Sears: From Wishbook to wistful thinking

I noted with interest yesterday morning that Sears Holdings would be closing 150 full-line stores but shrugged my shoulders as this was a necessary step for a retailer that has struggled for years. My eyebrows raised sky-high however this morning when I learned that they are also selling off one of the crown jewels, Craftsman brand tools, to Stanley Black & Decker.

January is always a date of reckoning for retailers as they examine whether the holiday sales propelled them into the black (in spite of the myth around the Black Friday moniker) or provided further evidence of failure in product mix, pricing and consumer engagement due to flagging same store sales. Obviously the news demonstrates that Eddie Lampert’s empire continues to crumble. Whatever the vision is here, the sale of Craftsman is the final nail in the coffin for Sears as an ongoing concern.  Yes the zombie business will continue to lurch about in the dark grasping for opportunities but as Seritage continues to close stores and attempt to recoup the value of the underlying real estate, it must be evident to anyone paying attention that Lampert is past the long game of building a successful Sears as a retailer.

Point of acknowledgement, I started my career at Sears working in the Credit division back in the heyday of Arthur Martinez and was at the cutting edge as the company dove into the nascent web.  But even more, as a kid, Sears was a core part of my childhood.  It was the department store we visited for the annual school shopping trip as my mother loaded up on knock off low top Chuck Taylors – or bobos as we called them back then – Toughskins jeans and striped shirts.  It was the catalog source of all Christmas goodness that a kid would study for weeks as he evaluated what was possible and created a wish list for Santa.  I even spent one Christmas season as a young teenager hired to demo the AG Bear and more importantly the Petster cat robot in the toy aisles of a Sears. It seemed like you could get anything at Sears from keys cut and Zippo lighters personalized – I still have the first one I bought as a 12 year old pyromaniac – to watches, tools, appliances, computers.  Honestly, we bought my first laptop from Sears, my first Armitron digital watch which happened to play Fur Elise, and most of my Dad’s tools. If we needed a new appliance we bought a Kenmore from Sears. If the dishwasher was acting up we visited the Sears Repair and Parts center for the necessary components. I recall more than one family photo taken in the Sears photo studio. And when the car needed a new battery we installed a new DieHard. When we needed a new mattress after getting married we bought it at Sears.

So that in part is what brings such dismay at the news that Sears is unloading the Craftsman brand. It was rumored back in June but I honestly didn’t believe that would  happen so soon.  Craftsman is such a fundamental part of the Sears identity.

When you walked into any Sears store you always knew that there was a guarantee that backed up a sale: “Satisfaction guaranteed or your money back.” And I was not surprised the first time I walked into Sears Headquarters on Beverly Road and saw those words fixed on the wall above the entrance in 3 foot high shiny aluminum letters. So storied was the Craftsman brand that my father liked to regale our friends with how he witnessed a guy walking into the tools department with a 16 inch long 5/16 slotted screwdriver, that had quite obviously been abused as a pry bar, requesting a new screwdriver because his could no longer properly perform its proper function. And the associate gladly exchanged the tool.  There was loyalty to the brand because the tools were reliable. Now, Craftsman has fallen on hard times and the quality of the tools are not always what they once were as I’ve found myself gravitating to Snap-On and other brands when I need a tool that I can count on. So perhaps this is just an overdue acknowledgement that more than just the store format and assortment has lost its way.

But once upon a time Sears was a serious innovator and this should be a cautionary tale for anyone who wants to build a brand toward greatness.  Most do not realize that Sears was a keen innovator in many of the evolutionary efforts to sell what consumers needed.  The catalog is well known but the movement into retail stand alone stores and malls in the suburbs was a big push by Sears.  The concept of a retail credit card started with lists of customers managed at each store and eventually the blue Sears card was the most common credit card in every American’s wallet to the point that 1 in 3 Americans carried and used it.

So what happened? Sears was a casualty of navel gazing and losing track of what made it great: delivering a quality product to customers with great service and providing what customers wanted at a good price.  The retail sector fragmented in the 90s and suddenly Sears no longer knew who their customer was.  Walmart and the Dollar Stores squeezed them from the bottom, Target brought design but budget conscious consumers great products in a bright and cheery buying experience, and all kinds of specialized box stores delivered higher quality products with a focused delivery in sectors like hardware, appliances, TVs and electronics.  No one thought of shopping at Sears because in being swallowed by Kmart it followed that business down the rabbit hole of little investment in the stores or the assortments.  I recall when the merger was announced sitting in a marketing class at Kellogg where a number of us in the class had experience working for Sears.  No one could come up with a defense for Lampert’s vision if it meant making the two stores remain successful and not going the route of Woolworths. We looked at the onslaught of Amazon and the encroachment from all other sides and determined the only way out was to capitalize on the assets. And that it seems is the logical demise of the store.

Yes, Lampert believes he can create this amalgamation of the new millennial retail with an innovative online presence welded to a brick and mortar presence. In 1998 we discussed a vision of allowing the customer to make the buying decision Any time, Any place, Any way – something that has evolved substantially since those early days of e-commerce and mobile computing.  But to me that obsession is no longer the issue for Sears. The bigger question is encouraging customers to shop at Sears. Why should I choose Sears over Target, Walmart, Costco, Amazon, Zappos, Nordstrom, JC Penneys? Every one of those retailers except for Amazon and Walmart has seen their market cap decline in the last 10 years but that really speaks to changing buyer behavior. The question that needs to be solved is who is the target Sears customer and what are they looking for?  As we discuss in ITW the question of who is your 80 customer drives every single decision.  Who are the customers that believe in your Brand and why do they shop with you? What can you do to increase the share of wallet they contribute to you?

My wife used to be a regular customer at Sears but she won’t even set foot in the store any longer because the layout and footprint are chaos.  “Too crowded (as in the racks are too bunched together), too hard to find an associate to help, too little in selection that is attractive to me or for my kids, the lighting is dim and the whole feel of the store is dismal.” This is the description of the Woodfield Mall store which for decades was the flagship store given its close proximity to HQ and placement within one of the best malls in the Midwest.  I haven’t used my Sears card in 3 years and I only make the trip to the Woodfield store if I need a particular tool that I can’t find at the closer Home Depot or can’t wait for Amazon and Snap-On to deliver to me. If Lampert wants to be the competitor to Amazon he needs to provide a more compelling offering than Prime 2-day delivery of practically everything a customer could need for their home with ease of delivery, excellent pricing and no fuss returns. I know this will pain friends I have on one side of the equation and delight those on the other but in our house Amazon, Target, Costco and occasionally Walmart trumps Sears 9 times out of 10.  Maybe we’re no longer the target customer but then who is?

Only being able to answer that question will resolve the problems Sears is facing.  Lampert once believed he would be the next generation Buffett and the SHLD stock skyrocketed in 2007 on the market’s perception that he could build a retail juggernaut with carefully curated selections like Land’s End, Renovation Hardware, and other key assets.  But to really successfully do that would have required a very different culture and a very different management style. My impression at that time when the firm I was working for was called in to present an approach for building a culture of innovation within Sears to the senior leadership on “Mahogany Row” was that the leadership, the vision, the intuitive understanding and the willingness to commit was lacking. We presented a plan and all I heard were platitudes and a view to chaos across an organization that was ingrained as historically extremely command and control. To manage the juggernaut that Lampert spoke of would have required a very loose and decentralized organization that allowed businesses to excel in pursuing their customers.

And hence here we are 10 years later watching the dying gasps of a once great company.  Gary Balter from Credit-Suisse put it quite succinctly: “We continue to believe that Sears will sell off or spin off assets in a controlled liquidation of its chain, monetizing the assets least tied in with Sears’ U.S. stores first. However, over time, selling off the profitable assets is unlikely to be a winning strategy.”

That was almost 5 years ago and Balter should hang his hat on that prediction.

Sad day indeed.

Languages can remap your world

Robert Heinlein in “Stranger in a Strange Land” reflects on how speaking another language changes your way of seeing the world around you. But I love how he explains why English is such a complicated yet expressive language. My Francophone friends will appreciate the statement concerning controlling the purity of a language (this is an Arab doctor speaking):

“You will understand, then, how difficult I found English. It was not alone that my native language has much simpler inflections and more limited tenses; the whole ‘map’ changed. English is the largest of the human tongues, with several times the vocabulary of the second largest language – this alone made it inevitable that English would eventually become, as it did, the lingua franca of this planet, for it is thereby the richest and most flexible – despite its barbaric accretions…or should I say, because of its barbaric accretions. English swallows up anything that comes its way, makes English out of it. Nobody tried to stop this process, the way some languages are policed and have official limits…probably because there never has been truly, such a thing as ‘the King’s English’ – for the ‘King’s English’ was French. English was in truth a bastard tongue and nobody cared how it grew…and it did! – enormously. Until no one could hope to be an educated man unless he did his best to embrace this monster.
Its very variety, subtlety, and utter irrational, idiomatic complexity makes it possible to say things in English which simply cannot be said in any other language. It almost drove me crazy…until I learned to think in it – and that put a new ‘map’ of the world in top of the one I grew up with. A better one, in many ways – certainly a more detailed one.”

A linguist would say that Heinlein erred in his comprehension of how languages express thought and whether the size of the vocabulary is the best metric for that evaluation. And that is reflected in the doctor’s concluding thought: “But nevertheless there are things which can be said in the simple Arabic tongue that cannot be said in English.”

Either way, it’s an amusing perspective nonetheless. And my geek friends will recognize this as the preamble to Heinlein finally defining his luminescent addition to the English language: the word “grok.” A word he freely used for the first 242 pages before finally almost breaking the fourth wall and providing a tutor session for this highly versatile word.

We would do well in today’s world it seems if more people took the time to grok other concepts, principles, and people before developing a passionate opinion about them. Of course, that would require spending more time thinking and less time tweeting or other types of posting on social media. The Web remains a very reactive environment.

What happened to Thanksgiving?

The third week of November is upon us with a serious chill in the air and children asking for this week’s homework early because their parents are trying not to let school get in the way of education, or at least Thanksgiving vacation.

What’s that you say? Traditions are changing? Yes as a matter of fact they are.  I was rereading Neil Gaiman’s American Gods this week and found myself musing on the “decline of the influence of traditions and gods on the American psyche” that Gaiman explored back in 2001. What’s fascinating is how aptly he predicts that manner in which media and other modern influences shift attention of Americans away from so many of their traditional pursuits  and interests well before the modern Internet, social media and mobile connectivity had overtaken our lives.  How interesting can Odin or Easter possibly be when Call of Duty, iPhone and Facebook are calling?

There’s an enlightening dialogue between Wednesday (Odin) and the female embodiment of Easter in the novel that speaks to this question:

“You’re one of us,” he said. “You’re as forgotten and as unloved and unremembered as any of us. It’s pretty clear whose side you should be one.”

Easter put her slim hand on the back of Wednesday’s square gray hand. “I’m telling you,” she said, “I’m doing fine. On my festival days they still feast on eggs and rabbits, on candy and flesh, to represent rebirth. They wear flowers in their bonnets and they give each other flowers. They do it in my name. More and more of them every year. In my name, old wolf.”

“Serious question, m’dear. Certainly I would agree that millions upon millions of them give each other tokens in your name, and that they still practice all the rites of your festival, even down to the hunting for hidden eggs But how many of them know who you are? …Shall we go out on the street, Easter my dear, and find out how many passers-by know that their Easter festival takes its name [in English at least] from Eostre of the Dawn?”

The whole premise of the conflict that brews between old traditions and modern distractions in the novel is that traditions change even fade away as new “gods” take their place.

It’s illuminating how poets like Shel Silverstein explore the modern shift where instead of sacrificing food and gifts to Baal or Ganesha, many Americans today lay out their trays of food and sacrifice to the gods of NFL Sunday and Netflix as they dine and are immersed in another world that perhaps diverts them from the stresses and struggles of every day life.

What does this have to do with Thanksgiving?  Well that traditions are in a constant state of flux and that  if our most recent election has taught us anything then it’s that retailers and CPG manufacturers have a very real challenge on their hands at navigating an agitated and increasingly diverse public.

So how will we celebrate this, the most American of holidays this year?  What shifts are happening today and how will that change the common narrative that unites us in food, family, and fun?

Many will pursue the very traditional dishes of turkey, potatoes, green bean casserole, sweet potatoes, cranberry relish and pumpkin pie.

thanksgiving-dinner

But with a changing cultural base a growing mass are far more willing to increase the number of meals and the foods on the table than the standard Thanksgiving picture would present.  How many of you celebrated Friendsgiving this week?

tradition-tradeouts-chart-1

If you’re a Millennial then it’s quite likely that you did and you also had tabouleh or chicken vindaloo or arroz con pollo or a good classic Ghanaian fufu along side that tofurkey.

tradition-tradeouts-chart-2

Times they are a changing and old traditions that we thought we understood will evolve until that classic Rockwell image Freedom From Want is perhaps as anachronistic as the idea of ice barns from which blocks of ice were delivered weekly to keep the refrigerator cold. In the mind of a market strategist this means you cannot simply assume that your customers will always be the same and expect the same from you year in and year out. No, trends are accelerating in many ways and traditions are evolving that require a close ear to the ground.

But as always change represents a grand land of opportunity if you know how to read the tea leaves properly. Families of various types will likely still gather together on the third week of November. And they want to share love by breaking bread, er tortillas, er naan, well you get the picture.