Sunday, June 01, 2008

Sears Holdings Reports $56 Million Loss

The parent company of Sears, Roebuck & Co. and Kmart reported a $56 million loss for the quarter ended May 3 on Thursday May 29, 2008. Natalie Zmuda at Ad Age says,

"During the quarter, sales at Sears' domestic stores open at least a year slumped 9.8%, while same-store sales dropped 7.1% at Kmart. Same-store sales declined across most of its major categories domestically, including the apparel, home appliance and lawn and garden segments. The company said weakness at its stores reflects the impact of rising gas and food prices on its consumers, as well as the weak housing market."

Overall, I agree with Zmuda's assessment. However, there are a few things that Sears can do to improve its sales during a slow economy. For starters, it needs to focus on improving employee moral and the customer experience at some locations.

I took a part-time job at a local Sears automotive center last summer but found employee moral to be rather low. Employee moral was lower than I expected, especially compared to other retailers that I've worked for.

Sears needs to focus on improving the customer experience. Very rarely due I encounter a Sears employee full of knowledge and helpfulness. Again, I think focusing on employee moral may help improve the customer experience.

These are just a few of my opinions. Obviously, my expereiences with Sears pertain largely to locations in Southwest Ohio. Nonetheless, a $56 million loss indicates that my experiences may have contributed to Sears' poor quarterly results. Hopefully Sears will get things turned around.

A key problem for Sears is that it doesn't position itself from competition. Is it a low-cost leader? No, that would go to Wal-Mart. Does Sears offer the highest quality products? Sears may offer the highest quality products, but it doesn't relay that via its marketing campaigns. I think of JC Penney's, Macy*s and Nordstrom when it comes to offering quality products. Does Sears offer the best service? Again, it may offer great service, but Saks Fifth Avenue and Nordstrom are more known for their outstanding service.

Sears offers great products (e.g. Craftsman tools and Diehard batteries) but needs to find its market niche and exploit it. Hopefully it will.