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Thursday, January 16, 2014

Why Sears, JCPenney and K-Mart are dying

Last week Macy's announced it would be laying off 2500 employees and closing 5 stores..

This week was JCPenney's and Sears' turn.

Penney's announced yesterday it was closing 33 under-performing stores and letting go 2,000 employees that were expected to save the company $65 million annually..

Honestly, is there such a thing as a Penney's store where business is booming?
Sears also announced they are firing 1,500 workers and restructuring.  If there's a silver lining US economy-wise, its that its taking place in Canada..  Nonetheless, expect US employees of Sears/K-Mart to feel some pain by year's end..

Some will blame the holiday season and yes it was rather unexceptional..

Truth is, most people just don't wish to shop at either of these stores, or K-Mart either for that matter..

Yours truly mentioned in a previous posting a couple months back that I took a visit to my local mall on Thanksgiving evening to see what the pulse of the pre-Black Friday shopping experience.

Macy's had good deals and the store had a good number of customers..  Not crowded or packed by any stretch (I only had to wait in line 5 minutes that night to buy the things I needed) but compared to JCPenney and Sears that night, Macy's was bustling..
Both stores that evening were similar sad stories.. very few people actually shopping.. even fewer making purchases.

Some of the employees in fact looked utterly bored; that 'Dear God, why am I here instead of at home in bed' look..  Can't say I blamed them..

The stores didn't even have decent sales..  Really the only reason to enter either location that evening and in general is they provide close parking to the mall entrance.    The beginning of a recent Sears TV ad admits as much..

I haven't stepped foot in either store since..  No need to.

If I need clothing, I will go where there's real sales like Target or Kohl's or get higher quality brands at the same prices with coupons at Macy's or true higher end like NeimanMarcus
~ Interior of a Sears during holidays.. notice the wreath at top right

If I want to buy jewelry, I will go to a jeweler, and if I wish to buy a cheap smelling fragrance, I will trek over to the local Wally World (Wal-Mart)

In the case of Sears, if I needed a tool or piece of equipment for lawn care, I go to Lowes or Home Depot, and if I wish to buy a new TV or stereo, I will go to BestBuy or hhgregg

And of course there's the discount king: Amazon.

I also know that anything I buy at Sears and K-Mart by extension will be at minimum 3% more than WalMart or Target with perhaps the exception of sale items in their circulars.

Those discounts are called 'loss leaders' because the store takes a financial loss but its done in hopes you will buy other items.
~ Interior of K-Mart which owns Sears

So what can stores like Sears, JCPenney and K-Mart do to attract customers?

Here's some free advice to their CEOs or whoever is in power to make decisions at these companies..

1)  Figure out your target economic demographic

Do you want to compete with WalMart to attract the Dollar General and Family Dollar clientele; the people who are financially having a very rough go of things and every penny saved truly is 'earned'...

Or do you want to re-market yourself to attract upscale shoppers to compete with Bloomingdales, Lord n' Taylor and such?
~ Sears-  fragrances..half empty shelves and sloppy looking

2)   Establish exclusive branding

Its all nice and good that these stores sell garbage with the name Martha Stewart or Rachael Ray stamped on but really what's so special or unique about that merchandise?

And why would anyone want to sell anything branded by the classless Kardashians?

Establish a 'name' that is exclusive to your store like 'Club Room' is to Macy's .  The name, logo, quality of merchandise and price points will help establish an answer to the previous question of who is your shopping target?
~ Sears-  empty shelves.. very ininviting

3) Fire all employees and re-hire from scratch..

Overall, employees at department and shopping stores are just terrible..

They are lazy, rude, indifferent and milk the clock..  They are also usually ignorant as to where items are located in a store, making suggestions/recommendations and overall have a tendency to use work time to socialize with one another..

In this horrible shit economy, anyone who has a job even at a department store level should be grateful to God to have employment.

The average turnover time to find a job once let go for lower-wage work is 4 months..  For jobs that actually pay a real living, its longer..

So fire everyone and then make everyone re-apply along with new applicants so you can truly find employees who want to be there..
~ In 2012, Penney's thought they would be 'clever' by having no holiday sales.. just mark everything down..  Their price reductions were still not a savings, people avoided them and they went back to weekly sales this past Christmas

4)  Improve store presentation..

Most Sears and Penney's stores are just god-awful drab.  You can get away with being depressing at Wal-Mart but not a department store..

Many stores also decide to go the cheap route by keeping the shelves poorly stocked, not playing music so the store environment is dead silent and making the store itself too warm so to save a couple dollars on the A/C bill..

5)  Do not alienate/insult your traditional shopping base

If you want to save $$ so desperately and not draw controversy, don't hire celebrity spokespeople like Ellen DeGeneres to pitch your store.
Not only was she a waste of $5 million because she did not do anything to improve JCPenney's fortunes but right or wrong, fair or unfair, her connection to Penney's alienated a lot of people who swore they would boycott the store as a result and thus probably hurt Penney's bottom line worse..

Personally we at A&G like Ellen-- she's funny, talented, very charitable and overall think she's a good person.

But truth is truth.. Penney's is a middle America 'red state' department store for the most part and its the responsibility of those in the marketing dept to entice those who traditionally shop there rather than dissuade.
Also, gays/lesbians generally speaking have an excellent fashion sense.. Why in the world would someone wanting to look "stylin'" ever think to go to Penney's for their fashion?   Seriously..

Paula Deen would have been a far better endorser even now after that faux contrived controversy and Especially prior to it..

A country music star like Taylor Swift or Miranda Lambert would have also been Far more appropriate..

In summary, if Penney's, Sears and K-Mart is to survive, they need to really come up with a true game-changer in terms of how they operate and develop a true sense of self; a sincere store identity..

NeimanMarcus, Saks Fifth Avenue and Nordstrom's do not try to pretend they are Marshall's or TJ Maxx..  They know who they are, their clientele, how to decorate their stores to entice the shoppers they wish to attract and are continually profitable.

Penney's, Sears and K-Mart better do the same.. and fast!