Case Study: 10 keys to survival for Sears Holdings Corp.

Today we are featuring a special guest commentary spot. It's an article written by Pseudo3D about the 10 things he thinks Sears Holdings Corp. needs to do to survive.

1. Kill Sears Essentials
Sears Essentials was started in 2005 under the idea that Kmart was the weaker brand of the two (Sears and Kmart). Unfortunately, Sears Essentials is a disaster and has undermined consumer confidence in Sears as a whole. Today, many of these Sears Essentials stores are being converted back to Kmart locations. A casualty of this is Sears Grand, which has basically fallen by the wayside after the Sears Essentials debacle.

Sears Essentials location that is closing.

2. Change the logo again and stick with it

For whatever reason, Sears changed their logo to a full lower-case affair. Seeming as part of a last-ditch effort that just makes the name appear less important and less bold than it used to be. It's a sorry way to go for one of America's most well-known names. Sears needs to quit redesigning their logo and go back to one of their older ones, the bold mid-1980s logo, the script logo of the 1960s, or even the art deco logo.

Sears current lowercase logo.

3. Give Kmart the gift of food
Eddie Lampert seems to be against food in general, closing the K-Cafés, neglecting the Pantry department, and phasing out Super Kmart's. What Kmart needs to do is embrace food and follow the examples of Target and Walmart in offering a larger food selection. Both Walmart and Target have essentially stopped adding 'Super' when it comes to food. Target now offers an expanded selection of food via the 'P-Fresh' format. While Walmart internally having full groceries in some stores, no longer puts "Supercenter" on its stores. On smaller stores, Walmart puts in an expanded food section. To achieve this, Kmart should reopen the 'Super' part of the stores that it closed off and lease out the K-Cafés to other operators. The Kmart name should replace both Big Kmart and Super Kmart.

4. Stop offering Sears brands in other stores
The strength of Sears has been in its brands: Craftsman, DieHard, Kenmore. By out-sourcing those brands, it gives customers less reason to go to a Sear store and erodes the brand quality. Cutting the sponsorship and pushing the brands at Sears and ONLY Sears would be better for the company as a whole.

5. Differentiate Sears and Kmart stores
Almost from day one of the merger and continuing today, Sears and Kmart started to share brands and become more similar to each other. What needs to be done is create a full division. Sears and Kmart should offer different brands and departments from each other. If a Sears and Kmart were to co-exist in a mall, they should survive by not cross-contaminating each other, at least not by much.

6. Enter new markets
Kmart left a lot of markets open in its 2002-2003 bankruptcy retraction, leaving some stores in odd places (a single Kmart left in Killeen, Texas for instance). If done right, a Kmart in a new market could steal customers who would normally go to a Target or Wal-Mart, as well as taking up vacant space in light of recent bankruptcies from other companies.

Kmart's mass closings of 2002-2003.

7. Don't to be too quick on leasing

Sears is trying to lease out store space to other retailers, with the offer open for nearly every Sears and Kmart. Unfortunately, Sears Holdings Corp. is more interested in just 'whatever it can get' rather than a good fix for the store. For example, a Cupertino, California Sears store is leasing out some of its space to a health club! More troubling is that the strategy resembles what Montgomery Ward did in the late 1980s and early 1990s, and we know what happened to them. Service Merchandise also similarly downsized store space. A Greensboro, North Carolina Sears store is sub-leasing part of its store to Whole Foods Market, which seems like a wonderful idea until you realize the Whole Foods is not going to be connected to Sears itself. What Sears and Kmart should be doing is leasing space that will actually open up to the inside, and complement the store. In the 1960s, the Canoga Park, California store included a Vendome store-within-a-store, which sold wine and spirits (by the way, Vendome is still around, but no longer offers brick-and-mortar retail space.) Another great way for Sears to 'rent out' space would be to convert some space to a Kmart, instead of having the aforementioned bad combinations.

8. Rediscover the Past
Sears and Kmart both have a storied past. What they need to do is look for past inspirations to help them find a niche today. I don't know why the Duluth, GA concept was never pushed forward but Sears needs to be classier. You don't have to have exclusively softlines to be 'classy'  but Sears needs to be "I'm a store that harkens back to the golden days of department stores, where there was something for everyone, Explore me!" This includes the fact that Sears should restore some of its older locations. A Sears store in inner Houston, TX and visible from the highway got a nasty exterior remodeling in the 1960s hiding its art deco. After Hurricane Ike, a piece of missing metal siding revealed the art deco exterior underneath, yet Sears hasn't gone ahead with any restoration of this building. Meanwhile, Kmart shouldn't imitate Walmart and Target and go for "low prices" or "affordable fashions" too much, it should just be a no-frills mid-line discount store, like it always was. Perhaps Kmart should revive the Kmart Chef name for its in-store restaurants with an improved menu and décor.

Sears Duluth, GA retro concept store.

9. Invest in Remodeling
Sears and Kmart stores are woefully out of date. Even the new-style Kmart logo on the '70s arches store is a bit painful to look at. While blue seems to work for Sears (it's kind of iconic, after all), the new brown and orange is a kind of unappealing look for Kmart. Why Kmart abandoned the green and grey concept of 2002 is beyond me. Clean up the stores and make them truly attractive places to shop again.

One of Kmart's green and grey concept stores.

10. Get new leadership
Kmart's Chuck Conaway led them into bankruptcy while frittering away the company's money on personal luxuries illegally. Lampert hasn't done much if any to improve Kmart's standings as a viable competitor to Walmart and Target. Even holding them back, all the while giving himself a large salary as CEO and bleeding the two brands to their death. Some suspect he's devaluing them deliberately and just using the company for it's real estate. 

And there you have it, Pseudo3D definitely makes some very good points in the article. The main point to take away is Sears Holdings needs to do something different to right the ship, because its sinking quick, fast, and in a hurry. I think investing money in the stores for remodels and improved product assortment is the single most important and biggest thing they can do at this point to help the company.

What are some things you think Sears Holdings Corp. needs to do to improve the company overall? Post a comment below to sound off your thoughts.

Spotlight: Kmart / Sears Outlet - Concord, NC

It's officially fall and that means new Kmart World updates! After taking the summer off, we're back with new posts to keep you occupied through the rest of 2011 and beyond.

Today's feature comes from Mike K. and is a former Super Kmart Center located in Concord, NC. It's now a regular Kmart location with a Sears Outlet store on the former grocery side. Below is Mike's observations from visiting this unique store.

"I've never seen a Super Kmart Center location in person before and was it huge! You can tell right away that it was a Super Kmart Center by the facade style and the sheer size of the building. Double entrances with one for the Kmart side and now one for the Sears Outlet side. All of the standard Kmart merchandise is in the middle and right side of the store. The far left, which was the fresh foods section, is now the Sears Outlet store. Kmart kept the regular food aisles and signs hanging above, where all the non-perishable pantry items are. A long shelf was put up to prevent you from going to the Sears Outlet side while shopping in these aisles. The selection of items was huge and a lot like a typical Walmart. This location included a still open Little Caesars Pizza Station. It was the largest one I've ever seen, especially with the massive glass windows out front that shouted 1990's. The front of the store had a Budget rental place, a nail salon, and the customer service desk. There was space for one or two other businesses, but they were closed off. It was probably a bank or something similar that was there before. The registers were in the front center of the store. You could access the Sears side from the Kmart side and vice-versa from the front of the store."

And there you have it, a former Super Kmart Center that found a second life and was converted into something useful. If Kmart continues to downsize Super Kmart Center's into regular Kmart's they should utilize this idea of a hybrid store for them. Instead of leaving the space where the grocery section was empty, use it for another one of Sears Holdings brands. Not only could they put in a Sears Outlet store, they could put in a limited section of regular Sears merchandise, a Lands End shop, a Craftsman shop, etc. There's plenty of things Sears Holdings can do with that space if they don't want to sell groceries in their remaining Super Kmart Centers. Unfortunately, this will probably be one of the only locations that gets a second use for its former grocery section.

What do you think, is this a good use of space or a waste of time? Leave your thoughts below and stay tuned for our next update soon!

Special thanks to Mike K. for taking all of the pictures and contributing commentary about his visit to the store.

A still open Little Caesars in this Kmart.

Little Caesars retro looking windows.

A shot of the Sears Outlet side.

Typical Kmart garden center.

Former Kmart Auto shop, now run by an independent company.

Looking towards the Sears Outlet entrance side.

Looking toward the Kmart entrance side.

Special Report: American Fare or American Failure, a history of the hypermart

American Fare 1989, Stone Mountain, GA

Some of you are thinking what's American Fare? Isn't it one of Kmart's house brands? The answer is yes and no. Flashback to two decades ago and you'll discover that Kmart opened a few stores under that name. It wasn't until later on that they adopted it for use as one of their house brand names.

Before Super Kmart Centers there was American Fare. It was a concept that Kmart created in the late 1980's to be their American version of a hypermarket, a retail concept started in France by Carrefour. Kmart's American Fare hypermart was very similar to competitor Wal-Mart Stores Inc. Hypermart USA, and both were started around the same time. Carrefour opened two of their hypermarts in the US also around the same time. All three companies hypermarts didn't make it past the mid-90's.

A hypermart is a fusion of a department store and a grocery store along with other extra services. They range in size from a little over 100,000 sq ft to 250,000 sq ft. Today's closest equivalent to hypermarts are supercenters, although most are a bit smaller than the larger hypermarts of the time.

American Fare was a joint venture of Kmart and Bruno's Supermarkets, Bruno's supplied the grocery side and Kmart stocked everything else. Kmart owned 51% of each store and Bruno's 49%. The idea was to offer very low prices thus lower margins and to make up for it with extremely high volume locations. These store were more upscale in looks than current day Super Kmart Centers.

The first location was opened on January 29, 1989 in Stone Mountain, GA. The second opened on April 1, 1990 in Charlotte, NC and a third location followed in August in Jackson, MS. These were the only locations that ended up opening and the concept was discontinued completely in 1994, but more on that later.

Upon it's debut in 1989, the first American Fare in Stone Mountain, GA was a sight to behold. Coming in at 244,000 sq feet, this monster mecca of shopping was a first for Kmart. According to an article, this store had an upscale flair with several fixtures and displays that were retail firsts at the time. American Fare was able to convince companies to carry brands not normally found in other discount stores. Some of them included Calvin Klein, Jones New York, Puma, Bill Blass, Beverly Hills Polo Club, Hush Puppies, among other well known brands. Although this store was huge, the assortment topped out at just 45,000 sku's. American Fare practiced a merchandising strategy they called selective dominance. They would carry a limited selection in certain categories but keep a large amount of each item on display.

American Fare present day, Stone Mountain, GA (Courtesy of Bing Maps)

At 244,00 sq ft, American Fare would make most Walmart Supercenters jealous. The store was divided up with 105,000 sq ft being devoted to hardlines, 75,000 sq ft to food, 35,000 sq ft for apparel, and the remainder to the mall section of the store. The mall part included 12 specialty shops including: a music and video store, a full-service bank, a hair salon, a pharmacy and a greeting card store (both operated by American Fare), plus a food court. The food court featured a Taco Bell and a TCBY. The store also had the "largest retail scratch bakery in the US." This store had a whopping 81 registers including 61 "custom designed" front end checkouts and 20 others in service departments around the store. It also had 1,800 parking spaces and 2,500 shopping carts for customer use.

Fast forward a year later to April 1, 1990 and American Fare made its second store debut in Charlotte, NC. With the opening of this store it marked the redesign of American Fare, a better selection in a less intimidating store. And less intimidating it was, at only 164,000 sq ft it was considerably smaller than the Stone Mountain store. This location came stocked with 110,000 sku's, over double what the Stone Mountain location had. The Stone Mountain store was re-merchandised to match the offerings at the Charlotte location after its opening.

American Fare present day, Charlotte, NC (Mike K. photo)

To make up for the smaller size of the store the aisle length was cut down and several of the "mall" shops were eliminated or absorbed into other parts of the store. The fixtures in the apparel department were wheeled closer together removing some of the spacious feeling the Stone Mountain store had. The Charlotte location also cut down the number of checkouts to 43 with 32 on the front end. Some departments like the florist shop and greenhouse were not added to the Charlotte store. The store did feature a photography studio, as well as a Little Caesars Gourmet Pizza and Little Caesars International Submarines shop.

Following the Charlotte store, a third location was opened in Jackson, MS on August 23, 1990.It was 147,000 sq ft and was nearly the same in looks and merchandising as the Charlotte store. A fourth location was briefly planned for Birmingham, AL, but never came to light.

After the opening of the Jackson, MS store, Kmart announced it was not planning anymore American Fare locations. It would instead open Super Kmart Centers, another new concept that was based off of the American Fare stores. The first of which opened in July 1991. In June 1992, just three and a half years after the first American Fare debuted, Bruno's Supermarkets ended its partnership with Kmart. That left Kmart to take full ownerships of the three stores and the responsibility of running the grocery sections. Unfortunately that spelled the beginning of the end for American Fare. In November 1992, the Jackson and Charlotte locations were converted into Super Kmart Centers. In 1994 the Stone Mountain locations grocery section was removed and the store was subdivided. A Cub Foods opened in the newly subdivided grocery area and the rest of the store was remodeled and converted into a regular Kmart location in May of that year.

By May 1994, American Fare was gone completely. It wasn't Kmart's fault, the hypermart concept as a whole failed and was extremely short lived. By the mid-1990's all hypermarts were gone from the US and the supercenter concept was expanding in its place. Following this, Super Kmart Centers began their brief dominance.

Fast forward to 2011 to take a look at the current state of the former American Fare locations. The Stone Mountain, GA location was refurbished into the Dekalb County Schools Administrative and Industrial Complex a few years ago. The parking lot is used for the county school buses to park and practice driving on a small course in the lot. The Jackson, MS location survived as a Super Kmart Center until 2003 when the bankruptcy closings hit. It was torn down in 2007 and replaced with a Carmax used car superstore. The Charlotte, NC location was a Super Kmart Center and then briefly a Steve & Barry's. Today it's vacant and still retains the original American Fare building style.

What are your thoughts on American Fare? Do you think it was a good idea or a bad choice from the start? Share your comments below and let us know.

Special thanks to Mike K. for recently capturing these photo's of the former Charlotte, NC location. He also made a short video of it on Youtube.

American Fare Charlotte, parking lot looking toward entrance (Mike K. photo)

American Fare Charlotte, front of building (Mike K. photo)

American Fare Charlotte, Former Auto Center (Mike K. photo)

Spotlight: Big Kmart - Snellville, GA

Big Kmart - Snellville, GA May 2011.

 Today's spotlight is the Big Kmart in Snellville, GA. This is a very old Kmart located in a dying shopping center. As you can see from the picture above it wasn't very busy when I visited on a weekday afternoon. I originally visited this location and took a couple pictures of it in September 2008 (shown below.) A few things have changed since then including new shopping carts, the removal of the K Cafe and a few minor decorative changes.

Typical Kmart store entrance, The door striping is now red, it was blue when I visited in Sept. 2008.

Above was the picture taken in Sept. 2008. At the time you can see they were having a sidewalk sale. The carts they had were blue plastic, now they are grey and red metal (as pictured below.)

Kmart's new carts, that are being put in several stores. There are two sizes, the regular ones and a new mini cart (they are on the far right row of the picture.)

 I for one am happy to see Kmart at least invest in new carts. Most stores had several different colors and styles, not to mention that they were very old. Now if they would only makeover the rest of the store maybe we'd get somewhere.

The former location of the K Cafe, now just an area for putting pallets of specials.

 K Cafe pictured still in business when I visited the store in Sept. 2008. It used to feature Little Caesars pizza, but as you can see in the sign its blanked out.

K Cafe's seem to be disappearing from Kmart's at an increasing pace. I think Sears Holdings has something against food, as they are removing more Super Kmart Centers, K Cafe's, and continue to lag in their food selection at regular Kmart stores.

I could not get over how old this Pharmacy sign looked, a serious throwback.

Appliance area that was added a few years ago.

Electronics department, complete with missing signs on the wall.

One thing I will say about the electronics department during my visit was that there was an employee working in the department and she even asked me if I needed any help. I was impressed as most Kmarts its hard to find someone working in the electronics much less willing to help you.

Olan Mills Portrait Studio.

I found this Olan Mills very strange as it was out in the open in the middle of the store instead of being in a little room like they usually are. It leads me to believe it wasn't an original location and was added after the fact.

That about wraps up this spotlight feature, hope you enjoyed it. We've got plenty more to offer in the coming weeks including a former Super Kmart Center in NC that is now a regular Kmart/Sears Outlet combo store.  And as always leave your comments and thoughts about this store below.

Case Study: Recent Sears Holdings Headlines

  Here's some of Sears Holdings most recent headlines along with my take on them.

Sears Interim CEO 2010 pay more than triples

Associated Press

NEW YORK — Sears Holdings Corp.'s interim CEO W. Bruce Johnson, who gave up the top role in February, received compensation worth $5.3 million in 2010, more than triple the prior year, according to an analysis by the Associated Press.

Johnson, 59, received a salary of $979,487, up 15 percent from the previous year, which ended Jan. 29, according to a filing with the Securities and Exchange Commission on Monday.

The company, controlled by billionaire financier Edward Lampert, operates Sears and Kmart stores. It has struggled for more than a decade with declining sales and customer defections. Analysts say it desperately needs to renovate its stores to lure shoppers back.

The bulk of Johnson's compensation came in the form of stock awards valued at $4.3 million, up from $663,400 in the previous year. Johnson also received other compensation worth $24,983 as part of Sears' perks program.

His total compensation the year before was valued at $1.5 million.

Johnson served as interim CEO and president from February 2008 until the company named Louis J. D'Ambrosio, 46, permanent CEO in February. Johnson now serves as executive vice president of the company's off-mall businesses and supply chain.

Johnson's base salary was restored to $900,000 in fiscal 2010 following a voluntary temporary reduction of his base salary to $850,000 in fiscal 2009 as the company aimed to cut costs. In April 2010, Johnson's base salary was increased from $900,000 to $1 million. In addition, Johnson received 40,000 shares of restricted stock last year to be paid in equal installments over four years.

Sears is being squeezed by retailers from all sides. At Kmart, whose business has strengthened somewhat, it faces challenges in food as Target Corp. expands into groceries. Wal-Mart Stores Inc., the world's largest retailer, has stumbled with falling sales but is still a formidable competitor.

Sears' stores' strength has long been appliances and home goods, including the Kenmore and Craftsman brands, but those sales have weakened. Home-improvement chains Home Depot and Lowe's Cos. have been specifically targeting that category.

For the year ended in January, Sears earned $133 million, or $1.19 per share. This was off 43 percent from $235 million, or $1.99 per share, in the prior year. Adjusted earnings fell to $2.07 per share from $3.19 per share.

Annual revenue declined 2 percent to $43.33 billion.

Full-year revenue at stores open at least a year fell 1.6 percent, with Kmart posting a 0.7 percent increase and Sears reporting a 3.6 percent decline. The measure is a key indicator of a retailer's health. Copyright 2011 Associated Press

My Take-
Can Sears Holdings really afford to pay their CEO's that much money while their sales shrink? Why Eddie Lampert would want to reward his CEO for declining sales is beyond me. This is just another reason why Eddie is slowly destroying Kmart and Sears. He should be using that money to renovate stores and not overpaying executives. One thing to point out that the article stated is Kmart's business has somewhat strengthened. That's been reinforced by Kmart's small increases in sales, while Sears stores have been reporting larger declines.

Sears Holdings Continues Commitment to the Military With Launch of Permanent Change of Station Promise

In Support of First Lady Michelle Obama and Dr. Jill Biden's Joining Forces Initiative, Sears Holdings Offers Continued Employment to Service Members and Families

HOFFMAN ESTATES, Ill. April 12, 2011 /PRNewswire/ - As a longstanding supporter of the military and military families, Sears Holdings has announced the launch of its Permanent Change of Duty Station (PCS) Promise. The PCS Promise was created to support Michelle Obama and Dr. Jill Biden's Joining Forces initiative, which raises awareness around the challenges that military personnel and their spouses endure when moving from one community to another. The PCS Promise, which helps military associates and spouses employed by Sears Holdings secure job transfers, is aligned with the Joining Forces initiative, which asks the nation to support our brave service members.

"The Sears Holdings PCS Promise for our military associates and their spouses was specifically created to identify new opportunities for our heroes to continue leading successful careers, regardless of their location," said Lou D'Ambrosio, chief executive officer of Sears Holdings. "And it is an honor to offer this promise at the same time that Michelle Obama and Dr. Biden are leading the charge in the Joining Forces initiative, which is committed to providing heroes the support and opportunity they deserve."

In many cases, military spouses move from one community to another when their spouses are reassigned. On top of the stress of uprooting children and relocating to a new community, military spouses are often faced with the difficulty of continuing their careers or finding a new job in their new location. With the PCS Promise, Sears Holdings will do everything in its power to give military associates who are employed by the retailer a job at a Sears, Kmart or Lands' End store convenient to their new location.

Sears Holdings will also conduct a virtual career fair for military spouses this summer that will enable them to connect online with other military spouses currently employed with the company and get information on employment opportunities at nearly 4,000 store locations.

"From our experience, we know that military associates are driven, motivated and have leadership skills that can only help our company grow. We win by keeping talented, experienced employees working in our stores," D'Ambrosio added.

In addition to the promise, Sears will continue to offer additional opportunities through its existing Heroes at Home program. The Heroes at Home program has provided the means for hundreds of military families to shop for in-demand items and necessities during the holidays through its Wish Registry, and the program will continue to provide support to service members, veterans and their families through joint efforts with various nonprofit organizations, including Rebuilding Together and the USO. The program has already helped hundreds of deserving military families by raising more than $21 million to support the rebuilding of more than 1,000 homes by the end of 2011.

My take-
This is one thing that Sears Holdings has done well with- helping people out in need. Kmart stores have the Smart Assist card that gives discounts for unemployed people. And now they are assisting military families who need help relocating their jobs. Not to mention they've done other things like providing items for Extreme Makeover: Home Edition. I would hope that they are doing this things to be sincerely helpful, but I'm sure a lot of it is for positive publicity.

Sears and Kmart Join Forces With TV Star Sandra Lee on Exclusive Home Products Line

The Debut Sandra by Sandra Lee Collection Will Be Available at Sears and Kmart Stores in Spring 2012

NEW YORK, April 5, 2011 /PRNewswire/ - TV star, entrepreneur and bestselling author Sandra Lee has entered into a direct-to-retail license agreement with Sears Holdings for home products. The exclusive collection of home products, Sandra by Sandra Lee, will be available in Sears and Kmart stores in spring 2012. The initial launch of the collection will include cookware, utensils, gadgets, bakeware, small kitchen appliances and tabletop items.

"The new Sandra by Sandra Lee collection is a welcome and timely addition to the value we offer our customers in the home category and underscores our commitment to making everyday special," said John Goodman, executive vice president of Apparel and Home for Sears Holdings. "Both Sandra's down-to-earth style and sense of practicality shine through this collection, which is both aspirational yet still attainable."

Acclaimed for her warmth and approachability, as well as her talent for offering simple solutions to everyday living, Sandra Lee anticipates a product line and a collaborative effort with Sears and Kmart that will help customers focus most on what's important to them.

"Launching my first ever, complete collection of home products with Sears and Kmart is a wonderful opportunity to help their customers live their lives beautifully and simply. I have waited a long time to find the right retail partner—one that would be able to execute my vision for the brand," said TV star Sandra Lee. "What is equally exciting is that the 'Sandra by Sandra Lee' collection will be affordable and accessible to everyone, while still maintaining the fun flair and simple sophistication my brand is known for."

"We're thrilled to welcome Sandra Lee to our Sears and Kmart family and to add her line to our portfolio of trusted brands," stated Chris Capuano, president of Home Fashions, Sears Holdings. Ms. Capuano added, "Sandra's philosophy of implementing simple ideas that create dramatic results will resonate with our customers and we are happy to be able to offer the collection exclusively to them."


My take-
This could definitely be a good thing for Kmart and Sears by filling the void left by the Martha Stewart Everyday collection that was removed a couple years ago. I'm not that familiar with Sandra Lee, but I'm sure plenty of others are and they might go to Kmart just because they carry her collection. Which can result in positive sales gains for Kmart and Sears stores. We will find out in a year when it hits the stores.

Post a comment below to add your takes on these stories and if you agree with my take on them.