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Sears Testing ‘Connected’ Shops, Will Close More Stores

Hoffman Estates, Ill. — Sears Holdings has opened a “connected living” shop within one of its flagship stores as it plans to continue closing big-box locations.

The announcements came yesterday at Sears’ annual shareholders meeting here, where chairman/CEO Edward Lampert defended his “integrated retail” strategy that favors online sales and its “Shop Your Way” loyalty program.

According to reports by the Chicago Tribune and Crain’s Chicago Business,  the first 2,275-square-foot Connected Living Solutions in-store shop opened last week inside a Sears store in a Schaumburg, Ill., shopping mall. The boutique features fitness watches, heart-rate monitors, garage door openers, smart locks and baby monitors that can be operated remotely by mobile devices.

The company is planning to open two more pilot shops in Illinois.

Lampert cited the success of “quantified life” accessories like the Nike+ Fuelband SE fitness tracker, and said Sears brands like Kenmore are well-positioned to enter the “connected living” category.

He also reiterated plans to continue shutting or subleasing underperforming Sears and Kmart stores, noting that “the world has shifted” and “closing stores is going to be a part of our future. … We think you don’t need 2,000 stores to relevant in the United States.”

He said five years out he envisions smaller company stores that carry merchandise from both Sears and third-party resellers, as many merchants now do online. The stores may not necessarily bear the Sears or Kmart brands, which are being downplayed in favor of the Shop Your Way program, which now comprises more than 60 percent of company sales, he said.

Lampert compared the company’s ongoing transformation to that of Apple and General Dynamics, which both underwent painful transitions before achieving their current success. In contrast, Eastman Kodak failed to adapt to the digital era and ultimately went bankrupt.

Retail is also undergoing a radical transformation, he said. “We know we have a storied past. … Looking back at what used to be doesn’t give us a chance to transform.

“We believe we’re building a better mousetrap,” he noted. “Sometimes you need to go backwards to go forwards.”