What We Can Learn from Sears
It has been wisely said that those who fail to learn from history are destined to repeat it. Once the largest American department store, now Sears is struggling hard to remain relevant.
The previously iconic chain is buckling due to its inability to adapt in accordance with today’s brand expectations. The result is that its parent company, Sears Holdings has filed for bankruptcy.
The failure of Sears, however, offers great learning opportunities for other business owners and retailers that they can learn from and thrive if they are to survive in today’s competitive business environment.
No Company/Business is Unassailable
At some point in time, Sears was seen as a bedrock of the American society, the biggest retailer, literally the face of the nation. The truth is that there is nothing as being too successful not to make mistakes or even fail. Shopping tastes and patterns change. And for sure, how people shop has changed, and you would be wrong to assume that it won’t happen again.
The failure of Sears didn’t happen because the year was bad or even due to a couple of bad years. It happened as a result of an extended period of poor choices and neglect that kept on pilling on top of each other cumulatively. Over time, it became harder and harder to rectify or correct the course of the giant company. Every business owner needs to seriously guard against any form of complacency. Over time, a small crack will grow bigger, and it’s much easier and more cost-effective to make necessary repairs along the way than waiting to try and fix problems after they become major.
Understand your Audience
Business analysts point at Amazon, which is grabbing the lion’s share of the retail business in America and which other mega-corporations, as well as independent retailers, have to contend with as being behind Sears’s woes. The truth of the matter is that since the formative Amazon years, Sears has been losing sales. From around 2000, the predicament of Sears was largely pointed to the emerging big-box competitors such as Home Depot and Walmart.
As Generation X was growing, these competitors were able to beat Sears mainly on price point, supplanting it in the minds of the consumers. This was a far cry from those Sears’s glory days when the brand was a stalwart in the minds of Baby Boomers. For the millions of Millennials—who had already abandoned the typical shopping malls, Sears might as well not be in existence.
Founded on a foundation of product catalogs and loyal consumers, the iconic giant has been badly hit by the fickle and whimsical nature of the current “on-demand” generation. For Sears, the problem is that it has remained a poor retailer. It has failed miserably on every known facet of retailing, ranging from product assortment to merchandise to service to the very basic shop-keeping standards. This failure is reflected in the loss of customers, loss of market share, and a once vibrant brand that is now tarnished and becoming increasingly irrelevant.
Ditch Outmoded Business Philosophy
Most analyses would appear to blame the collapse of Sears on the attempts by Chairman Eddie Lampert’s to turn the chain store into an online competitor to Amazon as well as his failure to upgrade the “brick and mortar” stores (Sears and K-Mart). Three lessons come out clearly from the outmoded business model pursued by Lampert’s and the failure to adapt.
First of all, unless you massively and successfully outspend a competitor, pursuing their successful strategy is doomed to fail. Secondly, the “online revolution” is generating a massive backlash. Today, having a visible presence in the online local community is far more valuable than merely having an awesome website. Thirdly, no business can afford to make business decisions for the 21st century based on obsolete arguments and concepts of the last 20th century. Your thinking must evolve to match the reality of today.
Embrace Influencers and Partnerships
About 2 billion people are now using social media. Your customers are now on social media and your competition is on social media. It would, therefore, be crazy if you are not there, too. Today, investing in a well-designed social strategy is perhaps the single best method to future-proof your company or business for the coming years. The truth is that technological changes are always disruptive but ignoring or wishing them away will inevitably backfire.
Among the many branding mistakes made by Sears was its deficiency in terms of on-trend partnerships. Successful stores like Kohl’s are partnering with celebrity influencers such as Lauren Conrad for quality branding for much less, thus generating a higher perceived value for their everyday-use products. In contrast, Sears is still carrying the same old brands of mattresses, hardware, appliances, etc.
The key here lies in finding influencers that already your target market is listening to, then developing a natural partnership that offers value to your customers. Had Sears pulled in several complementary and trending brands or influencers they might have managed to recapture a sizeable percentage of the fleeing customers.
Adapt Digital Marketing
Companies should strive to constantly evaluate their asset potential and keep informed about the growth strategies of their competitors. This ensures that they remain alert to potential market shifts as well as in customer expectation. With the type of exponential growth being seen in the technological sector, the ability of a company to adapt quickly and accommodate the ever-changing customer expectations is only going to become more crucial.
Walmart, for example, didn’t overtake Sears simply because it had adapted more sophisticated technology; it’s because its technology made it possible for Walmart to be more responsive to shifting consumer demands.
E-commerce has shifted the way we think about consumerism. Giants such as Amazon and Walmart have not only pioneered the way we shop today, they have adapted to the changing times. Buying online and having something shipped to you in 2 days or 2 hours without having to leave the comfort of your home has made it tough for businesses such as Sears to stick along. Mobile optimization has been a huge factor in the way consumers shop. Social media platforms such as Instagram has made it easy to point directly to product pages directly from their platform to Amazon or Walmarts product page.
Email marketing is another great opportunity that big business should be taking advantage of. Email marketing has been around since the age of the dinosaurs. But, email marketing has come a long way. Gone are the days where companies would reap the benefits of consumers by spamming them with mass amounts of sales-like emails. Today, there’s a huge emphasis on nurturing your audience, regardless of whether their ready to buy or just browsing along. Sears should have taken advantage of evergreen emails, sending segmented and personalized emails based on where the audience is on their buyer’s journey.
Constantly Add Value to Customers
Businesses must always be mindful of new ways through which they can add more value to their customers. In the case of Amazon, they did this by focusing on the challenge being faced by most online retailers — the supply chain. Amazon added value by greatly cutting down on wait times and then, perhaps more importantly, by diversifying this value by opening up its channel to external partners, affiliates.
Sears, unfortunately, did the opposite of that. While Amazon, one of its key rivals was taking concrete steps to get even closer to their clients by building locally-based warehouses, Sears was actually closing its physical locations. Though the long-term intention was to save money, Sears ended up losing ground to an emerging competitor by distancing itself more from its customers.
Messaging Consistency Matters
Despite running an elaborate point-of-sale system architecture and a massive number of stores, Sears can be classified among the early pace-setters of the Omni-Channel experience. The emphasis on the logistics involved in the pick-up-in-store experience has remained among the best and was replicated later by many big box rivals.
The problem, however, was more in the details. The whole Sears structure lacked messaging consistency. Take coupons for example; many a time, the customer would see a store-based promotion that was not applicable to their online purchase. The customer would leave the store somewhat disappointed, despite the obvious convenience supported by the in-store pickup.
If you happen to be coordinating sales between varieties of channels, whether social media, brick-and-mortar, or multiple sites, it’s vital to regularly review and ensure that your brand messaging across the board is consistent.
According to one business analyst, in today’s competitive environment, once a business has figured it out, then it’s in trouble. It has to figure out the next thing and the thing it figures out may last another couple of years, but inevitably, at some point, that latest thing will not be relevant any longer. Whether it was an in-house marketing agency or a web and marketing agency on Long Island, it is crucial to stay on top of the changing atmosphere we live in. Sears failed to do that.
The end for Sears was not inevitable. However, the reality is that the mega-chain store suffered from cumulative years of complacency. Its management and leadership did not simply make the needed changes to keep the company competitive. The bottom line is that it’s very hard, perhaps impossible, to be successful when only limited steps are taken to change course.