Sears Holdings will adopt new strategy to leverage online market

Sears looks to Web sites, new strategy for growth

HOFFMAN ESTATES, Ill. — The chairman of Sears Holdings Corp. said Monday that the retailer is working to change how customers interact with it in stores and online. Speaking at an annual shareholder’s meeting at Sears’ suburban Chicago headquarters, financier Edward Lampert said the company was upgrading its Web sites, selection and interactivity to help the company emerge stronger than ever from the recession, particularly as competitors slash prices in an effort to sell merchandise.

“Make no mistake, I’d rather have our sales going up, and rather have same-store sales going up,” he said. “But not at the expense of generating profit. When you give product away, you’re renting market share. We want to own market share. And you do that by providing better experiences.”

Coming off a year when sales sank 8 percent and profit tumbled 90 percent, Sears — which owns both Sears and Kmart stores — is using its massive footprint of 3,900 stores to experiment.

Lampert highlighted the company’s newest effort, known as mygofer, which opened its first store last week in the southwest Chicago suburb of Joliet, where shoppers can go online, select items and receive curbside delivery at the location right away. The store, which operates more like a warehouse than a traditional retail location, features few displays, in the hope that shoppers won’t miss strolling through aisles of toilet paper and detergent.

“We think that’s going to be a better way for people to shop,” he said. “This is not just about there being a new store experience, it’s about there being a different way for people to shop.”

Executives hope the customer-focused efforts, along with the online ventures, help Sears succeed where competitors have failed. The latest among them, Filene’s Basement, filed for federal bankruptcy protection Monday morning.

Lampert acknowledged the efforts may not succeed, much like the ill-fated Sears Essentials stores, which sold merchandise from both Sears and Kmart, but never resonated with shoppers.

Other initiatives under way this year include boosting proprietary brands such as Craftsman and Kenmore, highlighting the chains’ home-and-garden products — everything from Kmart’s bedding to Sears’ riding lawnmowers — along with their struggling apparel lines, said W. Bruce Johnson, Sears’ interim president and chief executive.

The company plans to promote some nonproprietary brands too, such as Wrangler, Adidas, Levi’s and Vanity Fair in Sears and Gerber, Fisher-Price and branded Nickelodeon clothing at Kmart.

“We’re pretty excited about the merchandise we have in the stores, the new merchandise we’re bringing in,” Johnson said. “We feel we’re moving in the right direction from the standpoint of what we have to offer.”

But much of the year’s focus relates the company’s online presence. Sears Web sites will offer more than 3 million products in 2009, up from 500,000 in 2008. The company also launched an online venture that allows homeowners to solicit online bids for service and maintenance projects as well as a growing and vibrant online community at MySears.com, where customers can write reviews, take surveys and lodge complaints while interacting with Sears employees.

Meanwhile, an online ordering program that allows customers to pick up goods at nearby stores will expand to Kmart locations shortly.

Sears said Monday that its layaway sales soared, adding $152 million to sales in 2008, thanks to a holiday push that promoted paying in installments.

Lampert, who spent more than two hours answering shareholder questions, said the company’s prolonged chief executive search continues, but that he remained comfortable with Johnson at the helm.

Sears shares rose $2.58, or 4.3 percent, to close at $62.85 Monday.

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