Lacy Accesses Sears' Appliance Playbook

By Alan Wolf On Aug 4 2003 - 6:00am

While sweeping changes to Sears' appliance departments won't be completed until the fourth quarter, the retailer is on track with a number of other initiatives designed to recapture lost market share.

Chairman/CEO Alan Lacy said in a conference call that the company's new major appliance re-launch, which includes wider assortments, lower prices on entry-level models, enhanced in-store service, and an advertising campaign to tout it, would be fully implemented by the end of the third quarter. (See TWICE, June 23, p. 1.)

While Sears has settled on a "standard template" for the appliance department remodels, final tweaks include regional variations in the amount of take-with inventory on hand. "You need more take-home inventory in Laredo, Texas, than you do in the Bronx," Lacy said.

To encourage opening-price-point volume, Sears has also modified its compensation model, giving sales personnel "a little less commission on high-end products and a little more on low-end models," Lacy said.

Sears has made similar strides in improving its visual merchandising and sales floor service throughout its full-line stores, Lacy noted, and is moving toward localizing its product mix across all categories. The company has also begun changing its advertising message to "differentiate us from the competition," he said.

Lacy also conceded that Sears' share deterioration was attributable in part to aggressive expansion by Lowe's and The Home Depot, noting that "the number of doors selling appliances has exploded."

In its off-the-mall businesses, Lacy noted that the eight Sears Hardware stores now carrying major appliances are "performing very well," and that the majap test will likely be expanded to a "substantial" number of other Hardware store locations.

Majap sales at the test stores are roughly equivalent to those at a Best Buy, he observed, and while they're "not as powerful as our full-line stores, it's something one can be happy with."

Sears Grand, a forthcoming full-line pilot store featuring traffic-driving, quick-turn merchandise like packaged food, DVDs and music CDs, is on track to open in Salt Lake City this October, Lacy said. The company has committed to three additional locations in three different states, including greater Chicago and Las Vegas.

Sears plans to open five pilot stores in all, each different in size and assortment in order to test the concept, which is an "important part of our growth strategy going forward," he said.

Lacy added that only one new Great Outdoors location was opened this year. While the company is pleased with the upscale emporium's consumer acceptance and revenue per store, "the profit model is not right," he said, and management is working to correct it.