Sears Unraveling: 3 Ways to Avoid Digital Destruction

Sears, once the number one retailer in America, is entering 2017 on the verge of collapse, particularly by digital destruction.

The company reported a net loss of $748 million in its third-quarter, compared to a net loss of $454 million in 2015. The year to date 2016 loss exceeded the full-year 2015 loss of $1.1 billion.

This is bad news for a brand that had dominated retail for decades.

Sears started off as a brick-and-mortar disruptor in the late 19th century, selling directly to customers through its famous catalogue. The company later pioneered big retail in the post WWII-era by following the American consumer to the suburbs where Sears became the anchor store to many shopping malls.

Now those malls are closing at a fast clip and the company is still heavily invested in brick-and-mortar (952 Kmart stores, 735 Sears retail locations) with no coherent eCommerce strategy to shore-up losses to competitors like WalMart, and an online marketplace like Amazon.

What can we learn from Sears?

Thriving in the Age of Digital Destruction

Adore Your Core.
Know what you’re good at, stick to it, and make it better. Sears, according to Forbes magazine, blundered in 1981 when it made an “aggressive expansion” into financial and real estate services.

That investment ultimately bumped up corporate cash flow, but financial analysts say it distracted from Sears’ core business, allowing competitors like WalMart to eat its lunch. These days, the company is so strapped for cash, it may consider selling off Kenmore, Craftsman and DieHard, core automotive and home brands that are the very reason customers visit Sears in the first place.

Go With The Customer Flow.
Know how your customers shop and beat a channel to their door. The Sears catalog was once a very big deal, especially to farmers in the late 1890s after the US Postal service introduced free rural delivery services. Customers didn’t have to travel for hours and hours over unpaved roads to shop. The retailer came to them.

Sears hasn’t paid attention in the last 20 years. Its only apparent digital initiative (an online loyalty program) is not only reported to be complicated and difficult to use but misses the point of online commerce.

Don’t Stick Your Head in the Sand.

Stay true to your core, but pay attention to where the market is going.

This is related to the first two lessons. If Sears had noticed what its competitors and customers were doing over the past six years, the company might not have lost $10 billion in sales.

A Fortune magazine writer ties the company’s woes to a lack of concern based on its historic dominance. In 1991, for example, Sears executives dismissed his reporting that WalMart had surpassed Sears in sales one month, calling it a temporary fluke. They didn’t think anyone could take them. In 2015, Walmart’s revenue was $482 billion, while Sears’ was $25 billion.

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