Alice Peterson

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.”

Quick start

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.

Strong identity

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.

Mainstream online

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.”

Customers will welcome well-known brands on the Internet, where things can sometimes get a bit confusing, she says. “We are going to focus on commerce categories where we can differentiate ourselves and where we can dominate. We have some proprietary brands like Kenmore and Craftsman that allow us to do that. That will be the basis of where we get started with our aggressive moves in 1999.”

Because consumers associate the Sears name with trust and the idea of “satisfaction guaranteed or your money back,” the company will have a major advantage on the Internet, Peterson says.

“Trust and security are on the minds of the Internet browser and the Internet shopper,” she says. “They want to know that the information that they leave behind is going to be used to solve their problems and not used to exploit them. They want to know that their usage of credit cards is a safe activity. They want to know when they purchase something that the company will stand behind the product that it sells.”

Customer focus

The company’s presence on the Internet may even encourage some “newbies” to buy online, consultant Freedman says. “People trust Sears,” she says. “When someone is considering whether to make a purchase online, that could be the thing that pushes them over the top. They may say, `Well, what’s the worst that could happen? I could just return it to Sears.’”

The Sears credit card also will play an important role in capturing online shoppers, and the company is focused on the security issues of using the card online.

Another advantage Sears will leverage is its huge customer database, which houses information on almost 100 million households. Today the database tracks what customers purchase at Sears stores, as well as their life stage, and enables Sears to provide targeted merchandise offers and specialty catalogs to specific consumer segments. Already the online team is using it for consumer research.

Many Internet retailers also are using customer databases to “personalize” their Web sites. Personalization technologies enable sites to recognize visitors and tailor the content they see to the individual’s preferences or buying habits. Such one-to-one marketing is going to be essential on the Internet, Peterson says. Sears is looking for a new site server that will enable it to personalize its own Web site over the next two years.

“The vision is for a single view of the customer, so that whether she is getting an appliance repaired, making a payment on her Sears card, scheduling a service or shopping, she will have all of that in one place,” Peterson says. “We will understand what she has done with us and therefore will understand how to customize Web pages for her and customize the online experience.”

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First forays

Sears learned about creating a “community” on the Internet from its first e-commerce ventures, which it set up for very specific types of customers. The company began selling Craftsman tools online in October 1997 to meet the needs of Craftsman customers, who seemed to love shopping on the Internet. More than 6 million people are members of the Sears Craftsman Club, and making the tools available online increased Sears relationship with them.

Sears launched its second e-commerce venture, wishbook.com, in November. The site makes thousands of toys from the company’s holiday Wish Book catalog available on the Internet.

Both ventures simply plugged very successful catalog operations into the Internet, Peterson says. Sears won’t disclose sales figures for the sites, but the efforts didn’t require much investment or development, Peterson says. “What we did was start to establish ourselves, start to create some community online,” she says. “We’ve learned a lot and now we will translate that into even better user experiences with what we come out with in 1999.”

Sears customers, Peterson says, are clamoring for more. Yet in addition to giving customers who come into the stores what they want online, Sears also wants to capture the online shoppers in general. “We are thinking big and very boldly,” Peterson says. “We are not taking our store and putting it online so much as thinking of ourselves as a pure virtual e-commerce player and then backing into where we can create value with the core strengths of the operation that we have.”

Great leader

Peterson is happy to be in the position to help bring Sears, one of the nation’s oldest retailers, further into the Internet community.

While she didn’t have any direct Internet commerce experience before moving into her new post, not many executives today do, Thompson says. “We thought about looking outside for someone, but this is such a fast-growing industry and space and channel that you are an expert if you have been in the industry for a year or two.”

In Peterson, Sears Online got “a great leader,” Thompson says. “Alice is an out-of-the-box thinker and a real go-getter. She had developed a strong reputation and external presence in her treasury role. Sears has been quite an innovator in everything from how we securitize our receivables to different ways we go after the debt and equity market.”

Much of that innovation has come from Peterson, Thompson says. “She knows how to deal with the leverage a company this size brings, and she knows how to think about and create shareholder value.”

Peterson proved she could think creatively and make tough decisions as part of the team that helped spin off Coldwell Banker Residential Services, Allstate Insurance Group and other parts of the Sears business in the early 1990s, Thompson says.

During that time, Peterson was involved in developing contingency plans and looking at all the different scenarios that could take place. She learned how to think the impossible, she says. “We were dreaming up ideas that at first sounded unthinkable or undoable but which ended up resulting in a very bold plan of action that changed the course of Sears’ history in a very positive way.”

Seeing Sears as an American icon, Peterson says the company’s strong brand presence is what drew her to Sears in 1989 after spending several years at PepsiCo Inc. and Kraft Inc., both big brand and image companies. “To this day I can’t drink a Coke,” Peterson says. “Those companies really embedded in me the power of a great brand.”

Taking on the role of leading a business segment is a new challenge for Peterson, who always has focused on the finance side of things. She’s looking forward to working on all aspects of the online group’s efforts. “The person who runs an operation like this gets to consider all aspects of what makes a business tick: the marketing, the systems, the operations, the finance, the strategy,” she says. “It’s going to be a kick putting all of those pieces together to create wealth and to create something spectacular.” •

MargaretAnn Cross is an Allentown, Pa.-based business writer.

July 1993-October 1998: Vice president and treasurer; Sears, Roebuck and Co.

1992-July 1993: Managing director, corporate finance; Sears, Roebuck and Co.

1989-1992: Corporate director of finance; Sears, Roebuck and Co.

1988-1989: Assistant treasurer, Kraft Foods, Inc., Northfield, Ill.

1984-1989: Various finance positions, PepsiCo. Inc., Purchase, N.Y.

1981-1984: Various treasury positions, Harris Corp., Melbourne, Fla.