Companies & Industries

The Plan to Make Sears Shoppers Go Digital


A customer secures a new washing machine purchased at a Sears store in Richmond, Calif.

Photograph by David Paul Morris/Bloomberg

A customer secures a new washing machine purchased at a Sears store in Richmond, Calif.

In its attempt to reverse two years of losses and a six-year sales slump, Sears (SHLD) is going all in online. The company’s new mantra is “integrated retail,” a phrase uttered over and over again last week by Chief Executive Eddie Lampert as he addressed “unacceptable” losses and a plan to turn things around. The idea is to stitch together closely sales on the Internet and mobile devices with those in bricks-and-mortar stores. Lampert said Sears is doing this by shrinking shipping times, inviting online customers to pick up goods at its stores, and letting in-store shoppers have items shipped back to their homes.

Sears has also taken a page from Amazon.com (AMZN) in allowing third-party retailers to sell goods on its online real estate. Shoppers can now order at least 75 million products on the department-store chain’s Internet platform, most of which aren’t car batteries, kitchen appliances, or the other Sears staples. The company has even created an in-house app-development team.

So has the digital expansion by the pioneer of the mail-order-catalog age moved the needle? Not quite yet.

A quick search of rankings at Web data firm Alexa.com shows Sears is still trailing some of its rivals. Sears is No. 126 on Alexa’s list of most popular U.S. websites, a ranking that doesn’t appear to have climbed much in the past year. As one would expect, Sears remains far below Amazon.com, No. 5 on the list, but it’s also behind Wal-Mart Stores (WMT) (40), Target (TGT) (64), Home Depot (HD) (69), Best Buy (BBY) (77) and Lowe’s (LOW) (112). Here’s the good news: Lampert’s Web push has bested Macy’s (M), which is No. 136 on Alexa’s list, as well as Kohl’s (KSS) (165) and J.C. Penney (JCP) (191).

Some Web visitors are more valuable than others, and this is where the Sears strategy might pay off even if its online traffic trails key rivals. Shop Your Way, the member-loyalty program launched three years ago, is being deployed in lockstep with Sears’s e-commerce efforts. The program already has tens of millions of users and accounts for more than 60 percent of revenue at U.S. Sears and Kmart locations.

As the company logs more data about each of its members and casually nudges them to buy online, Sears can put in play a massive price differentiation experiment. The high-income shopper who bought a top-of-the-line dishwasher may see fewer sale items online, while the person who visited the site for three months before pulling the trigger on a marked-down weed trimmer can be prodded with discounts.

Here’s how Lampert described it on a recent conference call:

“I think that the broad-based, everybody-gets-the-same-deal marketing that Sears and Kmart and many others have engaged in for a long time will be changing. I’m not predicting that the retail industry will become like the airline industry where 10 people … across a row on a plane all pay different prices for their seat or five people on the floor of a hotel room all pay different prices for their hotel room. But I do think there’s going be a lot more variability, and it tips both ways.”

Sears is still in a serious slump, but that sounds pretty savvy.

Kyle-stock-190
Stock is an associate editor for Businessweek.com. Twitter: @kylestock

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Companies Mentioned

  • SHLD
    (Sears Holdings Corp)
    • $33.52 USD
    • -0.75
    • -2.24%
  • AMZN
    (Amazon.com Inc)
    • $323.89 USD
    • -7.30
    • -2.25%
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