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(Photo by Scott Olson / Getty Images)
Make no mistake: the financial deconstruction of Eddie Lampert
Sears Holdings
That he is both a brilliant businessman (for himself) and perhaps the worst retailer in history, is not disputed.
However, many other factors have made Sears and Kmart less competitive, unable to adapt to changes, and ultimately lose the previous customer relevance to Lampert.
Here are the reasons two to ten:
- Sears and Kmart have tried to become more than retailers – and both have failed.
Few remember that at one time Sears owned Allstate Insurance, the Discover credit card (which she created), a securities brokerage firm and a national real estate agency.
Becoming a full service provider to meet the needs of its customers was an innovative strategy and, frankly, was beyond anything Amazon did, which is sometimes compared.
Under one of the ever-changing executive guards, all these units were sold so that the company could theoretically focus on the retail business. It would have been better to keep them and build a well-balanced consumer center.
Kmart has also expanded beyond its name, which itself owns a renovation chain, a group of bookstores and a storage club. All may not have been supported and the argument was at the time that it was a distraction for Kmart's core business.
Perhaps, but again, having a set of retailers selling a wide range of products to buyers is a compelling argument if it is executed correctly. They have all been sold over the years, leaving Kmart as the only brand in the house.
- Sears was the wrong shop in the wrong place.
While the suburban boom after the Second World War led to a massive explosion in the retail world, Sears chose to place its steadily expanding store base in regional shopping centers rather than shopping malls. This has turned out to be a disastrous strategy.
Shopping malls became the place where people bought clothes, shoes, jewelry and walked around the food court. It was in shopping malls where people were shopping more for durable goods such as washing machines and lawn mowers.
Sears was stuck in stores selling products that shopping center buyers did not want and they did not want to buy. It was not very good for Sears. On the other hand, other retailers took first place in the center's real estate and thrived. Sears has never recovered.
- Kmart has never dominated the mass garment as it should be.
During its prosperous years in the 70s, 80s and 90s, Kmart has been great at identifying fashion trends and selling them on its floor. He was better than any other retailer in the chain, including Target.
But Kmart never managed to take advantage of this force as it should. Even in the last ten years, while the rest of the store was deteriorating to embarrassing standards, its clothing offering was still on top, with good brands, innovative advertising and a new look. But it was never enough.
- Sears should have stayed with the softer side
In the 80s and 90s, Sears, under the orders of Arthur Martinez and Bob Mettler, created an exciting character for the store with Softer Side, focusing on his fashion areas. It was a big change for a retailer where the colorful t-shirts had been the previous trend statement.
Stuck in shopping malls where people were shopping, it was the right strategy for Sears to bring these shoppers to its stores. And it worked … for a little while. Finally, he was eliminated just like Martinez and Mettler. It could have made a big difference if Sears had stuck to this side of his business.
- Kmart should have stayed with Martha.
In the 1980s and early 1990s, Kmart introduced the Martha Stewart line to her home region. It has finally become the largest private label program in the history of retail furniture, registering nearly a billion dollars a year.
It was a great program, which went well in both product development and side selling, and changed the way shoppers thought about big box stores.
Kmart finally hesitated at the high cost that Martha withdrew to carry the mark, which was abandoned. If she had kept Martha, she would have had a solid foundation without precedent in the world of discount house.
- Sears has never properly expanded its leading brands.
It is not disputed that Kenmore, Die-Hard and Craftsman are three of the best brands of durable goods, perhaps retail. And Sears has done well to keep these labels and keep them at the top of their minds.
But what he did not do was to flag them all over the store. Kenmore could have been a much bigger power in kitchen appliances and in other categories where reliability and functionality were at the rendezvous. Die-Hard was pretty much retained in the automotive and Craftsman fields, but everyone could also have found an extra life in other categories, including clothing where a customer – mostly male – existed. These names could have been lifestyle labels rather than just product labels. It was a major missed opportunity.
- Kmart has never developed durable goods brands.
As successful as the clothing store and with Martha, she has never been able to truly develop powerful names in categories such as hardware, outdoor and home appliances. These were the main categories for striptease shoppers, but instead he went to the parking lot to Home Depot or Lowe when he wanted these products.
Kmart has never been able to service this business with a reliable brand sought after by consumers.
- Sears did not find the good service.
Although Sears has repair and other home and in-store services dedicated to maintenance and other service functions, this business could have become a huge business if it had developed a comprehensive national strategy. Imagine a Sears brand home – not just home appliances – a repair and transformation company that could rival anything that anyone else has ever done. It may be the difference in competitiveness to fight Home Depot and Lowe in this sector.
It has always seemed like an afterthought or a complementary activity for Sears, when it could have been an essential skill and a foundation of its existence.
- Kmart has never seen Walmart come.
You can say that about most US retailers, but that's especially true for Kmart, which was the country's largest retailer until Walmart adopted it in the 1990s.
Walmart was doing so much differently – and it's true – at a time when Kmart's management might not have understood how successful it was. Whatever the reasons, Walmart exceeded Kmart without ever looking back.
They might not have been able to stop them, but they might have been able to develop an alternative strategy, like Target, to remain a force in the chain without trying to face the Boys of Bentonville. Instead, Kmart never understood what was going on.
Both Sears and Kmart could have survived all these merchandising, strategy and real estate mistakes under different ownership and management at 21st Century. When Lampert took them over, they were both broken but far from being irreparable. He finally brought a new retail level to both brands, which sealed their destiny early in his term.
The bankruptcy of Sears Holding rests entirely on Eddie Lampert. But six decades of bad decisions played their part in the sad news of the day.
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(Photo by Scott Olson / Getty Images)
Make no mistake: the financial deconstruction of Eddie Lampert
Sears Holdings
That he is both a brilliant businessman (for himself) and perhaps the worst retailer in history, is not disputed.
However, many other factors have made Sears and Kmart less competitive, unable to adapt to changes, and ultimately lose the previous customer relevance to Lampert.
Here are the reasons two to ten:
- Sears and Kmart have tried to become more than retailers – and both have failed.
Few remember that at one time Sears owned Allstate Insurance, the Discover credit card (which she created), a securities brokerage firm and a national real estate agency.
Becoming a full service provider to meet the needs of its customers was an innovative strategy and, frankly, was beyond anything Amazon did, which is sometimes compared.
Under one of the ever-changing executive guards, all these units were sold so that the company could theoretically focus on the retail business. It would have been better to keep them and build a well-balanced consumer center.
Kmart has also expanded beyond its name, which itself owns a home improvement chain, a group of bookstores and a warehouse club. All may not have been supported and the argument was at the time that it was a distraction for Kmart's core business.
Perhaps, but again, having a set of retailers selling a wide range of products to buyers is a compelling argument if it is executed correctly. They have all been sold over the years, leaving Kmart as the only brand in the house.
- Sears was the wrong shop in the wrong place.
While the suburban boom after the Second World War led to a massive explosion in the retail world, Sears chose to place its steadily expanding store base in regional shopping centers rather than shopping malls. This has turned out to be a disastrous strategy.
Shopping malls became the place where people bought clothes, shoes, jewelry and walked around the food court. It was in shopping malls where people were shopping more for durable goods such as washing machines and lawn mowers.
Sears was stuck in stores selling products that shopping center buyers did not want and they did not want to buy. It was not very good for Sears. On the other hand, other retailers took first place in the center's real estate and thrived. Sears has never recovered.
- Kmart has never dominated the mass garment as it should be.
During its prosperous years in the 70s, 80s and 90s, Kmart has been great at identifying fashion trends and selling them on its floor. He was better than any other retailer in the chain, including Target.
But Kmart never managed to take advantage of this force as it should. Even in the last ten years, while the rest of the store was deteriorating to embarrassing standards, its clothing offering was still on top, with good brands, innovative advertising and a new look. But it was never enough.
- Sears should have stayed with the softer side
In the 80s and 90s, Sears, under the orders of Arthur Martinez and Bob Mettler, created an exciting character for the store with Softer Side, focusing on his fashion areas. It was a big change for a retailer where the colorful t-shirts had been the previous trend statement.
Stuck in shopping malls where people were shopping, it was the right strategy for Sears to bring these shoppers to its stores. And it worked … for a little while. Finally, he was eliminated just like Martinez and Mettler. It could have made a big difference if Sears had stuck to this side of his business.
- Kmart should have stayed with Martha.
In the 1980s and early 1990s, Kmart introduced the Martha Stewart line to her home region. It has finally become the largest private label program in the history of retail furniture, registering nearly a billion dollars a year.
It was a great program, which went well in both product development and side selling, and changed the way shoppers thought about big box stores.
Kmart finally hesitated at the high cost that Martha withdrew to carry the mark, which was abandoned. If she had kept Martha, she would have had a solid foundation without precedent in the world of discount house.
- Sears has never properly expanded its leading brands.
It is not disputed that Kenmore, Die-Hard and Craftsman are three of the best brands of durable goods, perhaps retail. And Sears has done well to keep these labels and keep them at the top of their minds.
But what he did not do was to flag them all over the store. Kenmore could have been a much bigger power in kitchen appliances and in other categories where reliability and functionality were at the rendezvous. Die-Hard was pretty much retained in the automotive and Craftsman fields, but everyone could also have found an extra life in other categories, including clothing where a customer – mostly male – existed. These names could have been lifestyle labels rather than just product labels. It was a major missed opportunity.
- Kmart has never developed durable goods brands.
As successful as the clothing store and with Martha, she has never been able to truly develop powerful names in categories such as hardware, outdoor and home appliances. These were the main categories for striptease shoppers, but instead he went to the parking lot to Home Depot or Lowe when he wanted these products.
Kmart has never been able to service this business with a reliable brand sought after by consumers.
- Sears did not find the good service.
Although Sears has repair and other home and in-store services dedicated to maintenance and other service functions, this business could have become a huge business if it had developed a comprehensive national strategy. Imagine a Sears brand home – not just home appliances – a repair and transformation company that could rival anything that anyone else has ever done. It may be the difference in competitiveness to fight Home Depot and Lowe in this sector.
It has always seemed like an afterthought or a complementary activity for Sears, when it could have been an essential skill and a foundation of its existence.
- Kmart has never seen Walmart come.
You can say that about most US retailers, but that's especially true for Kmart, which was the country's largest retailer until Walmart adopted it in the 1990s.
Walmart was doing so much differently – and it's true – at a time when Kmart's management might not have understood how successful it was. Whatever the reasons, Walmart exceeded Kmart without ever looking back.
They might not have been able to stop them, but they might have been able to develop an alternative strategy, like Target, to remain a force in the chain without trying to face the Boys of Bentonville. Instead, Kmart never understood what was going on.
Both Sears and Kmart could have survived all these merchandising, strategy and real estate mistakes under different ownership and management at 21st Century. When Lampert took them over, they were both broken but far from being irreparable. He finally brought a new retail level to both brands, which sealed their destiny early in his term.
The bankruptcy of Sears Holding rests entirely on Eddie Lampert. But six decades of bad decisions played their part in the sad news of the day.
