Sears Holding Corp., which includes both Sears and Kmart, has been experiencing declining sales since they merged in 2005. However, their holiday sales really raised some eyebrows, as the company reported an adjusted loss of somewhere between $811 and $914 million in 2013. While other brands, like J.C. Penney, have been making concerted efforts to reinvigorate their brand and entice consumers, Sears and Kmart have done less than their competitors in this arena to keep customers coming back. In this week’s edition of Retail Rap, I take a look at the problems Sears Holding Corp. is experiencing and what they can do to turn the ship around.
How did it come to this? While there are a lot of moving parts that contribute to the success or failure of any retail brand, one piece that jumps out at me with Sears and Kmart is that the company has been run less like a true retail operation and more like a real estate owner and developer for years now. What I mean by that is, because they own many of their locations, the value in the brand is largely in the real estate itself. Because of that, they can continue to sell off assets and not only maintain some cash flow, but actually make some money doing it. They have been doing some downsizing, leasing out some space to different retailers and selling some properties — focusing on the value of the real estate instead of the consumer value of the brand.
Check out the full article from my recurring column, Retail Rap, at Chain Store Age.