With the challenging holidays officially in the rear view, ‘tis the season for store closures. While Macy seems to be bearing the brunt of the criticism, Sears Holdings, relatively speaking, slipped under the radar with its recent disclosure that it will be shuttering a “small percentage” of Sears (as well as Kmart) stores in 2016. This confirmation appeared to be par for the course for the department store dinosaur, which just might be dying the slowest death in retailing history. But is there any silver lining for Sears? Using consumer insights from Prosper, I’ve analyzed the good, the bad, and the ugly of the Sears predicament to examine whether or not there is anything salvageable for this century-old chain going forward.
The Good: Appliances. Let’s begin with the positive: Sears remains a destination for appliances shoppers. Buoyed by its proprietary Kenmore brand, more than one in five U.S. shoppers still indicate they’d shop Sears first when in the market for a new refrigerator, stove, washer/dryer, or the like. (Note: Prosper’s preference share questions are unaided, write-in questions). While shopper share has slipped slightly over time, Sears has been able to successfully ward off advances from Lowe’s Cos, Best Buy, and Home Depot…so far. However, Prosper’s consumer intelligence shows us that Lowe’s has been slowly and steadily closing the competitive gap. Ten years ago, Sears held an almost 20 percentage point lead over the big box chain; now, that gap has been whittled down to just eight points. An additional caveat for Sears: with rival JCPenney wading back into the appliance market, the competitive landscape is likely to get much more cutthroat.
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The Bad: Everything Else. The stunning decline that Sears has suffered in all other merchandise categories will put its aforementioned ‘slight’ decline in appliances into perspective. Compared to a decade ago, Sears’ shopper share has dropped at least 40% in each of its other softlines (e.g. apparel, shoes) and hardlines (e.g. sporting goods, linens/bedding, home improvement, electronics) categories. Sporting goods, electronics, linens/bedding, and women’s/men’s apparel declined most precipitously during this period. In women’s clothing alone, where Kohl’s, Walmart, and Macy’s compete for category supremacy, shopper preference share for Sears has dropped 53% from January 2006 to January 2016. This month, Sears ranks in 15th position within this category, behind Goodwill. Yes, you read that correctly: women’s apparel shoppers currently express a preference for Goodwill over Sears. A dire situation, indeed. Sears did receive a softlines boost during late 2012 and into 2013, which appears to be the result of theFair & Square debacle at JCPenney, though it failed to capitalize on any of these gains in the long-term.
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The Ugly: The Future. Is there a rule that indicates that once one matures to a certain age, he or she must start shopping at Sears? The long-running joke about Sears is that it’s the place where the grandparents shop, and while that may have rung true ten years ago, contemporary older adults (i.e. today’s Boomers) are simply choosing to shop elsewhere. Quite literally, Sears shoppers are a dying breed. Examining the Sears composite index by age (for softlines and hardlines categories combined, excluding appliances), it is clear to see that over the past decade, Sears’ biggest shopper losses have come from what was once was its core customer base: those 55 and over. Adding to Sears’ woes are dramatic declines among those 18-34 and 35-54 as well, pointing to a very bleak outlook for Sears’ future standing within these merchandise categories.
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So what’s to be done about Sears? Perhaps Eddie Lampert & Co. should have cut their losses years ago, paring down the business to focus on the sole area that still works for them: appliances. With so much time wasted though, it unfortunately appears that Sears is a sitting duck in that category as well, and for competitors, it’s open season.