What’s the fate of Sears?

Last updated on: January 23, 2014 at 9:07 am by Jane the Actuary

What’s the fate of Sears? 2014-01-23T09:07:00-06:00 Jane the Actuary

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I remember when Montgomery Wards died. My parents never shopped there — it was too low-class for them (they were Penny’s people), and neither did I, with the exception of our new washer/dryer after we bought our first house. And we never got the rebate because they liquidated shortly after that purchase.

In fact, that’s the only thing I remember about them. I don’t know why we would have purchased the set from Wards in the first place, and I was surprised, in looking at Wikipedia, that they didn’t actually liquidate until 2000, but they did declare bankruptcy in 1997, so they must have closed our local store at that time.

Is Sears as doomed now as Wards was then?

They are the last remaining “true” department store, offering hardlines as well as softlines — everywhere else, it’s just clothing and home goods. (Or at least, the last such one in the United States — they would fit in pretty well in downtown Munich.) But in the U.S., there isn’t much advantage in being a full-line department store: Best Buy competes for appliance purchases, Home Depot for lawnmowers, Sports Authority for sporting goods, and so on — and the customer base of people who want to manage all these purchases at one store is too small. (Has Sears tried to emphasize small towns where there isn’t a Home Depot, Best Buy, and Sports Authority? I don’t know — presumably even there, the customer base is too small.)

What Sears does offer is a set of private-label brands with a reputation for quality: Kenmore, Die-Hard, Craftsman, and Lands’ End. True, the last of these was an acquisition, but it’s part of the Sears stable nonetheless. There also is/was the Toughskins clothing line for children as well (I say “was” because when I was at the store most recently, they had notices at the cash register that the “they’ll outgrow them before the clothes are worn out” guarantee was eliminated; whether that means their quality was down or the administration of the guarantee was a hassle I don’t know).

(My own “Sears Quality” story: a Kenmore sewing machine that I bought at a garage sale just out of college. It dates to the early 60s, I think, based on some online research I did a while back, and is nearly indestructible. Incredibly heavy, but indestructible.)

They also have a very expansive website — pretty much every category under the sun, though I can’t figure out from a cursory look the extent to which this is an Amazon-type of “everything” or just “lots of stuff.”

So — Sears executives, are you listening? — the only way forward is what Ford did in the 80s: “Quality is Job 1.” I grew up a half mile from the K-Mart world headquarters, and a further mile from a Ford facility (not a factory — I think a tool and die facility, but I don’t remember any longer), and remember the blue “Q1” flag fluttering in the air.

The only way that I see for Sears to differentiate itself is to go beyond its historic brands and promote a guarantee that everything with a Sears private-label on it will be durable and built to last. Clothes will be properly and consistently sized, with quality material and finishes, and pre-shrunk (granted, some here-today, gone-tomorrow styles of women’s clothes may need to be an exception, for fabrics that are inherently non-durable). Shoes, linens, everything — telling customers, “your budget is tight, it only makes sense that you want to buy things that’ll last.” Or, the “green” pitch: “it’s environmentally wasteful to sell goods that’ll just have to be thrown away.”

As for the items that aren’t private-label? I suppose for brands that are household names, it doesn’t matter. But they could still differentiate themselves from Amazon by a promise that they’ve picked only quality products to sell online. If they can get consumers to think of Sears as a first choice for products where they’re concerned about quality if they buy elsewhere, then maybe the points/rewards promotions can make a marginal difference for other purchases, too, as well as the convenience factor once you’ve got a customer in the door.

Of course, everything else has to be right to keep the customers: stores stocked well and clean, well-lit, and laid-out well*, systems running smoothly, employees speaking reasonably accent-free English.

(*One of my gripes with the local Penny’s is that in their recent remodel, they moved the petites section, that is, clothing for short women, to a different floor than the rest of the women’s clothing, rendering it useless for me, when I’m in-between sizes and need to try on both. Some executive somewhere probably though it was a good layout on the diagrams but they lost my business.)

Could a pitch of quality for budget-minded consumers work? Probably not (after all, I was cheering for the everyday-low-price experiment at Penny’s that was such a bust, too), but I don’t see what other direction they could take.

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