Sears has been floundering for some time and no effort to revamp its business has yet been beneficial enough to draw the retailer out of the red.
In a blog post following the company’s annual shareholder meeting last month, Steven P. Dennis, a former Sears vice president who refers to retailer’s decline as “the world’s slowest liquidation sale,” said Sears should waste no time throwing in the towel. These were the five reasons he gave:
1. The retailer has no value proposition and no reason for being. In all the time Lampert has led Sears, he has never quite been able to articulate a clear vision of how the retailer will succeed in the mid-tier market, Dennis said, and the results of the steps Lampert has taken in the turnaround have been largely unsuccessful. “The world does not need a place to buy a wrench and a blouse and a toaster oven,” Dennis said.
2. The competitive gap has continued to widen. Dennis has said Sears has lost relevance and market share to competitors and that its real estate is a disadvantage. Even though Sears has closed close to 500 stores since 2005 and leased its retail space to Dick’s Sporting Goods and Forever 21, this cannot help Sears’ core issue. “In soft lines, they have been given a great gift by the recent foibles of JC Penney and Kohl’s and yet still woefully under-performed,” he said.
3. Sears is only digging itself a deeper hole. As omnichannel becomes increasingly important, Sears has tried to reach the consumer on multiple platforms, namely through its Shop Your Way membership program, but before it can tap into omnichannel, its physical stores have to be compelling. “Sears has under-invested in their brick and mortar stores for years, so not only do they have a lot of catching up to do, they have to develop and roll-out a new store design and related technology support,” Dennis said.
4. Lampert is either a liar or delusional. “The results speak for themselves: Lampert doesn’t know what he is doing. After 28 straight quarters of declining sales—let THAT sink in for a minute—he has the chutzpah to assert, among other things, that Sears is investing in where retail will be in the future (huh?)” Dennis said. Shop Your Way, fast fashion shop-in-shops and partnerships with Seventeen magazine to lure the young consumer, have done little to boost business and Dennis doesn’t think any of it will.
5. The company’s valuable assets are getting less valuable every day. Sears has partnerships with powerful brands like Craftsman, Kenmore and Diehard, for example, Dennis said, but these brands are only as good as their distribution channels. And Sears does not seem to be where consumers want to buy these brands. Sears’ real estate has also been cited as a source of value, but Dennis said they are really more of liabilities. “As retailers continue to prune and down-size their locations it is difficult, if not impossible, to make a case for Sears real estate value increasing over time.”
Following the blog post, Dennis appeared on CNBC’s Fast Money saying, “Lampert has not indicated or articulated a strategy for sears to fight and win in the marketplace and he keeps talking about things like being an integrated retailer, developing the membership rewards program for them, but not addressing the core issues which is having the products that customers want to buy in the places they want to buy them.” He said there is no hope of Sears ever again becoming a viable retail entity.
Lampert still seams to believe in Sears and his strategy for the business. On his own blog last week, Lampert talked about the difference between turnarounds and transformations and said that Sears is working toward a return to profitability. He wrote, “Turnarounds happen when a company succeeds again at doing what it had once done successfully before. Transformations are almost entirely different — they occur when companies adapt their business model to fundamental shifts in technology, competitive landscapes, government policies and regulations, or macro trends to serve their customers (or, in our case, members) in new ways. Over the last decade, incidentally, Sears and Kmart have faced all of the challenges I just listed.”
He added, “Turnarounds are challenging, but transformations are even harder because not everyone sees the direction you’re heading in or your destination. After spending our annual meeting with shareholders, associates, and other partners, however, I am hopeful that looking carefully at other companies’ transformations sheds more light on the actions we are taking and why.”
Sears said Monday that it expects to release financial results for the company’s fiscal 2014 first quarter Thursday, May 22, 2014.