Sears Sells Big Data Solutions on a MetaScale

Discussion
Apr 25, 2012
George Anderson

It’s been argued, based on actions and financial results, that Edward Lampert and Sears Holdings really aren’t interested in being in retailing — at least not the bricks and mortar kind. So what does Sears Holdings want to be when it grows up? Amazon.com or some sort of technology company, of course.

Yesterday, Sears Holdings announced it had created a wholly owned subsidiary called MetaScale, which offers data management and analytics via the cloud. The solution, which was developed in-house, has been used for all of the company’s businesses including Kmart, Lands’ End and Sears.

"MetaScale is uniquely positioned to serve the needs of large-scale enterprise projects," said Keith Sherwell, CIO for Sears Holdings, in a statement. "From a competitive standpoint, MetaScale has identified a gap in the market to provide a superior managed-services model to other large-scale traditional enterprises that haven’t taken advantage of or investigated the potential of Apache Hadoop."

"They’re just trying to find ways to monetize any of their assets," Mary Ross Gilbert, an analyst at Imperial Capital, told Bloomberg News. "It certainly doesn’t appear that they’re generating profit from the retail operations themselves."

It’s because Sears Holdings is having such issues with its retail business that many wonder why it continues to branch off in areas that don’t appear to address its major areas of weakness.

Erik Gordon, a professor at the University of Michigan’s Ross School of Business, said MetaScale would be going up against some of the most sophisticated technology companies in the world with its new venture.

"Doesn’t Sears have enough problems competing with retailers?" Prof. Gordon told Bloomberg. "Now it wants to compete with some of the smartest people in the world."

Tom Aiello, a spokesperson for Sears Holdings, dismissed the criticism.

"In emerging areas such as this, you can create a competitive advantage … by having an edge on something like this," he told the Chicago Tribune. "We wouldn’t have started the venture unless we recognized there was (an opportunity) around big data."

Discussion Question: Do you think the development of MetaScale’s big data capabilities will help Sears Holdings various retail businesses? What is your reaction to offering the service to other companies? Will we see other retailers selling technology and/or other services a la Amazon and Sears?

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10 Comments on "Sears Sells Big Data Solutions on a MetaScale"


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Dick Seesel
Guest
8 years 3 months ago

There is a long list of specialists in providing data services and information management especially to retailers — such as IBM, SAP, SAS and others. This looks like yet another attempt by Sears Holdings to avoid dealing with its core problem: The lack of capital spending and compelling merchandise in its stores.

If the methodology behind MetaScale were so effective, wouldn’t we all be talking about Sears’ great results in supply chain and inventory management? Sears Holdings ended 2011 with 5% less inventory but also had a gross margin decrease from 27.2% to 25.5% — not exactly worthy of bragging rights.

Gene Hoffman
Guest
Gene Hoffman
8 years 3 months ago

Sears is searching for a secret that will lift its boats higher in the retailing waters. Maybe MetaScale will help but Sears Holdings needs more than just some help.

Does this indicate that if Sears Holdings still can’t crack contemporary retailing successfully, then they can focus on selling big data capabilities service to others? Sears Holdings is spinning the roulette wheel in the hope they will hit the winning number. That’s always a long shot.

Ben Ball
Guest
8 years 3 months ago

While I appreciate, often participate in, and agree with most of the criticisms of Sears Holdings’ retailing prowess, there is one indisputable fact. The company, or at least the owner, knows how to build shareholder value and equity. Based on that, I would submit SH is interested in things that make money, not things that improve retail operations.

I have no idea how well SH will do with “big data” — but I will bet that they have a sound plan for monetizing their efforts successfully.

Ed Dennis
Guest
Ed Dennis
8 years 3 months ago

OK, I’m at a loss as to what is new here. Sears has created a competitive advantage in the past (the credit card, branded PL merchandise, etc.). I don’t think this is another ground breaking deal, simply because they can’t patent what they have done and it will be duplicated and competition will drive down the cost to the point that Sears will not be able to make any money on “Big Data.”

James Tenser
Guest
8 years 3 months ago

Sears Holdings’ strategies are hard for people like us to quickly grasp because we persist in viewing them through a conventional retail lens.

Better to discard the merchant frame of reference, and try to take this on its own terms. An asset is an asset. A profit-generating spin-off may be worth pursuing, or not, depending upon the alternative uses available for investment capital (among other factors).

If existing Sears and Kmart stores require costly, high-risk investment and huge tie-up of capital to generate value, but MetaScale’s data services can generate high returns with modest capital, well then the choice becomes clearer. It’s no different from some other chains who focused on real estate investing over merchant profits in the past.

Yes, we’ve all heard the conventional wisdom about sticking with one’s core area of expertise. But Sears Holdings is an investment vehicle first.

Gene Detroyer
Guest
8 years 3 months ago

From Day 1, it has been clear that Sears Holdings is not in the retail business. There is no turning either Sears or Kmart around and Lampert knows this and knew it before he got involved in the business.

SH’s objectives is simply to maximize their assets. MetaScale may be one of the alternatives. It may not. But, certainly Sears and Kmart are not.

Let’s stop trying to resurrect these dogs and understand what business SH is in.

Craig Sundstrom
Guest
8 years 3 months ago

I guess if you try everything you’ll eventually find something you’re good at; assuming you don’t run out of money first … and of course you actually ARE good at something.

Bill Emerson
Guest
Bill Emerson
8 years 3 months ago

Technology services? Sure, why not? How about stem cell research or maybe an airline? The only puzzle is why this financier continues to hold on to Sears. He obviously has no aptitude or interest in retail. One might surmise that he’s just using the real estate to collateralize whatever happens to interest him at any given moment.

Carol Spieckerman
Guest
8 years 3 months ago

“Retail” has been redefined and broadened in ways that fly in the face of old school merchant sensibilities and limitations. Sears, under Mr. Lampert, has played a major role in making that happen and, I’ll say it again, they can change many games with or without winning them. He got it that brands are assets to be monetized, that physical stores aren’t the be-all and end-all, that platforms trump products, and now, that data sharing is switching off of default settings. To the miners and the managers go the spoils.

Gordon Arnold
Guest
8 years 3 months ago

I am unable to find any company with as much practical development and use of the Apache Hadoop big data system as it would be used in a very large retail/distribution company other than Sears Holding. There may be companies with the ability to support the program, but implementing it and putting it on board a company(s) the size of Sears is not a big step it is an elevator ride that lasts for years. Companies trying to catch up will be eager to talk to them because in the land of IT, time is money. If this software is implemented properly, the companies using it will save millions by advancing the amount of information they can find and manipulate with fewer resources. I have no doubt that there are several interested CIOs willing to see what Sears has and will pay for it if they can put it to work.

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