SALON.COM  December 9, 2016

Sears death watch update: Is it time to prepare an obit for our least-essential department store?

The company has lost $1.6 billion so far this year — and it might be too late to turn things around

ANGELO YOUNG / SALON.COM

Link to the full article:  http://www.salon.com/2016/12/09/sears-death-watch-update-is-it-time-to-prepare-an-obit-for-our-least-essential-department-store/

Excerpt:  

Jeff Sward, founding partner of retail consultant Merchandising Metrics, doesn’t share Hollar’s optimism.

“What does Sears stand for?” Sward told Salon. “Sears unfortunately stands for so many different things that I don’t think there’s anything that’s a standout. I would go to Sears for appliances and tools, but I’ve certainly never thought of them as a headquarters for apparel.”

Sward says the issue isn’t that Sears doesn’t have good products and competitive prices. Instead, he said, the problem facing Sears is that it isn’t the first choice for buyers of any of its core product categories. If consumers need tools, they go to Home Depot or Lowe’s. If they want outdoor or work apparel, it’s Dick’s Sporting Goods, not Sears. Electronics and home appliances? That’s for Best Buy. And who’s buying apparel and shoes at Sears?

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Comments from daily articles posted on RetailWire.

  • Posted on: 02/03/2017

    Is Macy’s about to be sold?

    I think I understand the wide-eyed wonder in evaluating Macy's balance sheet and wanting to unlock all that value. It's gotta be irresistible to a real estate player. Unfortunately that does nothing in and of itself to solve the dilemma of fixing Macy's role in the mall. Sears has been plundered in the process of unlocking value. It may not ever have survived as a soft-goods retailer, but it certainly could have had a long-term role as a hard goods retailer. So now Macy's balance sheet can be plundered. To what end? Another carcass at the other end of the mall? I worked at Macy's. I love the place. The most vibrant department store around in its heyday. I vote that they take the five years they will need to re-invent themselves and their role in the mall. (And they will need an intact balance sheet to do that.) The last thing I wish for Macy's is to stay as it is.

  • Posted on: 02/02/2017

    Is omnichannel cannibalization retail’s biggest challenge?

    At any given moment there is X amount of demand for a given product or brand. If part of that demand is satisfied through the Internet then there is that much less being satisfied through brick-and-mortar. It's classic competition, it's a battle for market share now made all the more complicated with multi-channel battle fronts. Brands don't cannibalize by performing well in omnichannel. Omnichannel is a simple recognition of a new shopping model in today's market. It is not cannibalizing. It's competing. If a brick-and-mortar retailer lost business to another retailer's website, you wouldn't call that cannibalizing. You'd call it a failure to recognize a new shopping paradigm.

  • Posted on: 02/01/2017

    Has Amazon fundamentally changed the way Americans shop?

    I'll start with a possible definition of Amazon's brand promise. Painless, information-rich couch shopping devoid of any sensory input. Mall shopping = see, touch, smell, feel texture, sensory-rich, information-rich shopping. Amazon = left-brain shopping. Malls = right-brain shopping. Both work. Both have a role. If you have a right-brain platform already established for a brand, Amazon shopping works. If you need to develop a right-brain model for a brand, you are headed for the mall. So I think the separation between Amazon and other retailers is pretty simple. One is not better than the other. They have different roles in the range of shopping experiences. Brands and retailers can model accordingly.

  • Posted on: 01/31/2017

    Will free two-day shipping give Walmart an edge over Amazon?

    Walmart is making up lost ground -- better and faster than a lot of other retailers. If shipping is a leveling of the playing field or table stakes, then it's not an edge or advantage. It's going to get really interesting when Amazon makes some kind of slam dunk into brick-and-mortar. I semi-joked the other day about Amazon taking over Sears and reinventing that space into something mall shoppers would actually visit. Now I'm going to say, "Amazon, what are you waiting for?" Sears' market value has been plummeting in the last couple of days to multi-year lows. Pretty soon they will be very affordable. Will Amazon wait for them to go bankrupt?

  • Posted on: 01/30/2017

    Should Macy’s have never gone national?

    My thumbs up re: the beige-ing of the mall comes with a caveat. I can't agree that Federated is responsible. Back when Macy's, Federated and May Co. were separate companies, they had very different platforms. Macy's was almost pure right brain ... highly creative and dynamic. May Co. was almost pure left brain...by the numbers. Federated did a great job of balancing the two ... and survived. Federated operated many of their divisions with very real connections to their local markets and at the same time exercised solid financial disciplines.Federated/Macy's does not deserve to be singled out. Beige-ing is a virus that many retailers are suffering from. Tough to inoculate against and tough to cure. This one has to run its course.

  • Posted on: 01/30/2017

    Should Macy’s have never gone national?

    20/20 hindsight ... well said. But there are also those of us that viewed Macy's commoditization of regional department stores with horror and heartbreak. I always viewed My Macy's as an embrace of the late recognition of what was lost in nationalizing the chain. My Macy's used to be Bullock's, and Burdines, and Foley's, and Filene's, and Woody's, and Hecht's and so on. I grew up at Bullock's at the same time as Terry Lundgren. He was a stand-out then and I continue to view him as one of the real exemplary retail executives. But at the time, the siren song of nationalizing Macy's was irresistible. Of course they could keep the local touch but bring the power of a national brand to the equation. Impossible to argue with at that moment. Oops. The loss of a powerful local perspective was a brain drain that left a vacuum filled with cookie-cutter stuff. Which would have been fine if the market didn't already have Sears, J.C. Penney, Kohl's, Target, etc. How many layers of commodity stuff can the market digest? Not as many as we now have. Local relevancy + emotion = some level of insulation from being dragged into the race to the bottom.

  • Posted on: 01/26/2017

    Do retailers need to work on making more emotional connections?

    Emotion = margin opportunity. Emotion is relevancy, the edge, the moat, the differentiator, the reason to buy versus continuing to shop. Emotion is the reason to come back or stay away. Lack of emotion = race to the bottom, competing on price. Lack of emotion = irrelevancy.

  • Posted on: 01/24/2017

    Are the days of pure play e-tail coming to an end?

    Thank you for the exchange. Good points all, but I'm going to come down on the side of humans and touchable product as having a role for a long, long time. A huge mistake continually made in the apparel business is fashion for fashion's sake. That's the sexy conversation. More is more. Except at some point it goes beyond what the shopper can take in and process. More fashion is more risk and that kind of risk can get very expensive. Same with technology. It's a great solution for a lot of shopping. But more technology for technology's sake is dangerous. Human and product interaction = emotion. I would argue that emotion is as powerful a driver as price. Emotion assigns the value. And I think those are still humans at the Apple Genius Bar.

  • Posted on: 01/24/2017

    Are the days of pure play e-tail coming to an end?

    E-tail has proven to be an amazing incubator for different businesses. A good idea and minimal capital gets you started. Bonobos started with a very simple brand promise. "Superior fit" in guys' pants. And the rest is history. It's a great modern day story of an idea realized and adulthood achieved. But adulthood meant brick-and-mortar, re-invented their way. Amazon starts in books and and is now the all-seeing, all-providing modern day department store. What will their brick-and-mortar presence look like? Can you imagine if Jeff Bezos and Eddie Lampert collaborated on a new concept? The name over the door is now Amazon. Think people would walk in? Sears maintains some shops (if they stop selling off their brands) and Amazon populates the rest of the space with their own stores-within-stores, or kiosks, or ... brands that had no current mall presence are now given that opportunity. Amazon would figure out how to manage the space to create a "treasure hunt" persona. OK, so I exaggerate a little. But the opportunity to create total linkage from the web to physical plant is there. There is a vacuum in parts of the mall. Nature will fill it.

  • Posted on: 01/23/2017

    Can retail compete for data scientists?

    I have to agree. Prioritize or drown. WHAT is the important data and then HOW does it impact the product in the pipeline? Or the marketing? Or the in-store presentation? Or web site pagination? I look at it as left brain/right brain stuff. How does the left brain data miner serve up the information in manner that the right brain product developer can actually do something with it? At some point pure data has to be fused into a design & development process. That's the hard part.

  • Posted on: 01/23/2017

    Is four-wall profitability still a relevant metric?

    Of course four-wall contribution metrics still matter and of course the lens through which they are analyzed needs to be changed. The stores and the Internet are extensions of one another. It makes perfect sense to attribute online sales to physical locations. Ditto attributing store expense to online sales. The P&Ls aren't separate and distinct -- they are mushed together, to put it scientifically. But continuing to measure discrete four-wall contribution will at some point suggest a 3,000 square foot location can now be served by 2,000 square feet. 1000 square feet can now be a kiosk. A five-store market can now be a three-store market. A growing Internet-only business now needs a "sales and support" brick and mortar store in a certain ZIP code. I think it all adds up to a pretty good lesson in evolution for everybody in the retail business.

  • Posted on: 01/20/2017

    Will online sales redeem struggling brick and mortar retailers?

    I think online sales are largely "instead of" sales, not incremental sales. Shoppers are online instead of in their car. So it's hard to imagine online business offsetting declines in brick-and-mortar business if online business IS the decline in brick-and-mortar business. If I'm a retailer, first and foremost I just want the sale ... front door, side door, back door. And if the consumer insists on buying it online, it's up to me to figure out how to do that profitably. A large part of the answer will be found in shipping costs and returns. Efficiencies there will pay huge dividends. I also like the idea of emphasizing non-emotional and non-fit purchases online, like dog food and my favorite coffee on auto-replenishment. I haven't returned a box of coffee yet. New shoes or a new jacket? Total coin toss. How does the retailer incentivize a visit to the store when returns are a high probability event?

  • Posted on: 01/19/2017

    Target gets creative help from Gen Z in new apparel line

    Generation Z is expecting a more deeply engaging and, yes, entertaining shopping experience than mom and dad. Collaboration, in the right context and dosage, is a value-adding process. Cruising the mall or Internet for cheaper "stuff" is hardly engaging. And "cheaper" in and of itself is not a reason to get in the car and head for the mall. I see collaboration as a 2 + 2 = 5 process. Target has been sometimes wildly successful with some of their collaborative initiatives. When a retailer offers a pleasant surprise, an unexpected offering that delights, it can only enhance how a customer FEELS about that retailer.

  • Posted on: 01/18/2017

    Why does Gen Z like brick-and-mortar stores but not malls?

    One of the great things about the age profile of Generation Z is that they are still exploring, learning and forming opinions. That learning is best done through seeing, feeling and experiencing product -- REAL product, not pictures of product. Once they (anybody) have a baseline understanding of and comfort with a brand, shopping online becomes more comfortable. Any brand or retailer has to first establish a level of trust with the consumer. The consumer has to believe the brand promise is real. Maybe it's a version of online dating -- and I am totally guessing here. The pictures and attributes look good, but it's not until the actual face-to-face meeting that you really know.

  • Posted on: 01/17/2017

    Sir Richard Branson at NRF: Are retailers looking outside the box?

    Equity ... absolutely. But before there is brand equity there has to be a brand promise. Clear, concise, focused and, yes, rolls off the tongue because the consumer just knows what the promise is. It's not just what they KNOW about the brand, it's how they FEEL about the brand. Equity is built by keeping the promise over time.

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