The e-retailer heads into the holiday shopping season behind a 30% increase in fulfillment spending and a widening net loss. North American sales increased ...
When Alice M. Peterson talks about Sears, Roebuck and Co. and the Internet, she uses words like “aggressive,” “dominate” and “spectacular.” The executive, who in October won the newly created post of vice president and general manager of Sears Online, is speaking mostly about the company’s vision for its future in the new selling space. So far, Sears has built a lively, informational home page at sears.com and launched two very targeted e-commerce sites to sell Craftsman tools and toys. There’s a lot more to come, Peterson promises.
Sears won’t give out too many details about its plans. But the company plans this year to create a stronger presence on the Internet by further leveraging its proprietary brands and attempting to become the definitive online source for solving problems around the home. “1999 will represent a year of tremendous growth in the Internet arena for Sears,” Peterson says.
By appointing Peterson to lead the effort, Sears has signified its commitment to grow this side of its business, says Jane J. Thompson, president of Sears Direct, a newly formed division that includes Sears Online. “We are seeing momentum in all of the things we are doing online, but they are only a fraction of what we want to see in the future. We are a more than $40 billion company, and we want to make this a substantial part of the larger corporation. We hope this is a channel where we will be selling billions of dollars of goods someday.”
Peterson is excited about the opportunity to develop the new sales channel. She has always championed the Internet and its use. In her previous job as treasurer, Peterson persuaded banks to ship research and investment reports over the Internet so the company didn’t have to deal with piles of paper. She also often used the Internet as an example of something the company could leverage to create shareholder value. Now she has the chance to prove it. “I have been a major evangelist for the Internet for quite some time,” she says. “Since getting this job, I have turned evangelism into being a zealot.”
Peterson is striving to speed new business lines to the Internet. Already, she has been encouraging her small but growing staff-as well as top executives throughout the company-to focus on how Sears can differentiate itself in the online space, Thompson says.
If there’s one thing that Sears has learned over the years, it’s that the company’s sheer size does not guarantee success. One of Peterson’s biggest challenges is to figure out how to leverage the core competencies of the huge company as well as the strength of the Sears brand, all the while thinking with a “virtual” mentality rather than a traditional retailer mentality. “We have to think differently in the e-commerce world than we do in the other parts of our company,” Peterson says. “In many ways this is an entrepreneurial effort.”
For instance, the online team has had to shed some of the corporate structure of the larger company-the endless meetings, the chain of approvals-to incorporate speed into its business plan. Peterson encourages staff to try new approaches to getting things done quickly, such as running ideas past key decisionmakers rather than taking the time to set up meetings with a large number of people.
“Everything moves very quickly in the Internet world,” Peterson says. “Speed is a very major feature of how we are operating. Things that take time, that bog us down, that get bureaucratic are things we try to avoid. We are making decisions on the fly. We are making decisions every week about changing our marketing, for example. We can shift resources to where we are getting higher click through rates.”
That’s not possible in other parts of Sears, where marketing goes through traditional media that is lined up months in advance, she says.
It also will be a challenge to incorporate the new information technology of an e-commerce business with the Sears’ legacy systems. But those challenges come with opportunities that start-up companies don’t have, Peterson says. For instance, she envisions working with Sears’ large corporate buying organization. “We want to take advantage of that scale without getting slowed down,” she says.
To pull this together, Peterson is looking for fresh, creative strategies. She hopes to establish an environment in which people float ideas knowing they can fail. “We have to understand that we are going to do new things that we are going to learn a lot from,” she says.
So what is Sears hurrying to get online? Peterson won’t be specific, but she’s willing to give some hints.
Sears has many categories that are very viable online, says Lauren Freedman, president of the e-tailing group, an e-commerce consulting firm based in Chicago. Though women’s apparel is not a strong category for online commerce, other Sears staples, such as automotive and appliances, have been strong online sellers, she says.
In addition, Sears has been pinpointing potentially hot online sellers and mining consumers’ expectations about shopping online through focus groups and other initiatives. The people shopping online today are higher-income who go to Sears stores for such things as appliances, tools, home services and tires, Peterson says. So it would be logical to expect Sears to address those categories first, she adds.
Sears also expects its mainstream customers-middle-income women with children and homes-to get online in increasing numbers over the next couple of years. Customers eventually will expect to see Sears conduct all of its business areas over the Internet, the company believes. “Sears has relationships with millions of households in America,” Peterson says. “This is generally a slice of middle America, and middle America is just beginning to think about getting wired, especially as the price of computers came below $1,000 last year. Middle America is getting increasingly Web savvy, and they will be feeding the hyper-growth in Internet shopping that we saw commence during the 1998 Christmas selling season.”