Sears, Roebuck and Co. hasn't outgrown the mall scene, but it's spending more time in other places. Beyond its 840 US mall-based stores, Sears has more than 1,400 other locations nationwide.These include more than 900 independently owned Sears Hometown Stores (formerly known as dealer stores) in small towns, 105 Sears hardware stores, and about 30 free-standing Sears Auto Centers. Sears' stores sell apparel, tools, and appliances (Kenmore), and provide home services (remodeling, appliance repairs) under the Sears Parts & Repair Services and A&E Factory brands. It also operates a growing online business. Sears was acquired by Kmart Holding Corp. in 2005. The deal formed Sears Holdings, which owns both chains.
Sears' aging US stores lost nearly $5 billion in merchandise and services sales between 2007 and fiscal 2011 (ends January). In fiscal 2011 total sales fell by about 3% vs. the previous year, while same-store sales (generally considered the best indicator of a retailer's health) declined 3.6% over the same period on lower consumer electronics and apparel sales. Sears lost money in two of the last three years. Its rivals, including Home Depot, Wal-Mart, Macy's, Kohl's, and Best Buy, have all stolen market share from Sears by investing in their retail chains, while Sears' stores have been starved of investment.
The outlook for the megamerger engineered by Sears Holdings' Chairman Eddie Lampert took a turn for the worse in 2012, following yet another disappointing holiday selling for the retailer. Sears Holdings announced plans to close as many as 120 Sears and Kmart outlets. (Previously, the retailer shuttered more than 20 underperforming stores nationwide in 2010 and about two dozen store during 2009. In 2012 the company sold another 11 stores to General Growth Properties for $270 million.) In early 2012 the situation deteriorated when factoring giant CIT Group said it would no longer be able to guarantee financing to Sears' suppliers.
Lampert, who has a reputation as a shrewd investor, is not a retail veteran and his grand design for the Sears and Kmart retail businesses has left many shoppers, investors, and retail analysts perplexed. He has criticized the retail industry for recklessly expanding retail space at the expense of profitability and appears to see store closures at his Sears and Kmart chains as progress toward achieving better returns for shareholders, rather than a sign of defeat. (Sears Holdings shares dropped 56% in 2011.)
CEO Lou D'Ambrosio, appointed in 2011, is looking to technology and the Internet to revive Sears. While its bricks-and-mortar stores struggle, the retailer has been hard at work improving its e-commerce platform Sears.com. The updated website features appliances and offers merchandise available in both Sears and Kmart stores and is designed to drive online customers to its stores and store customers to the website. The launch of Marketplace on sears.com in 2009 greatly increased the online offering by giving shoppers access to million of products beyond what can be found in its stores.
The company's freestanding off-the-mall format -- about 50 Sears Essentials/Grand stores -- is designed to compete directly with supercenters by selling consumables, health and beauty aids, housewares, and toys, among other offerings, all under one very large roof. About half the locations have in-store pharmacies. The superstores average about 116,000 sq. ft. and are present in about two dozen states. However, the number Sears Essentials/Grand locations has declined from 75 in 2008 to 52 in early 2011.
In the clothing aisle, Sears dumped the "Softer Side" image advertising campaign years ago in favor of more hard-sell tactics focused on low prices. In search of an identity to boost flat sales, the company is consolidating eight of its private-label clothing lines under one name: Covington. Sears also purchased catalog retailer Lands' End, which brought the Lands' End apparel brand as well as the company's strong direct marketing and online sales to the Sears fold. There are about 290 Lands' End departments inside Sears stores, and more are planned. – less