I was helping a start-up in the appliance industry develop its servicing approach, using Sears as a model for a brand with high in-home service quality perception when Sears announced it was in receivership.

Although it is a shame to see an iconic fixture of the North American retail sector meet its demise, it is nonetheless not a surprise:  Tired looking stores, out of style merchandise and pricing that could easily be found in several “better” alternatives doomed the chain.  In fact, a client of ours predicted the timing simply by mapping Sears’ cash flows starting out about a year ago.  What was surprising was that a brand synonymous with home and trust could so easily lose its way.  Certainly, it wasn’t without trying to shift course, the most recent being a yet-to-be fruitful attempt to exploit online sales.

So, the question is where to now?

Sears has a few options: It could simply take advantage of its protection and the sale of (more) underperforming assets and locations to concentrate investment, likely prolonging its eventual demise.  Or it could take a bolder, more courageous move to save its iconic brand.

Applying Jim Collins’ Good to Great principles, identifying what Sears believes it does better than anyone else, could provide the basis of such a move.  We all know that the retail sector is facing extraordinary disruption, with online competitors popping up daily, Amazon eating everyone’s lunch and shopping mall traffic declining sharply, so rear-view mirror analysis might only help solve part of the puzzle.  Moreover, Sears’ executives will be immersed in the daily fire fight of a distressed organization:  they are unlikely to take the time to think creatively about business opportunities.

The Board will be similarly preoccupied, but could they help by asking the management team to expose itself to “alternative thinking,” an approach that until recently has been the purview of activist shareholders?

One example of this kind of thinking would be to build a “home comfort as a service” model.  It’s not that big a stretch, when you think about the brand, but it would mean shedding traditional assets and building a new business model that doesn’t rely on inventory as much as it relies on networks and people.  Tough questions would abound,  with even more difficult answers to provide, but it seems the time is long past for Sears to be able to afford to take yet another incremental approach.

 

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