Undifferentiated, Sears finally declares bankruptcy

by Nigel Hollis | October 22, 2018

Sears, the once-iconic brand has been run into the ground by a continued strategy of store closings and sell-offs that has done nothing to alleviate the essential problem facing the company: people do not find it an attractive place to shop compared to the alternatives.

Last year I posted that bankruptcy seemed inevitable in the light of both people’s attitudes toward the store and the company’s response to its plight. The definition of madness, they say, is doing the same thing time and time again and expecting a different result. And yet Sears management seem hell bent on following the same strategy that helped ensure the company ended up where it is today.

I feel a degree of satisfaction that Sears has declared bankruptcy. Sears has been on my list of dead and dying brands for a few years now, and I have wondered whether it was fair to include the brand, given its apparent ability to keep going. However, it seems our brand equity data was correct. Compared to a wide range of other ’department’ stores Sears came bottom of the heap on many key metrics in 2017. While still meaningful to many in absolute terms, it lacked salience and difference, and in relative terms was weak on all three.

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Potential is one of the key metrics we calculate based on meaning, difference, and salience. It is the likelihood that the brand will grow in the year following the survey. It is not a predictive measure, because the brand still needs to reach out to new customers in order to realize its potential. Sadly, in 2017 Sears ranked lowest of the stores measured in terms of Potential. The data gave Sears a one in three chance of growing in the following year and without some dramatic change of course even that narrow opportunity was unlikely to be achieved.

“It’s never been easier to save!” claims the paid ad for Sears on my Google search page. Really? What about on Amazon? What about a trip to Dollar General, Kohl’s, or  even Walmart? While Sears is perceived to be cheaper than many of the stores we measure it is by no means the cheapest. But it does have the lowest Premium score suggesting that many people do not believe it is worth shopping there. Even when we look at non-rejectors and assume a value positioning, the brand does not fair that well.

Today, retail is a tough business. (Probably the only time in the past when it was as tough was when Sears’ famous catalog business was forcing mom and pop stores out of business across America.) To survive brands must play to their strengths, not try to fight fire with fire. The problem is that without a clear sense of purpose – the value that the brand can add to people’s lives – and commitment to delivering on it Sears is unlikely to recover. Last year Chris posted that Sears is still a leader in appliance repair and home warranty. Fair enough, but unless the company steps up to amplify that part of the business in the marketplace I suspect it will not be enough to stave off the brand’s demise. But what do you think? Please share your thoughts. 

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