I think it might be just about time to say your last
goodbye to Sears.
Launched as a mail order catalogue in 1888, the brand
has survived recessions, depressions, booms, busts, wars, the technology
revolution and just about every market fluctuation imaginable. But it could
soon fade away into that great check-out line in the sky because of the latest
in market trends – low prices.
I know that sounds a little odd to designate low
prices as an actual trend. It does to me, too.
I believe that it is more than the economy that has
caused the absence of customer loyalty. there remains a sizable number of
consumers who are willing to pay more for value. the major problem is a lack of
consumer confidence. As a result of that lowered confidence, retailers
scrambled to gain share of the market by lowering prices. now, to sell for less
they must cut their costs. On top of cost cuts, many were heavy in debt --
debts which they had to pay off, pay down or be forced to fold. Those who were
unsuccessful went into liquidation (circuit city, linen's and things, mervin's
and most recently borders). Sears is about to become a victim, as well.
One of the primary problems with that model is that
quality is often sacrificed in order to appeal to consumers' desires for low
prices.
There's an old adage that one gets what one pays for. Low price is often an indicator of low quality. It's the equivalent of buying a
junker car off craigslist. If you pay $500 for a car, chances are it won't last
long. The same thing is the case with consumer goods. Whatever is less
expensive will also likely be of lower quality and will lack durability.
The logic thread continues and those consumers who
sought low price are now complaining of low quality.
Consumers are up in arms about the low quality, but
retailers are already in the hole because they have hardwired consumers not to
pay full price. Now retailers must deal with that mentality.
Even upscale consumers have lost confidence in many
major brands. They want value and they don't feel that they are getting it. Instead of turning to lower prices, in many cases they are purchasing less, not
necessarily spending less. However, there have been retailers who have not
sacrificed quality and are still giving their customers excellent service while
striving to do better.
The recession had an effect on these retailers, and
they may have closed some of their poor performing locations. however, they
have survived by not altering their standards. by doing what they do best and
delivering what their consumers value, they have maintained their loyalty.
But not Sears.
Officially named Sears, Roebuck and Co., Sears is an
american chain of department stores which was founded by Richard Warren Sears
and Alvah Curtis Roebuck in the late 19th century. As Wal-Mart became the
dominant department store during the 1990s and 2000s, Sears began to struggle,
so the company merged with Kmart in early 2005, creating the Sears holdings
corporation.
The problem is that joining forces strengthened market
share, but not revenues. Two dying giants who merge only create one larger
dying giant. The competition between the two brands continued, simply under the
same roof, with Sears losing the battle. Kmart reported a 1.6 percent decline
in sales in the first quarter of 2011, while Sears dipped 5.2 percent.
The end result? Look for new ceo Lou D'ambrosio to
shutter the lesser performing brand, Sears, and use the additional resources to
bolster Kmart. It didn't have to be that way.
Savvy retailers are up on trends and keying into
regional needs. Branding is a key element. When a company truly develops their
brand and helps it evolve into a changing market, they create exclusivity. If
you want that brand – and Sears has great brands like Craftsman tools and Kenmore appliances – you have to go to that store. The corporate management of Sears allowed their brand equity to be diminished by going after the low price
consumer. Against that landscape, Sears couldn't possibly perform well. It's
almost as if they set Sears up to fail. If they had simply stuck to Sears
strategy of the 1880s – satisfy their brand loyal consumer – they wouldn't be
looking at the gallows today.
written
by Darlene Quinn a former senior executive with the bullocks wilshire department store
chain and an expert in the consumer retail business.
