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Khloe, Kourtney and Kim Kardashian attend an in-store appearance for the Kardashian Kollection at Sears.
Kenmore and Kardashians.
The dichotomy between these two Sears brands, representing old-line appliances and trendy clothing, points to what may be the biggest problem for the iconic 125-year-old retailer: It doesn’t know what it wants to be.
Sears may have to figure that out soon if the company is to survive.
“They’ve lost their way,” said Anthony Dukes, associate professor of marketing at the Marshall School of Business, University of Southern California, about the retailer’s failed attempts to compete with discounters such as Wal-Mart or add new merchandise to keep up with retailers such as Target. “They have a future if they can find a space in retail that they can occupy.”
All eyes seem to be on Sears right now, following last month's announcement it will shutter up to 120 stores, rumors the company may go private, and a recent infusion of capital from its chairman and investor Eddie Lampert. Shares of Sears Holdings Corp. have jumped about 49 percent so far this year, making it the best performer among companies in the S&P 500, according to data from S&P Capital IQ.
“When you see the chairman out there buying blocks of stock that gives investors confidence,” said Mickey Klein, managing director and co-founder of the Astor Group, a global investment firm. “He’s giving the company a price boost to give it some time to make improvements.”
Recently published reports show Lampert had snapped up $159 million in stock and now owns 59 percent of the company's shares, fueling reports he plans to take the company private. One investment bank said the stock has been rising as short-sellers clear their positions in case of such a bid.
If improvements don’t come, however, Sears won’t survive, said Klein.
The bottom line, he added, is the overall shopping experience at Sears stores is “unappealing and un-adventuresome,” and has only gotten worse since the Kmart merger in 2004. Sears operates a total of about 4,000 stories, including some 1,300 Kmart outlets, according to the company's latest filings with regulators. Analysts believe the Sears brand is the more valuable one.
A good sign for many analysts is Sears’ recent move to name a new chief merchandising officer, Ron Boire, who will head up both Sears and Kmart merchandising. Boire previously was CEO of Brookstone Inc., the quirky gift and gadget company.
"By attracting someone with Ron's significant experience in retail, merchandising and product development as well as in leading companies through turnarounds, we're adding a key talent in accelerating our transformation," Sears Holding’s CEO and President Lou D’Ambrosio in a statement this month.
But transformation won’t come easy.
Sears stores seem to be trapped in a time warp, said Steve Buxbaum, retail consultant and executive vice president of the Buxbaum Group. Trying to market new items such as a clothing line by reality show stars the Kardashian sisters in an old-fashioned store more conducive to selling washing machines can be a tough sell, he added.
“If you don’t keep up the physical environment and make capital (investments) then ultimately you’ll fail,” he said “You can’t put trendy clothes in something that looks like a ’70s retail store.”
He said Sears still has a solid foundation of customers and strong brands including Kenmore, Die Hard and Lands' End that can help propel the company if it makes needed investments in its stories.
Sears remains one of the biggest retailers in the country with $43 billion in annual sales, and the retailer’s long history continues to give it some retail street cred.
“Many of us still have an emotional connection with the Sears toolbox we bought 20 years ago,” said Ken Tencer, a business consultant and author of “The 90% Rule.”
“Most people, including myself, once thought that if you bought something at Sears, it would last forever,” he said. “Now we associate Sears with being cheap. They stopped being what made them successful.”