Sears' New CEO Using Majap Model To Boost Store Sales
By Alan Wolf -- TWICE, 12/4/2000
NEW YORK -Alan J. Lacy, the new president/CEO of Sears, said he plans to use the company's peerless major appliance business as the blueprint for improving the performance of its lagging retail operation.
Speaking here before analysts and corporate investors last month in his first public address as successor to the outgoing Arthur Martinez, Lacy acknowledged that the retail chain's sales, earnings and image had grown tired, and that majaps might provide the road map to enhanced profitability.
"We recognize that we don't make enough money in our retail business," he told the gathering, describing the stores as "the heart of the franchise." Indeed, while retail contributes about $29 billion, or 70 percent, of the company's $40 billion in annual sales, its credit business-which Lacy had headed prior to his promotion-has been the primary earnings performer in recent quarters.
To help remedy the situation, Lacy pointed to Sears' unparalleled white-goods business as the template for improvement, citing its wide assortment, top national and private-label brands, and the department's reputation for superior service. "With breadth, depth, the offer of all major brands plus the one private brand, Kenmore, a knowledgeable sales staff, as well as being part of Sears online, we have a $5 billion business," he said.
Lacy told the group that he plans to press that advantage and expand the company's 38 percent majap market share, now that No. 2 appliance player, Circuit City, has given up the white-goods ghost. One tactic, designed to drive customer traffic and revenue during the current holiday season, is to hold more sales events, including an appliance promotion that's planned for the days leading up to Dec. 25. Sears traditionally holds its white-goods promotions after the holidays, he explained.
Another area earmarked for growth is Sears' The Great Indoors home decorating and design specialty stores, which Lacy described as a "an attractive and potentially significant growth vehicle."
The four existing units, which carry a select array of higher-end white and brown goods, offer a more upscale and "female-friendly" alternative to the home improvement chains, he said, and bring to Sears "a new affluent customer" without cannibalizing sales from its full-line stores. At least 10 additional Great Indoors stores are planned for 2001, while a long-term goal of 150 units has been set.
Sears also plans to step up its direct-sales activity by better integrating its online business with its catalogs and stores to help drive sales, Lacy said, noting that 10 percent of all appliances purchased at Sears stores-or about $500 million in annual sales-are first researched on Sears.com.
Lacy assumed his current post 10 weeks ago from Martinez, who is retiring this month. He added that during the transition he had been busy "getting my head back into the retail flow."
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