Sears Holdings: Will Sears and Kmart Be the Next Hostess Brand?

Retail is a fickle beast. If you don't understand your customer, your brand, and how the retail cycles impact each, along with your bottom line, your business will fail. Will the hedge fund billionaire turned retailer wannabe, Edward Lampert, save Sears Holdings? Or, will the company go the way of the Twinkie?    

For years, Sears has struggled to find their way back to "America's most trusted" in all areas of their business. They were on a good path to recovery until the economy tanked (see chart below). Last month, Sears Holdings board chairman, Edward Lampert, announced that he had named himself CEO — the fifth CEO for the company in 7 years.  This move has left many in the retail and investment communities asking, "what does a hedge fund guy know about retail?" 

Sears stock prices from May 2003 to present:

Photo Credit: Yahoo Finance.

Since the crash, Sears has not been able to regain their footing and has been in a perpetual state of leadership flux and directional change. As a result, they stumbled upon the retailers curse – brand confusion.  

Sears has two unique brands: Sears and Kmart. Each brand should have unique marketing plans and websites that do not link to the other. Yet, on www.sears.com, there's a splash of green showing the 'big sale' and various brands across the header section, including links to Kmart and Lands End. Clicking each link redirects the shopper to another Sears Holdings site and away from the main Sears site. The revenues may stay with the company, but do not bolster the margins of the Sears brand. 

There's also a link called, "Sell on Sears." This is Sears attempt to capture eBay e-tailers. Not only do Sears shoppers have the opportunity to purchase some of the Kardashian style, they also have the opportunity to become an e-tailer, like Outer Rebel, and provide Sears shoppers the opportunity to pick-up a fitted mini their daughters through the Sears Shop My Way link, also found on the Sears home page.

Fitted Mini:

With Valentine’s Day coming up, Sears partner e-tailer gives Sears shoppers the opportunity to get in touch with their inner bicker chick with this little number:

 

Another challenge adding to the brand confusion is the mygofer link. Mygofer is a newer service provided by Sears that gives the shopper the chance to grocery shop online. Pick your groceries then click on the delivery option and Sears will deliver them to your doorstep. This is a value added feature for Kmart stores that sell groceries, but fails to meet the 'personal shopper' test for a Sears’s customer.

An area of expansion that doesn't make sense is the remodeling service offered by Sears.  Are they re-branding to be the next Home Depot? Next on the click list is the home services portfolio is their carpet cleaning service. Why not buyout ServiceMaster?

Missing from the site is the link for Sears Portrait Studio. You'll have to go directly to http://www.searsportrait.com/cpi/en-US/ to find out if the service is still offered.  Somewhere along the line of the Sears 'transformation,' Sears Optical has also fallen off the site map. If your optometrist is with Sears, you'll have to visit http://www.searsoptical.com/eyeglasses/eyeglass-frames-contact-lenses-sunglasses-and-safety-glasses to find out if your store continues to host this service. These two glaring omissions makes one wonder, "is Sears in the process of separating from the two services thus turning them into a franchise opportunity not unlike their move with Sears Hometown Stores?"

Searching on the Sears site can be a bit comical. If you're looking for designer clothing, you may be out of luck using a keyword search of "designer" then clicking on the 'clothing' option. But then again, if a bag of socks, an "Old Guys Rule" t-shirt (what about the gals, Lampert?) and what can only be deemed as a sexy kitty cat outfit fits your bill of "designer" anything, then Sears has you covered with these little ditty's:

    

If you're looking for used Armani, you're in luck. E-tailing consignment partner, ShopLindasStuff.com has you covered, but you're shopping at your own risk when it comes to sizing. 

In all fairness, Sears has made a couple of moves to help strengthen the bottom line. The company spun off a significant number of shares in Sears Canada and recently announced numerous store closings in Canada. Plus, they're adding a little star power to the Kmart brand with the addition of accessory and clothing lines by Adam Levine and Nicki Minaj in 2013. This doesn't negate the fact that, overall, sales were down for 2012 even though the company's on-line sales did increase 20% last year. 

In his letter to investors, Lampert stated, "in my opinion, Sears Holdings has a profit problem, not a liquidity nor an asset problem." In my opinion, they also have a brand confusion problem. Fix that, align with the economic tone of the purchasers, and your bottom line will level out. Then again, sexy kitty and used clothing may very well be the plan for the new Sears Holdings Company.