Sears Betting Its Future on Technology
Back in February of last year when Sears Holdings named Lou D’Ambrosio as its new chief executive, it was clear that the decision was made because of his background in technology.
"We were determined to find a leader with information and technology experience who could catalyze the transformation of our portfolio of businesses in the context of the evolution of the retail industry that is occurring more broadly," said Edward Lampert, chairman of Sears Holdings, in a statement at the time.
Mr. D’Ambrosio, a former executive at IBM and Avaya, seemed a good match for Mr. Lampert even if many questioned whether he had the retail instincts to turn Sears and Kmart around. Many contend that the problems at the company have much more to do with rundown stores, poor customer service and a variety of other basic retailing issues.
Now in a Wall Street Journal article Mr. D’Ambrosio reveals that his plan to get Sears turned around involves more effective use of customer-facing technology and by mining data collected from the company’s Shop Your Way Rewards program to gain consumer insights.
One example, similar to what Neiman Marcus is doing with its NM Service, is having customers use their mobile phones to check in at Sears. Associates on the floor can then use GPS tracking to find the customers in the store and offer timely assistance.
Mr. D’Ambrosio told the Journal that while Sears is often criticized for failing to invest in its stores, critics are not taking into account millions in investments in store-level and digital technology.
More effective use of the Shop You Way Rewards data is seen as a positive step, although whether Sears is more adept at mining its data than competitors remains to be seen.
"A good loyalty program, which gives a company better intelligence about what its best customers really want, can be a strategic advantage," Jim Sullivan, a partner at Colloquy, told the Journal. "But it’s a truism in our business that even the best loyalty programs can’t fix a fundamentally broken brand."
Discussion Questions
Discussion Questions: Can customer-facing technology and insights gained from its loyalty program help get Sears Holdings turned around? Of the technology-based initiatives at Sears, which do you find most promising?
I think at this point, Sears needs to consider what they want their customer base to look like, not what it does look like. I imagine their current base doesn’t mind that their stores look like 1971. However, that is a slow sink hole to oblivion.
The peeps who are attracted to technology are unlikely to shop in Sears as currently designed. Redesign the stores, add excitement, then maybe customer facing technology will have some effect. This is a very big challenge at this point, however, as the stores are so far gone (admittedly generalizing from the Sears I’ve personally been in over the past 5 years).
Sears and other box retailers need customer-facing technology to get customers in the door. Lou D’Ambrosio appears to be a “back end” technology expert focusing on analytics and big data mining.
Cool GPS technology, floor sales associates using iPod Touch and iPads for mobile POS and scanning QR codes are not going to address the issues of bad locations, poor customer service and quite frankly, overall blandness and un-awesomeness of Sears.
Sears should focus more on technology to address marketing science with aggressive pricing and in-your-face advertising to compete with Home Depot, JC Penney and Best Buy.
All great ideas except that Sears doesn’t follow through on anything and their brand has been dead for years. This will most likely be another soon-to-be-forgotten press release from Sears. Now if it was any other company, I see a lot of promise. I’m sure Sears will learn a lot about their best customers, all 5 of them.
This would be laughable if it weren’t so very sad. Sears has forgotten how to be a retailer and that what a retailer does is sell product that people want at the prices that they want to pay.
This quote, which I’ve taken from the article, by Edward Lampert, I liken to the sounds of a bell tolling a funeral, “We were determined to find a leader … who could catalyze the transformation of our portfolio of businesses in the context of the evolution of the retail industry that is occurring more broadly.”
What in the world is he talking about? Using GPS to locate customers in their stores once the customers have “checked in”? In my experience you don’t need GPS at a Sears Store; just listen for the sound of the footsteps of the only other person in the store and you’ll find your customer.
Sears’ focus on technology as the savior for its problems is very wrongheaded. Their survival depends upon more basic research and action plans than this; they need to strive to bring a product forward that customers want to shop.
Sears made some extensive social media technology investments a few years ago that did not pan out, so it is wise for them bring in an IT expert to try to right the ship. Mobile check-in and associate notification is a great idea, although for Sears it will probably be most effective for customers buying paint and other home supplies, as their apparel and accessories are fairly generic.
You have got to be kidding me. I’m borderline speechless. This sentence really got me.
“Many contend that the problems at the company have much more to do with rundown stores, poor customer service and a variety of other basic retailing issues”
Ya think?
You know, our research consistently shows under-performing retailers set unrealistic expectations for their technology investments. This could qualify as Exhibit A.
I think this was the concern expressed on this blog when Mr. Lampert hired Mr. D’Ambrosio. That he would try to solve the company’s problems with technology.
Ironically, there are things Sears does do quite well. I still prefer buying my appliances from the company, and the associates really do go out of their way to please the customer. I am a repeat shopper. I just only repeat when I need new stuff.
The company’s problem remains having a lot of square footage it wants to fill up, instead of designing stores around the core product portfolio (electronics, appliances, tools and lawn and garden supplies).
Technology isn’t going to fix that. A sound merchandising strategy will. I know Mr. Lampert killed off the small-box experiment. I would give that a go again. Curate the assortment. Shed categories that promise high turn, but yield not much of anything. Do what you’re good at.
Having a hand in the creation of and launch of the ShopYourWayRewards program, I can tell you that senior management is not only committed to the program and in turn optimizing ROI from existing customers, but using that insight to acquire new customers. It is so easy for us on the “outside” to harp on the physical store shortcomings. However, in time with a turnaround in the overall economy there will be investment in the physical plant to make the store a more attractive place to shop.
We always look at technology as an asset “plus” … you know, a ‘nice to have’ vs a ‘have to have’. I’m sure everyone else will chime in on this because it’s so obvious, but I would think technology at retail should be about 5th on the list of things to do at Sears Holdings. Product? Place? People? Price? Lots of work to do before Lou’s expertise comes into play, in my book.
Sears has a number of problems, and one of them is that they are wearing the “kick me” sign on their back that has been handed down from Circuit City, Borders, Blockbuster and many before them. It sounds to me like Lou D’Ambrosio is a pretty sharp exec, with sound plans to customize and personalize the shopping experience and their rewards programs. But, customers and analysts are still upset about the physical structure of the stores and the apparently poor customer service. If I were Sears, I’d review all these customer and analyst comments, throw out the ones that are just mindlessly venting, and see if I couldn’t pick their collective brains to figure out some ideas that would help increase traffic and turn around the buzz.
Sears sends its soul out into the technology world
To seek a map to return it to former greatness.
Like its many other attempts to reach a zenith
Its current use of technology will lack finesse.
But Lempert will stay around to pick up the pieces
And Sears Holding will retain its retail ugliness.
Yes, absolutely. Sears can help turn-around its future by instituting advanced customer-facing technology. However, talk is cheap, and actually doing it is quite another thing. It’s not a simple undertaking, and there is a lot of work to be done. First, leadership needs to completely define what it is that they envision and how Sears will stay on top of it day to day, week to week, and year to year. In my humble opinion, Sears has tried to go too many directions in the past several years, and they don’t seem to stick to any given plan. Again, that’s just one opinion.
Job #1 is brick and mortar customer experience. The store is the primary medium. Task #1 is fix the peeling lemon-white paint. Retail can be that simple.
Why is it that so many smart people make retail so hard?
Or as we like to say, “retail ain’t for sissies.”
Sears timing might be too late when it comes to e-commerce selling. The experience they add to the corporate office structure means nothing if they can’t bring customers willing to spend in the stores. We discussed this when they made the hire. Now we are discussing it again and Sears is no better, if not worse than they were then. Does Sears know who there customers are? Are they the customers Sears wants? Do they even know the answers to these questions?
Looking for another silver bullet! Technology won’t solve Sears’ problems. Message to all: A LOYALTY PROGRAM DOESN’T WORK UNLESS YOU HAVE CUSTOMERS! Sears seems to be identifying some of its strengths as it is advertising itself as “the” principle source of major appliances. Appliances and tools along with household electronics should be Sears’ major focus. They do a decent job of renting space to opticians and hearing aide dispensers. They should look at renting out as much space as they can to other vendors and get out of a lot of areas where they can’t establish a brand or an advantage. There is no amount of customer loyalty that is going to move shoppers into Sears stores and no amount of customer loyalty is going to keep them there. You can’t build a business by jumping from one silver bullet to another. You have to hire right, train right and price right. This takes work, not gimmicks! If Sears keeps looking for a quick fix the only thing they will have left is real estate.
There is no such thing as a magic bullet. Can Sears turn things around simply by introducing mobile check-ins and in-store-GPS-based-shopper-tracking-systems? No. But that’s not all they are proposing. The more important part of the plan, in my opinion, is mining the Shop Your Way Rewards data. But the mining can’t just be an academic exercise: they need to use the golden nuggets they extract to actively shape everything about the Sears of the future–from assortments to merchandising to personalized marketing to store layouts–around the preferences of their best customers.
Once that foundation is in place, the other pieces of the business can follow. More and better advertising can draw new customers into the now-more-appealing stores. Alternative formats and re-engineered layouts can capture more impulse trips and more impulse buys from their existing customers. And yes, new customer-facing technology can improve the customer experience and the effectiveness of store associates.
So I lied. There is a magic bullet (but only one): shopper-centricity. Sears must focus wholly and completely on understanding its best customers and getting them to spend more, to shop more, to share more, and to care more. And this isn’t just a mission statement to be put on the website and forgotten; it must pervade every decision, every action, every internal evaluation and comp plan, from the CEO down to the store associate.
I’m reminded of the myth that technology can re-invent education. Learning is a fundamentally human activity and technology can be a help. But technology hasn’t (and won’t) been able to make a dramatic fundamental change — and is far too often distracts students from true learning.
I think we’ll get out of this decade and look back at these shopping theories and wonder why anyone might have bought into them.
Paula’s descent into speechlessness probably began with the sentence that preceded the one she mentioned:
“…even if many questioned whether he (D’Ambrosio) had the retail instincts to turn Sears and Kmart around.”
Suffice it to say, those who questioned are still doing so.
So the strategy is to better execute in crappy stores, using “state of the art technology”? If Sears is to have any chance to survive as a credible retailer they need to get focused on old-time retail fundamentals: compelling assortments of quality merchandise at sharp prices, in stores that are attractive and appealing, with associates who are fully engaged.
Anything else is just putting more lipstick on the pig.
Sadly it is too late in the game for the tech based initiatives to help. You don’t need GPS for good old fashioned customer service. Sears lost the retail experience of good value and service long ago.
These are perfectly reasonable tactics that can help maximize the revenue from existing customers.
What is the big picture strategy to drive new customers to the brand? What is the unique brand promise that Sears stands for, and what customer segments does it appeal to? What does success even look like at Sears? Do they aspire to re-capture the top retailer in America position? Is there some new role they can carve out?
Tactical investments in technology are well and good, but they need to be in support of a strategy.
As Joel Rubinson, Ed Dunn and David Livingston previously noted, Sears’ new technology and loyalty program are worthwhile but it seems as though D’Ambrosio is trying to solve a brand problem through technology. D’Ambrosio’s intentions are good. In the WSJ article, he acknowledges what happened to Borders and Blockbuster, saying, “You don’t change, you die.”
But change is not entirely technology-dependent. The Sears brand needs a makeover, not unlike the one Target underwent in the 2000s. Before Sears can expect to get the customer data it wants to mine, it needs to make visiting its stores desirable again.
It feels as if Sears is attempting to leapfrog issues with technology. Customer facing technology is great if your customer base is the correct audience. It makes sense for Neiman’s customers — more so because it allows the employee to provide better customer service, not because the customer is looking for it.
For Sears it feels like a gimmick. A gimmick that can look seriously outdated if it’s not evolved and used properly.
This is beyond disappointing. It is only through Mr. Lambert’s financial sleight of hand that the Sears and Kmart brands continue to exist at all. The idea that they would focus on best-in-class technology vs. the horrid stores, service, and lack of brand equity is frivolous at best, incompetent at worst.
Who cares if a customer can check in on their mobile device if no one is there to respond (or if they are there that they care to respond)?
I sincerely hope they can turn these brands around to avoid millions of square feet of empty big boxes and thousands of job losses. But this article does not give me much hope.
Sears has a requirement that its associates gain e-mail addresses of 30% of customers or risk losing your job. If you can not get a customer to sign up then a manager is to intervene. GPS? Just try to buy something quickly at Sears. Credit, SYWR, extra warranty pitch, CTT survey, CSAT survey, email recaps and now iPad sales. All required percentages to keep your job. Sears has forgot the basics of customer service, respect for the customer’s time and privacy.