The two firms will become independent publicly traded companies in 2015. The move follows pressure from investor Carl Icahn to spin off the payments ...
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Sears is further planning to broaden its base with a newly launched fine jewelry selection. It is focusing jewelry sales in a separate catalog, but coordinating the content with the web. While it has beefed up its jewelry offering on the web from 300 items to 1,000, it also is restricting the sale of higher priced items to the catalog. Customers can view them on the web, but they have to call the catalog center to order.
It may take a while, but Sears expects to eventually win over many of today’s young apparel shoppers once they move beyond fashion-forward to a mixture of comfort and quality offered by Lands’ End and Covington. And Sears may be counting on its strengths in tools and appliances, and to a lesser extent in auto services and electronics, as well as its strength in those areas on the web, to achieve that long-term goal. “The big question that Sears has faced for the last 20 years is how do they get the next generation?” Calvin says.
She and others note that Sears will have to maintain a strong connection with younger buyers for items like auto parts and consumer electronics where it has been successful reaching shoppers in their 20s. The hope now is that, while dodging in and out of Sears for car supplies and home entertainment products, young buyers will build an awareness of the retailer’s quality apparel that they’ll come back to in 10 years. Sears, meanwhile, will be adding them to its customer database. The same buying pattern could hold for tools and appliances as today’s 20-somethings become homeowners. “If young people come into Sears when they have a flat tire, they may not buy apparel, but when they get to the age of 32 and need a sweater, they’ll think of Sears-and Sears will already have their name,” Calvin says.
The key to the future
Sears’s emphasis on multi-channel retailing fits right into this expected evolution, since young buyers also tend to be the most comfortable using the web. And Sears has stated forcefully that the web is key to its future. “We know that tri-channel customers are more valuable than any others,” says Dennis Honan, vice president of Sears Customer Direct.
Sears decided early on in its web experience that the brand combinations that worked in stores could be winners on the web as well. While it initially offered toys and other products online, Sears focused on tools and appliances and prepared its online infrastructure and fulfillment operations to present them on the web in a way that enhanced the store experience. “Customers wanted online side-by-side comparisons, so we launched that,” Honan says. Sears also provided access on Sears.com to thousands of product schematics so do-it-yourselfers could find and order a particular part for fixing an appliance or other product.
Sears quickly found it had hit on a good strategy. It launched online sales of appliances in April 1999. “In the first day, we sold more appliances on Sears.com than we had expected to sell online in the entire month,” Honan says. He notes that Sears.com expects to be profitable this year.
Moreover, offering tools and appliances on the web is driving up store sales. Sears store personnel keep track of the number of store shoppers with web page print-outs of product specifications when buying an appliance. “One out of every 10 major appliance sales in-store are influenced by Sears.com,” Honan says.
This all fits in with Sears’s goal of making shopping easy for customers, regardless of which channel or combination of channels they choose for browsing, researching, buying or receiving products, Honan says. “It’s all about making Sears more convenient to shop, and making the web a stronger component of shopping convenience,” he says. “If you look at what we’ve done this year, it’s all about serving the needs of customers, and especially multi-channel customers.”
Backing up its strong brands in tools and appliances was an extensive back-end infrastructure, Honan adds. “We view our existing infrastructure, whether logistics, supply chain, or price management systems as kind of hidden jewels,” he says.
But online success with tools and appliances doesn’t necessarily translate into online success with other products, especially when they are as different as socket wrenches and merino sweaters. Although Sears was able to rely at least partly on existing infrastructure to support its move to offer appliance and tool products online-for example, its long-time expertise in delivering appliances to buyers’ homes-its online infrastructure is not as strong elsewhere, analysts say. “They don’t have the ability to deliver apparel effectively to consumers’ homes,” Stern says.
And some industry observers note that Sears lost and never regained its direct merchandising expertise after abandoning its Big Book catalog a decade ago. “It’s ironic that Sears, once the largest direct marketer, disbanded much of its direct marketing infrastructure,” Stern says. “Sears has been doing well online, but it had to cobble its infrastructure together.”
With Lands’ End, Sears gains state-of-the-art expertise in a complete direct marketing system, including customer database management, a call center in Dodgeville and a fulfillment center, also in Dodgeville. In addition, Lands’ End brings industry-leading web-site technology. It pioneered both the My Virtual Model online clothes fitting system and online custom-fitting technology for chinos and jeans.
How, when and if Sears will leverage Lands’ End’s extensive direct merchandising expertise, however, remains an open question. Sears has already placed a prominent link on Sears.com to direct shoppers to LandsEnd.com, where it’s accepting Sears credit cards for purchases. Beyond that, however, Sears says it will first focus on merging the Lands’ End brand with other apparel in Sears stores. As it did with tools and appliances, Sears can be expected to first build the in-store experience before making more changes online.