BrainTrust Query: Can Paul DePodesta Knock It Out of the Park for Sears Holdings?

Discussion
Dec 20, 2012

Sears Holdings’ Chairman Eddie Lampert has gone outside the box in an effort to add to his bench strength by placing Paul DePodesta on the company’s Board. Mr. DePodesta is the central character depicted in "Moneyball" who used his expert statistical and predictive analytical skills to influence decisions by Oakland A’s GM Billy Beane, and later went on to be GM of the LA Dodgers and later San Diego Padres. He is currently a VP with the New York Mets.

Can one man sitting on Sears’ board influence decision-making of a challenged iconic brand? Is a commitment to data and the insight that information provides enough to stem Sears’ quarterly sales declines?

According to one retail analyst, placing brilliant statisticians in a position of influence is a trend that is likely to emerge in traditional retail operations.

"What Paul DePodesta … did to bring analytics into the world of baseball is absolutely parallel to what needs to happen — and is happening — in retail," Greg Girard, program director of merchandising strategies and retail analytics for IDC Retail Insights, told the Chicago Tribune. "And he’s got street cred to take it down to the line of business guys who need to change, who need to bring analytics and analysis into retail decisions."

According to sources, those classic 7 a.m. daily calls with Mr. Lampert are heavy on data. A massive team of analysts, both domestic and offshore, compile a daily report full of data derived from Sears’ ShopYourWayRewards program as well as the retailer’s credit card programs. Mr. DePodesta’s challenge will be to take this big data and make it meaningful in order to drive key business metrics — average sale, units per transaction, conversion, cross-shopping and traffic. It certainly is a tall order for a board member.

At Sears Holdings, a loss of more than $3 billion in 2011 all but erased memories of small profits in previous years. Apparel and Home Appliances saw positive sales trends in the third quarter of 2012, but Home Electronics suffered declines given the heavy pressure on price through showrooming and price match strategies from competitors such as Best Buy, H.H. Gregg and others.

Mr. Lampert said the company was excited about adding Mr. DePodesta’s "strong analytical skills and talent assessment acumen" to its board. But he fits even better than that.

Once on the board, Mr. DePodesta will consider a complicated scouting report and set of objectives: a commitment to 1:1 marketing; leveraging the long-standing preference and affinity of credit cardholders; delivering relevant and compelling offers to ShopYourWayReward members; and innovating through mobile, social and online. The question is, can his expertise be applied to turning around the fortunes of a player that hasn’t finished in the first division in a very long time?

Will adding statistical superstars to a retailer’s bench become a new trend? How likely is it that Mr. DePodesta can make a real difference in Sears Holdings’ performance?

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14 Comments on "BrainTrust Query: Can Paul DePodesta Knock It Out of the Park for Sears Holdings?"


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Ian Percy
Guest
9 years 5 months ago
Well it will certainly be fun to watch. But speaking of putting the right player in the right position…trying to do this from a Board level is pretty well impossible. The statistical model worked in baseball (sometimes) because there was an immediate connection to the playing field. Unfortunately the distance between the Board Room and the customer is a thousand uphill miles. My mind wanders to two thoughts. First we need to remember that statistics are a record of what happened yesterday. In baseball there is a secure framework of rules and the same positions are played at every game no matter what. In business there is no security and the idea that the future is a statistical linear extension of the past is rather shortsighted. Second, and this is probably one of those thoughts best kept to oneself, is that in my experience as an OD consultant, something happens when brilliant individuals sit around the long rosewood table in the puffy leather seats and call themselves a “Board.” Something awful happens to the collective… Read more »
Bill Emerson
Guest
Bill Emerson
9 years 5 months ago

There has been a steady stream of otherwise successful retail merchants that have passed through the Sears’ organization under Mr. Lampert’s tenure. No doubt Mr. Podesta will add tremendous insights and ideas, much like his predecessors. Also likely is that Mr. Lampert will do what he has done for all the others, which is ignore their advice.

There are no silver bullets in retail. It is a game of persistence and endurance. Color me deeply skeptical.

Cathy Hotka
Guest
9 years 5 months ago

Mr. DePodesta’s appointment certainly can’t hurt. But it’s not a substitute for a clear strategy, which seems to have been lacking for many years. There are many smart people at Sears who would like to be unleashed to address the opportunities facing this iconic retailer.

Tom Redd
Guest
9 years 5 months ago
With the amount of shopper, product, and activity influence data (economy, hurricanes, etc) growing in retail, a good numbers person can help, but will not win. Retail is not baseball. You do not get 3 outs. There are few fixed variables and you have more channels for success—not just crossing home plate. The battle of retail change will be won with technology and retail art, no matter if you are at the board level or at the store level. You can beat shopper technology (iPads, best price apps, androids, social tools, etc) with data and decision technology that is coupled with retail art. This art? Retail art in the future is about having and using the right technology at the right place and at exactly the right time. This leading of technology, data, retailing, and human gut feel will be the new standard defining element that separates the retailer winners and losers. The retail industry executives that “play” this game will not be on the bench. Baseball, numbers, and retail mix well—but are not “for… Read more »
Doug Garnett
Guest
Doug Garnett
9 years 5 months ago

Looks like a PR move to me. Yes, we hear a lot of hype about big data. But, given the amount of statistical work already going on inside Sears, I’d be surprised if there were a major insight that could dramatically change their future. Improvements? Of course. But enough to warrant a board position? I’m skeptical.

Kurt Seemar
Guest
Kurt Seemar
9 years 5 months ago

Right idea, wrong implementation.

Driving analytic insight and data driven decision making is critical to organizational success and is becoming less of a strategic advantage and more of a critical need for companies to keep an even playing field. However, thinking you can place a marquee name on a company’s board and make that have any real impact to a company is unrealistic.

As we move into the world of data scientists and big data, quantitative folks are going to occupy linchpin roles in the c-suite with a team that will drive analytics, economics and data based decision making through the organization. Doing that quicker, better and bigger will drive company success and in the case of faltering organizations, turn them around.

Ted Hurlbut
Guest
Ted Hurlbut
9 years 5 months ago
On the surface this may make a lot of sense. On further examination, however… There’s certainly no lack of data at Sears (or any other major national retailer, for that matter). That’s really never been the issue. The challenge has been culling through all of that data for the essential information that can lead to transformative decision-making. And yet, Sears is only one of a number of retailers that seemingly continue to make mis-step after mis-step. What’s missing? It’s certainly not data. If anything, I believe that most retailers have been taken captive by all the data. Data is, by definition, backward looking. It can tell you what’s happened, and while that’s not unimportant, it’s not determinative. It can’t tell you what’s ahead. That requires a true merchant. I was taught, and still believe, that retailing is part art, part craft and part science. I have no doubt that Mr. DePodesta can crunch numbers with the best of them. But unless he can bring some understanding of the art and craft of retailing to the… Read more »
Al McClain
Guest
Al McClain
9 years 5 months ago

It’s a great move, but an incomplete one. Sears should bring this guy on in a top exec position, and pay him based on performance. Shouldn’t be too hard to lure him away from the Mets—they are a hopeless case, and their owner is even more incompetent and inflexible than the worst retail exec.

David Livingston
Guest
9 years 5 months ago

Another publicity stunt to raise stock price? If this was such a great move, it would have already been done by the successful retailers, not the low sales per square foot chains.

Kai Clarke
Guest
9 years 5 months ago

No. Sears has not lost its business to BBY or HH Gregg, but instead to poor customer service, the wrong product pricing, terrible product positioning and inventory control. Go into a Sears store and you will see tremendous numbers of out of stocks, bored store clerks that offer no assistance, poor product prices, and a misaligned retail model.

Everywhere you look it appears that the Sears retail model is broken. No amount of statistical focus, from a board member (not a VP or President) nonetheless, will fix this.

vic gallese
Guest
9 years 5 months ago

Certainly this is one way to get the Sears name on the front page again. Mr. DePodestra will not be up against a bunch of aging jocks in this battle. It still boils down to the right stuff at the right price.

Vahe Katros
Guest
Vahe Katros
9 years 5 months ago

Sears announces that they have traded the Craftsman brand for Allen Questrom and a merchant to be named later. Said Questrom, RFM, RBIs? Let’s walk the mall!

Actually, the amount of data we have around customer behavior, albeit not so deep historically, like: Like! or, big data sentiment analysis, indoor and outdoor traffic flows, and web analytics makes this interesting—is this when we find out the value of GMMs, DMM, Store Managers, Sales People, Facebook, Twitter, SKU count, Oprah? Maybe, but Steinbrenner stays—oh sorry, this is Moneyball and Sears is Oakland. I Like! Oakland.
They find a way to win, but the attendance sucks due to the location of the store (I mean stadium.)

Craig Sundstrom
Guest
9 years 5 months ago

I give up (sigh). Just when Sears was laying low and staying out of the news (so we can’t update the office pool on whether they will have single- or double-digit same-store sales declines this season), or more particularly as BestBuy, Supervalu and their ilk were hogging the headlines as fumblebums, Eddie-the-Great has another brainstorm…or maybe we can blame the Ouija board they seem to use for strategy.

But anyway, is he going to make a “real” difference? Of course not (any more than he transformed the Dodgers, Pads or Mets, for that matter). Sears doesn’t have a “statistics” problem, it has a number problem: that number is one, and it’s the one person who has to leave for there to be any hope for a future.

Larry Burns
Guest
Larry Burns
9 years 4 months ago
I have been consistently commenting on the underlying concern or even fallacy of “marketing as algorithm” because we humans are far more complex than mere numbers can discern. Does making basis points shifts in response rate matter? Sure, at scale, minor advances in better email open rates and conversion does add efficiency, however, that is not all that is required. It is very easy, even understandable, to be at the top of a huge enterprise and have a desire to review “the numbers” which roll up to be reviewed at “a high level.” Yes, significant statistical outcomes can be predicted, modeled, and executed against, even to positive effect. BUT—as several comments have noted, at the moment of human interaction there remain some potential flaws in this particular model at Sears. To my simple mind, revitalization of this retail franchise needs to operate on both ends of the classic “top down’ AND “bottom up” approach. If, by adding such a talented visionary, a recognition can be reached that perhaps each store could be thought of as… Read more »
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