The Failure In The Midst of Success 

This iconic brand, nearly 120 years old, may be going the way of Wanamakers. The latter, which dismissed the post-World War II demographic shift from urban to suburban settings, lost out to Sears and other department stores that DID respond to that shift. Now, Sears, which merged with KMart in 2005, seems to have turned up its nose at capital investments in its real estate, and instead plowed its profits into repurchasing stock.

This unfortunate turn of events highlights the importance of keeping one's brand fresh. It's great to have a long history (stability, reliability) but it's a big mistake to rest on those laurels, allowing the brand to become stale. Shoppers are often fickle, looking for the next new "cool" place to shop. It is well known that retail environments are critical in spurring purchases--hence, scented air, calming lighting, new displays, and music. Sears ignored all of this, allowing their stores to become "shabby" and "uninviting" (according to Associated Press, 12/27). Brian Sozzi, an independent retail analyst said, "There's no reason to go to Sears. It offers a depressing shopping experience and uncompetitive prices." Even the addition of Land's End merchandise to Sears stores couldn't help.

This is yet another example of a senior management not paying attention to what is going on "in the trenches." Competitive pressures have a number of sources, related to the Four Ps of marketing (discussed in last month's newsletter): new products, pricing strategies, online shopping and in-store experiences, and promotions. In Sears' case, they seem to have missed on all four Ps, leaving shoppers unmotivated to visit and purchase. There's an interesting article in Social Science Research Network that explains what happens when managers become overconfident in their own perceptions and "wisdom." Seems to fit this case like a glove.

The net result is the closing of at least 100 stores and the loss of thousands of jobs. But an even more serious result is the tarnishing of the Sears brand. Traditionally, this has been "the people's brand." Well known for its Kenmore appliances and Craftsman tools, and before that, its catalog business that helped bring all manner of consumer goods (including DIY houses) to average folk, Sears has been a staple in communities all over the country. However, it has not kept pace with changes in communications, transportation, and the spread of mass merchandisers and "big box" stores, which has led to what I call the "homogenization of America."

There was a time when you knew where you were by the department stores, restaurants, and other local or regional retail brands. With the spread of shopping malls and the expansion of regional brands to national accessibility, you can visit your favorite store or restaurant in dozens of cities all over the country. So this national marketplace that was once owned by Sears, is now much more crowded with hipper brands and more inviting shopping experiences.

There is still time for Sears to get more spiffy, but as a rule, building a brand takes a lot of time and money. Taking it down is a lot quicker and cheaper.

Be Prepared For Bad News