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Sears Gets Swanky, Opens Luxury Goods Department

Long known as an affordable provider of home goods and appliances, Sears is switching gears and entering the luxury market. Soon, customers will be able to buy Louboutin shoes, Chanel handbags and rolex watches as they shop for washing machines and hand towels. Industry experts immediately weighed in, wondering if the radical shift is born of innovation or desperation.

“Affluent [consumers] only make up about 20 percent of American households, but are 40 percent of consumer spending. But Sears is wasting time on this,” said Pam Danziger, President of Unity Marketing. “They should be doing a better job of attracting more affluent customers back into their store, with good merchandise and good service. Affluent shoppers buy from all classes of stores-from dollar stores up to Neiman Marcus and Bergdorf Goodman.”

Danziger clearly counted herself among those who interpret Sears’ strategy as some combination of unwise and unhinged. “It just seems totally nuts to me. Sears, Kmart and luxury don’t go together.”

In 2010, Sears CEO Eddie Lambert first conjured the idea that the retail giant could profitably straddle the fence that separates low cost and couture. Since then, he’s been aggressively pushing to add more and more luxury items to Sears’ Marketplace site. Sears will contract with high end suppliers of expensive brand name goods and then essentially function as a third party in the transaction with consumers.

This third party role highlights the second pillar of Sears’ new approach, which mimics the business models of eBay and Amazon. Besides a vigorous expansion of their customer base by appealing to wealthier customers who wouldn’t typically patronize Sears, they are also redirecting their focus to e-commerce. Imran Jooma, executive vice president of marketing for Sears Holdings, explains:

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“When you combine the capabilities of our stores with the broad assortment we have available online, it will help bring an endless aisle of products from our Marketplace to our members and start to blur the four walls of our stores. If our members can’t find the items they need in a store, they can order through the terminals or tablets in store and have them delivered to their homes.”

However, Danziger, like many others, is skeptical that Sears’ pivot to online retail could rescue the company from its recent sluggishness. “eBay has had success, but that is a function of their longevity and through their ratings system, they have given [shoppers] more confidence. I don’t know how Sears can match the length of time eBay has been at this business to compete with them,” she said.

Sears continues to project optimism over the prospects of renewed success. Jooma cheerfully reported: “We’ve grown Sears Marketplace to include more than 85 million items in just more than three years, so while it does include designer items, it also includes literally millions of other items across nearly every imaginable product category at a wide variety of price ranges. We’re focused on serving, delighting and engaging our members while they shop their way.”

Sears’ most recent financial report disclosed a 9 percent dip in revenues with a $279 million loss, with same-store sales down 3 percent this quarter.