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How I Would Save Sears

BY CSA STAFF

By Lynn Hinderaker, [email protected]

The future is knocking on the door of hedge fund manager and owner of Sears, Eddie Lampert. His decision to split off Lands’ End and Sears Auto Center from the core Sears brand would have been a good decision in 2004, one year after he purchased the deteriorating retail brand. Today, given the monumental shift in online purchasing behavior that has changed all of retailing, Lampert’s move is akin to rearranging the deck chairs on the Titanic.

Now is not the time for incremental tweaks in the Sears formula. Instead of focusing on “finding value,” Lampert and his team in Chicago should look at the broadest possible scenario and ask themselves two questions:

1. “Who in the retail world is winning and losing…and why?”

2. “How can we change the rules of the entire game by really understanding today’s retail ecosystem?”

After such inquiry, they will arrive at two conclusions:

Amazon and Wal-Mart are winning the digital and analogue retail game, respectively. They offer superior selection, price and convenience. Their highly efficiencies merchandising systems are supported by state of the art technology.

Sears cannot win on those fronts, although it has invested admirably in online infrastructure, massive data mining systems and sophisticated credit card operations. They also are masters at using digital algorithms to cross –sell.

These are the very skills and assets that another type of local retailer — the small, family-run specialty store — doesn’t have. About 500,000 small retailers (art supplies outlets, fitness equipment stores, jeans stores, auto specialty shops, tobacco shops and occupational apparel retailers) are having a difficult time surviving because their ecommerce efforts are inefficient and their pricing is non-competitive. Their product selection is not as unique as it once was and their one strength — hands- on, customized service — is becoming ignored by today’s here-today-gone-tomorrow-smart-phone-based shopper.

The suggestion that follows would have once been unthinkable; however, when the resources, skills and overall scale of Sears are combined — one market at a time — with the passion and imagination of family-owned specialty retailers and boutique owners, something miraculous could happen.

Amazon and Wal-Mart could face a formidable, hybrid competitor with a local service-after-the-sale advantage.

The core strategy is for Sears to recreate itself — market by market — as an aggregator of specialty items that are sold by local retailers. Local retailers would work with Sears representatives to get their product inventories — in combination with a some of Sears’ products — up on a super-functional web site that acts like a local mall. Most of Sears stores would be sold as soon as possible (yes, there are complications with real estate and employee pensions, but they are manageable) as Sears would come to be known as the “big-daddy-rescuer” of local retailers.

Of course, there are challenges that would seem too messy for a wheeler-dealer like Eddie Lampert. The Sears workforce would have to be trained to approach and assist the beleaguered specialty retailers themselves. They would have to provide some technology at no charge that would enable the retailers to keep track of inventory SKUs. Store owners would require some training. Retailers in the new Sears ecosystem might have to switch over to a new credit card processing supplier.

The Sears merchandising reps would be deployed similarly to the local reps that are used by Constant Contact — only there would be many more of them. These “boots-on-the-ground” advisors would, over time, save many a small store from being shuttered.

The small store owners will turn their inventory much faster because Sears will by motivated; they will collect a commission on every item sold. Store owners will control the pricing of the items on the Sears local ecommerce platform.

Small retailers’ revenues will grow, profits will grow and they will be connected to a high tech site, complete with shopper metrics and QVC-style video.

Sears will benefit because their site’s product selection will rival Amazon and Wal-Mart. They will cleverly bundle their Lands End or Kenmore items with items normally sold at Ken’s Championship Catfish Poles just across town; through collaboration, both Ken and Sears will generate new revenue neither would have ever known.

Despite predictable convulsions, this cooperative arrangement is the only way for both Sears and America’s specialty retailers to survive. If the system is set up right, the consumer will support this newly defined local retail ecosystem.

Note: the potential of the cooperative relationship discussed in this essay is being confirmed by a recent announcement from Amazon. The online retailer just announced a new program, Amazon Source, that would enable local bookstore owners to resell its Kindle reading devices, then receive a commission on all e-books sold to that Kindle owner thereafter. The proposed relationship, above, between Sears and specialty retailers is broader and more “synergistic.”

Lynn Hinderaker is a speaker, marketing consultant and expert in change management. He spearheaded one of the most dramatic turnarounds in the history of fast food for Taco Bell in the late eighties, introducing the first Value Menu. His “local” video website is Wowbiztv.com. He can be reached at [email protected].


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Rue La La simplifies online shopping ahead of holiday season

BY CSA STAFF

Rue La La, a leading online lifestyle shopping destination, is rolling out a ‘goof proof gifting’ program just in time for the holiday shopping season.

"We have all received the not-quite-right gift," explains Robin Domeniconi, chief marketing officer, Rue La La. "Rue La La’s new Goof Proof Gifting program removes the uncertainty of shopping for gifts online, reassuring gift-givers that purchases can easily be returned if they aren’t the perfect fit. Coupled with our robust assortment of curated gifts and guaranteed delivery, we have created a destination that simplifies giving for the holidays and occasions throughout the year."

The Goof Proof Gifting holiday program offers Rue La La’s 10 million members guaranteed gifting and extended returns. Gifts purchased after Nov. 1 can be returned by using an inbox gift receipt or online receipt form. Recipients can return items at no cost using free return shipping and will receive a redeemable credit in their personal Rue La La accounts. For those who aren’t Rue La La Members, a special hotline will be set up to ensure the process is seamless, according to the company. Any gift purchased from now through Dec. 15 will be eligible for extended returns through Jan. 15.

The company is also guaranteeing holiday delivery. Most items on the site ordered between Dec. 1 and Dec. 23 will be delivered by Christmas. The company also has gift cards available for purchase through the holiday and beyond, as well as a dedicated Holiday Gift Center, which offers an assortment of gift ideas for shoppers and will be “shoppable” through Dec. 21.

Rue La La provides its members with access to curated boutiques of designer offerings at private sale prices. Items include men’s, women’s and children’s apparel and accessories as well as home décor and accents.

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Survey: Shrink averages 1.5% of U.S. sales

BY Marianne Wilson

Thorofare, N.J. — Shrink, comprised of shoplifting, employee or supplier fraud, organized retail crime and administrative errors, cost the retail industry more than $112 billion globally last year, and represented 1.4% of retail sales, on average, according to the 2012-2013 Global Retail Theft Barometer. In the United States, shrink came in at 1.5% of retail sales.

The study, underwritten by an independent grant from Checkpoint Systems, was undertaken in 2013 by Euromonitor International, and was based upon in-depth phone and written survey interviews conducted in 16 countries among retailers covering 160,000 stores representing $1.5 trillion in sales in 2012.

According to the study, shrink is on the rise in most countries with increases noted in shoplifting, employee theft and organized retail crime. The lowest shrink rates were recorded in Japan (1% of retail sales), followed by Hong Kong, Australia and Germany (1.1%). The highest rates were recorded in Brazil and Mexico (1.6%). The cost of shrink to U.S. shoppers averaged $300 per household.

Among the most stolen merchandise reported by the retailers were fashion accessories, jeans, footwear and lingerie/intimate apparel, high-value electronics, consumer health such as allergy treatments, milk formula, electronic games and satellite navigation/GPS, mobile device accessories such as cases and earphones.

According to Euromonitor International: “Shrink is a multi-dimensional threat for retailers across the globe, with shoplifting and employee theft, including organized crime, on the rise. Growing shrink concerns have put loss prevention high on the agenda of retailers; companies are keen to invest in effective and proven loss prevention methods, collaborating with technology companies and specialists for loss management solutions to diminish these shrink problems.”

Retail respondents with particularly strong investments in loss prevention told researchers they believe that they manage shrinkage well, and typically reported shrink rates well below the respective country average, with investments clearly paying off. In fact, U.K. and German retailers stated that improving loss prevention methods helped them to keep shrink under control. Overall, retailers interviewed estimated their future loss prevention investments would increase or stay stable.

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