August 30, 2001, 12:00 AM

How Sears is achieving a multi-channel payoff from the web

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However inventory is just a small part of the connections required on the backend. Sears decided it did not want to invest in totally new systems just to support the web business, so it has spent considerable time linking its web system to its existing store and corporate systems. Such areas as accounting, inventory control, replenishment, POS, pricing and merchandising are all key areas that Sears has integrated. Honan declines to reveal how much Sears has spent developing its online infrastructure, although he says the work is nearly completed. “We invested pretty significantly in the first few years in the online infrastructure and we always planned to wind down,” Honan says. “The investment now is less than last year and it will be less next year.”

But Sears has not integrated just its technology. Sears’ Customer Direct division is not separated from the rest of the company. Rather, Customer Direct shares offices with other departments at the Hoffman Estates headquarters. The online efforts are just another part of Sears’ business, which also includes 14 specialty catalogs, the regular Sears catalog and a specialty merchandise business. All of these areas report to Honan, who in turn, reports to Sears’ CEO Alan Lacy. This level of top line integration has allowed Sears to put a combined show of strength behind its multi-channel plans, Sears executives say.

In sync

By laying the groundwork from the corporate structure on down, the retailer has been able to focus more succinctly on the task at hand-driving customer traffic to Sears.com and from there to the stores. “Sears is clearly focused on extending the multichannel capability to consumers,” Charno says. “Internally we’re making sure our online marketing is in sync with our Sears branded message and promotions and making sure that the enterprise views Sears.com as another sales channel. Externally, we need to raise the awareness with consumers so they know that we are multi-channel and so they know that Sears.com exists.”

Some of Sears’ most recent efforts to combine its online and offline strengths include testing in-store pick up, integrating service scheduling for appliance delivery and repair, and supporting specialty catalogs with new web sites. The ultimate goal of the combined efforts of catalog, online and stores, Honan points out, is to sell more products regardless of which channel dominates.

So far, the offline stores dominate. Sears recently undertook a test it has named Project Fusion to determine which products customers want to pick up in a store. Project Fusion is running across the country, testing a cross-section of store pick-up products. Sears plans to introduce the service to its 860 stores in time for holiday shopping. “We’re fusing our new economy with the old economy and it’s part of our evolutionary process,” says Honan.

Store pick-up provides a convenience to customers who don’t want to pay shipping or don’t want to wait at home for delivery of a product that the UPS driver can’t just leave on the doorstep. Winners include leaf and snow blowers, air conditioners, lawn mowers and other items consumers may want in a hurry. Store pick-up is a good example of the channels working together and taking advantage of each other’s strength, Honan says. After a customer places an order, the order goes to the store. When store personnel determine the product is in fact in stock, they set it aside, then e-mail the customer that the order is ready.

Primed customers

Sears sees the web site also as a place where customers can shop before coming into the stores. The site provides side-by-side comparisons of products and features and a search engine that allows shoppers to learn about sales at Sears stores.

Providing product and shopping information online has translated into sales at stores; Honan says one out of ten customers who buy an appliance at Sears has researched it at Sears.com. “The sales associates love it,” he says. “Customers come in with printed pages about the items. They are informed and ready to buy. This encouraged us to pursue online development especially with big ticket items.”

Sears has an advantage over many of its national competitors in making the web useful as a multi-channel sales device: With its home improvement services, it can allow customers to go online to schedule home repairs or installations, saving them a trip to the store or hanging on hold at a call center. Customers can schedule home appliance repairs online and find local Sears services for window, door and siding installations. Online scheduling links to the system that Sears associates use to make appointments. Scheduling these types of services is a great use of the web, says Stern of McMillan Doolittle. “Putting it online actually improves the process,” he says.

Online circulars

Supporting specialty catalogs and new store endeavors with web sites linked from the Sears.com home page is another example of Sears using the web to enhance its other channels. For instance, Sears this summer launched its Room For Kids web site (Searsroomforkids.com), which supports the Sears catalog of the same name. And Sears has been promoting its new home stores, The Great Indoors, for which Sears Direct has developed a web site. The Great Indoors is a major growth vehicle for Sears to tap the $10 billion a year home goods category, Stern says. “Having thegreatindoors.com serves a lot of purpose for Sears because this is a great way for them to get the brand out and get brand recognition before the physical stores launch,” he says.

Finding out what’s on sale at local Sears stores also is an important feature of Sears’ online plans. Sears is putting its weekly circular online with a system from Chicago-based SalesHound Inc., a company that specializes in preparing and presenting store information in a searchable online format. With this, customers visiting Sears.com can search for on-sale items in stores. SalesHound provides the software management that sorts all the products under different search item names and matches them with the ZIP code and closest store location for the customer.

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