Commentary: Here's what Eddie Lampert should do with Sears now
Sears Holdings Corp. will stay out of the retailing graveyard for a bit longer.
Eddie Lampert, the company's chairman and major shareholder, prevailed in a bankruptcy auction with a last-ditch plan to save the storied department store from liquidation and preserve thousands of jobs, Bloomberg News reported, citing a person with knowledge of the situation. He won out in part after sweetening his bid, now valued at more than $5 billion. The agreement, reached early Wednesday, still needs to be approved by the U.S. judge overseeing the bankruptcy.
Lampert may have beat out other bidders, but he hasn't exactly won himself a prize. Hoffman Estates-based Sears remains as troubled as ever, and this takeover won't change that. I still believe it's only a matter of time before the company winds up in liquidation.
But this week's events got me thinking: What would I recommend Sears do at this point, if not to fully return to health, then at least to hang on a little longer? Here are three ideas:
• Make a nostalgia play:Shopping at Sears now is a sad experience, but the department store occupies a distinct place in American history. Its Craftsman homes still dot our suburbs, the tower it built in Chicago is iconic (even if it no longer carries the retailer's name) and its catalogs were once a familiar fixture in our living rooms.
I know Sears doesn't have oodles of cash to throw at lavish marketing campaigns. But what if it stopped trying so hard to lure customers with Shop Your Way rewards - a program I have literally never heard a shopper rave about - and went for our heart strings instead?
I'm imagining some ads showing the remarkable story of how Sears evolved from selling America horse buggies by catalog to offering us 4K TVs via our smartphones. Or maybe something with millennials and Gen X-ers sharing memories of making childhood Christmas lists from the Sears Wish Book, and grandparents recalling the pride they felt when they bought their first Craftsman toolbox. In other words, remind shoppers that many of them - with the exception of Gen Z-ers - probably have some latent affection or nostalgia for this brand.
• Wave the white flag over Kmart:The discount chain is in a brutally competitive corner of retailing. Walmart Inc. and Target Corp. are in their best shape in years, and Dollar General Corp. is a retailing rock star that is blanketing America's rural areas at an astonishing pace. Kmart simply doesn't have a prayer of keeping up with them.
Kmart had only 360 locations as of August and has shuttered dozens of stores since then. It doesn't have the ubiquity and scale to compete on important offerings such as click-and-collect. And its gross margin lags that of Sears, presumably because a significant share of its business comes from the food-and-drug categories.
Maybe focusing on the Sears brand alone - and reaping savings from ceasing to operate Kmart stores - wouldn't be a bad idea.
• Think strategically about labor allocation:Sears won't be in a position to dole out generous raises, and I suspect many of its employees already are eyeing the exits. But it should do everything it can to make sure it puts its best workers in the places it can make the most difference.
Appliances are still a relative bright spot for Sears. And we've seen from the recent strength of Best Buy Co. how powerful it can be to focus on first-rate customer service when shoppers are making an expensive, highly considered purchase. Sears should make sure its most knowledgeable, consultative employees are stationed in the appliance section, in theory helping it score sales in a category where it still competes reasonably well.
Even if Sears does all of these things, its days are likely numbered. But if Lampert wants to feel like he truly gave the salvage effort his best shot, these are the things he ought to try.
• Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.