watches to an unsuspecting jeweler in a Minnesota hamlet. Thus started a chain of events that led to the founding of Sears.

Richard Sears was an agent of the Minneapolis and St. Louis railway station in North Redwood, Minnesota. Sears job as station agent left him plenty of spare time, so he sold lumber and coal to local residents on the side to make extra money. Later, when he received a shipment of watches – unwanted by a neighboring Redwood Falls jeweler – Sears purchased them himself, sold the watches at a nice profit to other station agents up and down the line.

In 1886 Sears began the R.W. Sears Watch Company in Minneapolis. The following year Sears moved his business to Chicago. Sears, Roebuck and Co. and other mail-order companies were the answer to rural America’s prayers. Thanks to volume buying, to the railroads and post office, and later to rural free delivery and parcel post, they offered a happy alternative to the high-priced rural stores. Years later the company adopted the motto “Shop at Sears and Save.”

Growth at Sears was spectacular. But that growth has all but stopped. Worse still, access to cash to buy inventory has been cut off. Sears Holdings suffered a major setback when a major business lender, CIT Group, halted loans that Sears’ suppliers use to finance the goods they sell to the chain. The news triggered fears that other lenders to the retailer’s suppliers would follow a similar path, making it harder for the company to do business.

Without this credit Sears is unable to place orders for Fall 2012 production. And the upstream impact is being felt today. Mills and manufacturers across Asia, the middle east, northern Africa and South America are already seeing large chunks of their business evaporate. Unless that volume of business can be replaced those same mills and manufacturers will suffer and be forced to cut back. This, of course, leads to layoffs – which no one likes.

I have a prescription for Sears:

  1. Close 80 percent of those big box or mall anchor stores. They are too big and provide the most dreary of shopping experiences.
  2. Sell ancillary brands like Lands’ End to raise capital.
  3. Reinvent the company as the retailer of practical products. Focus all attention on brands like Kenmore and Craftsman. If that can be accomplished in a store that’s 15,000 to 25,000 square feet, so be it.
  4. Be obsessive about quality and service. Over deliver on all aspects of customer interaction.
  5. Use Amazon to manage the company’s online presence. Hire it out to experts…now!
  6. Dump foolish affiliations like that with the Kardashian’s asap. It only makes things worse.

A brand such as Sears deserves better than to wither away. The company has hired Ron Boire, the former Brookstone president and CEO, as executive VP and chief merchandising officer for Sears and Kmart brands. I hope he reads this.

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