Thursday, December 29, 2011

Sears and Kmart Closing Stores – Is Boring Merchandising the Issue?

As reported shortly after the Christmas holiday, Sears and Kmart (who combined forces in 2005)will be closing 100-120 of its 4,000 stores due to poor holiday sales.  This poor sales performance (-5.2% in stores open over a year) is due, in part, to a sagging economy as well being squeezed on all sides by aggressive retailers who are executing better against Sears’ core departments. Electronics was a particular problem at Sears this holiday.

Department store sales, overall, will climb an estimated 4 percent in November and December, compared with the same period a year ago, according to the International Council of Shopping Centers, a New York-based trade group.

Retailing is Theater

I once managed a clothing department at a big department store. Our boisterous store manager would shout “Retailing is theater!” whenever she “walked the floor” inspecting my assortments and displays for any minor discrepancy.  She meant that on top of great product selection, it was vital to seduce the consumer with wonderful floor and wall displays and visually transport them into a world where they saw themselves wearing the fine clothing we offered. She hired talented visual artists,invested in dramatic displays and the best merchandise.

The Sears Approach 

Sears Womens fashionSears and Kmart do a poor job in creating theater.  This is not news to anyone who has shopped at either store.  The merchandise, while not that much different than other department stores, looks boring and bleak. Sears is unique in that it even has some of the best power tools and appliances in the market, but their approach to merchandising puts them in visual sight lines with curtains and linens, bikes are with bedding, and women’s fashion sits limp against stark white walls Sears hard goods (my pictures were taken at local mall).





Compare this to Macy’s

Macy's womensMacy’s did quite well this season, due to aggressive price discounting and great selection.  Macy’s is a destination store in most malls and does a brilliant job in creating visual interest in a department store setting.  Great sight lines always keep the consumer eye focused on colorful merchandise and designer names.  While many single concept stores (Abercrombie, Aeropostale, etc.) can create great visual interest within a very controlled format, the department store must create this visual appeal in a multi-department setting. Macy's linens

 Sears Holdings Performance

imageSears and Kmart have not done well financially since their merger in 2005. Their stock peaked at close to $200 and has tumbled through the recession, recently in the mid $30.  Some analysts have blamed the decline in revenue to Chairman Eddie Lampert’s approach of cost savings rather than investing in store remodeling.  Lampert was a successful hedge fund manager that looked for value stocks, first buying Kmart and then combining them with Sears to create a synergy and savings.  It has been said that Sears and Kmart combined, own some of the most valuable real estate in retail. They will undoubtedly make good money selling this property to more progressive retailers if their slide continues.

I think my store manager had the right idea of to how run a retail operation.  The secret is the theater.

1 comment:

Jim said...

Retail theater has gone mobile. I am disappointed to learn sears failed given they were voted Mobile Retailer of the Year: