Sears Is #2 Holiday Shopping Destination, Still Can't Make Any Money

According to a poll cited by the Chicago Sun-Times, Sears is the #2 holiday shopping destination this year (after Walmart.) So why can’t they make any money?

Maybe it’s because the media is “picking on” them. In a letter to Sears employees, Sears Holding CEO Eddie Lampert said:

“Much of the commentary in the media and on Wall Street . . . ignores the strength of our company and the progress that we have made.”

Credit Suisse analyst Gary Balter is siding with the media, says the Sun-Times:

Lampert said times are tough in retailing today. Balter said while that’s true, Wal-Mart and Target are enjoying good years. Balter said: Kmart’s net-profit margin is expected to decline to 3.6 percent this year from 5.1 percent; Wal-Mart’s projected flat operating margin is 7.4 percent this year and Target’s is 11 percent.

Sales productivity is $135 a square foot “and shrinking” at Kmart. That compares with Wal-Mart’s $584 and Target’s $314, according to Balter’s report.

We liked this part of Balter’s analysis the best:

Balter believes the answer is for Sears to get rid of its most valuable assets and realize that there’s no more profit to be squeezed from cutting costs at Kmart and Sears stores.

“Retailing is a very humbling profession, as Eddie is discovering,” Balter wrote. “Your lowest paid employee is the one who makes an impression on the customer. . . . One better instill a sense of customer service in the associates to be successful.”

Hey Sears: You can’t have the “shopping experience” of the Filthy Walmart, the customer service of Comcast after an ice storm and the prices of a mall department store if you expect to make any money.

Eddie can’t whitewash Sears’ troubles: analyst [Chicago Sun-Times]
(Photo:Nelson Minar)

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  1. Franklin Comes Alive! says:

    Let me be the first to ask… Who the hell shops at Sears? How on earth are they the number 2 holiday shopping destination? I don’t know anyone who has shopped at Sears in the last 15 or so years.

  2. amoeba says:

    @Franklin Comes Alive!: I do ask myself the same question.

  3. TWinter says:

    Did they get that #2 by combining Sears and K-Mart and considering them one store? Even if they did that I’m really surprised that Sears/K-Mart adds up to the #2 spot.

  4. FishingCrue says:

    I walked through a Sears today and they actually had a greeter who opened the door. He was so enthusiastic I wondered if there had been any customers in weeks. Apparently there haven’t been. To me Sears is Walmart with better customer service. Any prestige that it once had is gone. Further it seems that they’re betting on the model that people are willing to pay more for customer service but I’m afraid Walmart’s success proves that we’re clearly price shoppers.

  5. meadandale says:

    I’ve shopped in the past at sears for things like tools, lawn mowers, vacuums and appliances (fridge, washer/dryer).

    However, when I last went appliance shopping (dishwasher) I wasn’t impressed with Sears. I don’t like the fact that they change the model numbers YOY for no other reason than to make comparison shopping between model years different, among other things.

    I ended up buying my dishwasher at Lowes and that’s the first place I’ll end up looking the next time I’m in the market for a new appliance. Sears is NOT ‘Where America Shops’ anymore.

  6. I think a lot of older dads still go there.. My dad was offering a dishwasher as a wedding gift from there to my wife and I this fall hehe. He still gets all his tools (Craftsman of course) from Sears religiously!

  7. quail says:

    This article was about Sears/K-Mart but it got me thinking about the core problems and it got me thinking about Wal-Mart.

    In the early 90′s I was in Arkansas and took a tour of the Wal-Mart/Sam Walton museum. This was either right before or right after Sam’s death. One of the key things I took out from the tour was that Sam Walton was in the retail store business for some time. His first set of stores went belly up BECAUSE his prices were too low. In the late 50′s no one wanted to buy from the stores because they perceived the products to be inferior.

    Reading this made me think of old Sam. Hate him or like him, I doubt that he would have taken Wal-Mart down it’s current path of squeezing every penny out of the vendors and creating an atmosphere of low morale among the associates. It’s the pandering to the stockholders and the stock price that seems to cause this behavior.

  8. FLConsumer says:

    @Franklin Comes Alive!: Keep in mind the source — Chicago Sun-Times. Maybe people in the midwest still go to Sears out of tradition. I honestly can’t think of the last time I’ve set foot in one. Around these parts, the only places you’ll find Sears/KMart are the areas “where the white people USED to live.”

  9. I’m going to go out on a limb here and speculate that they’re not making money because they don’t really care about making money.

    I walked in to buy a simple small kitchen appliance. Place was deserted. Barely any customers. Yet damned if I could find anyone who would help me pay for the thing. Finally I asked someone who was helping another customer if they could quickly ring me up and send me on my way. Instead of helping me, they pointed vaguely in the direction of some abandoned cash registers and told me I’d get help there.

    Finally after around ten or fifteen minutes, I put the appliance down and walked out. I was better off for it, too — found a better one at Target.

  10. ShadowFalls says:

    @Franklin Comes Alive!:

    I wonder the same thing, I haven’t even been in one for over 6 months, and that is because I had time to kill waiting for someone else…

  11. I guess amazon has gotten themselves out of the boiling pot this year

  12. SaraAB87 says:

    The only things people seem to be buying at sears here are Children’s clothing, possibly because of the guarantee and the fact that they have the only Plus-Sized Children’s Department that I know of! The whole store is usually deserted except the Children’s clothing department.

  13. homerjay says:

    Where else will I get my Easy Fit Hagar Slacks?

    RAINMKR has a point. The sears shopper is a dying breed. Everything in that store with the exception of overpriced Plasma TV’s is the same product it was decades ago. I think they still sell rotary phones.

  14. goodkitty says:

    They could make a tremendous and speedy turn-around if they did update their business model. Catalogs and pushy salespeople (on commission?) are not the way people want to shop these days. They could cut store staff down by 50% (managers first) and still have no worse service than they do now, and apply the savings towards at least attempting to be price-competitive with say, oh… Best Buy (which is anything but). And who buys clothes (which must be half their floorspace) there anymore anyway… I don’t think I have in at least 5 years, and even then it was ridiculously expensive.

  15. Protector says:

    True story: my girlfriend’s dad went to Sears on Black Friday for a sweet deal: a Sharp Aquos 46″ LCD TV for $900, regular $1800. They didn’t have the TV in stock, so they ordered it for him.

    When he went to pick it up a few days later, they mistakenly gave him a 56″ Panasonic Li-Fi 1080p projo TV. Yeah, it’s not a flat-panel, but it’s 10 inches bigger and 1080p.

    Think that inventory gaffe won’t hurt your bottom line?

  16. MrDumahss says:

    I assume the comment about Sears not making money is in regards to its dismal third quarter profits. With that being said, there seems to be a bit of disconnect in relating Sears inability to make money in the third quarter to being the number two shopping destination for this holiday season. If I recollect, the holiday season is very levered to the fourth quarter. In that case, this article may be a little premature in stating that Sears is not making any money this holiday season. No I am not a Sears employee, just a reader that is mistrustful of media B.S. Thanks for your time. Mr. Dumahss

  17. mike1731 says:

    @meadandale:
    A former neighbor of mine who worked in appliance sales told me the reason for the frequent model number changes… they love to advertise “lowest price ever” or “lowest price of the year” — which for a specific model number it may be. But the same unit under a different model number may have sold for less earlier, or less later in the year.

  18. gc3160thtuk says you got your humor in my sarcasm and you say you got your sarcasm in my humor says:

    Blah Blah Blah…keep bashing Walmart if it makes you feel better. I personally enjoy working at Walmart in the Electronics Dept. and a few other depts. I am trained to help out with. I enjoy my managers, coworkers, and customers. My store is high sales because we care so don’t think all Walmarts are how people on here perceive them to be.

  19. RocktheDebit says:

    A few weeks ago I went into the Sears on the corner of State and Madison in Chicago – the closest thing to a flagship Sears has anymore – and asked a bored-looking salesclerk where the fat chicks – excuse me, plus-size – department was. “Third floor.” But the signs at the escalator said second floor, so I trusted that–and realized the clerk was right. But why were the signs wrong?

    I asked another salesclerk if I could speak with the manager on duty. She got me to another manager, who told me they were reorganizing the store – but why were the signs the last to be fixed? Could I speak with the store manager?

    So I wait about ten minutes for the manager on duty, and when he arrives he apologizes, “but our signs are on order”. Well, couldn’t you put up ad hoc signs, like the little stand-up signs they use for sales? Apparently no one had thought of that, but they appreciated the suggestion.

    And this is the nice Sears.

  20. ginnylavender says:

    A) The stores smell bad.
    B) There are sales staff hanging around talking to each other while customers aren’t getting helped.
    C) Prices are too high compared to Target and WalMart
    D) They still do a lot of bait and switch, even though they know it’s illegal.
    E) Their clothing is dowdy.
    F) Their jewelry is laughable.
    G) Their accesssories are cheap
    H) Their shoes are ugly.
    I) The stores are depressing.
    I could go on and on and on.

  21. ExtraCelestial says:

    sears confuses me. is it a hardware store? is it a clothing store? is it an electronic store? id prefer to not buy my jewelry in the same place they sell dishwashers thank you.

  22. dirk1965 says:

    Celested… you most likely aren’t old enough to know WHAT Sears really use to be all about. It was the Wal-Mart of yester-year, but only better. Sears was THE one stop shopping center for consumers. Sears was where you went to see Santa. Sears may not be the crown jewel of the consumer world today, but their brands Kenmore, and Craftsman are some of the best money can buy. YES… I STILL SHOP AT SEARS!

  23. @Franklin Comes Alive!: I do! But to be fair, we’re drastically short on department stores here. Also I don’t shop that much.

    It seems to do a decent business here, but the anchor stores at the mall are J.C. Penney’s, Sears, and the worst-run Macy’s in the history of the universe which is far too close to Chicago for people to be willing to shop at it anyway because they’re pissed over Marshall Field’s.

    The Sears here is well-maintained and has a competent staff, though I do think the way the floor is set up is a little out-dated maybe? Just feels a bit crowded. I actually got a great formal gown at Sears for this black tie thing I had to go to; the brands are the same brands they carry at all the other department stores (except the house brand, of course) … it’s just $10 cheaper at Sears and they have actual sales associates manning the registers, unlike at the Macy’s across the mall.

    I gotta say, though, Penney’s is growing on me, given the alternatives! (But I still end up having to go to Chicago for shoes and suits.)

  24. minneapolisite says:

    My husband and I did some of our holiday shopping at Sears this year. We purchased a small kitchen appliance there (a water boiler for my sister-in-law’s dorm room) and two small tool items (ceiling-mounted extension cord reels for my brother-in-law and my father.) We also recently purchased an air compressor there. We shop at Sears because it is conveniently located in a mall where we do our other shopping and it’s not Walmart (we both avidly hate Walmart).

    The customer service typically is lacking. The employees who have helped us have been polite, enthusiastic and knowledgeable–however there just never are enough of them to go around. I should not have to wait in line or wander around a store looking for someone to ring me. However, even worse than Sears in this regard is Macy’s. Customer service is unintelligent and difficult to find. As a former Nordstrom employee, I expect a higher level of customer service than most people, but is it really that ridiculous to expect there to be employees to ring me when I want to be rung and answer simple questions?

  25. smitty1123 says:

    @Franklin Comes Alive!: Dude, gotta go somewhere when Woolworth is closed…

  26. justcuase says:

    I never understood why Sears let Kmart buy them. I worked for Kmart while in highschool and my first few college years, and the way they did things, I can see why they loose so much business. That is why most of there stores are run down and look nasty. Sears was a better place to go put I feel the management of the Kmart team has slumped it to Kmart standards. I can tell the change since they merged. Both companies could have gotten better, but I feel they will prob eventually have the future of something of Roses’s that turned to crap. Kmart will fade away.

  27. Chryss says:

    We recently bought a vacuum cleaner at Sears, as the model was rated by Consumer Reports as the best for picking up pet hair.

    First, I called our local store to see if they had it in stock. Got disconnected. Called back. Got disconnected. Called back. This time, put on hold, THEN disconnected.

    OK fine we’ll go to the mall. Go into the store. It smells like broken dreams and ass. There were approx. 5 BAZILLION sales people hanging around major appliances, but when we got to the vacuum cleaners, no sales folks were to be found. And there were about 20 people looking to buy vacuum cleaners!

    After about 15 minutes, a saleslady showed up. She was, however, AWESOME. Very knowledgable, very informative, and nice! And, I have to say, the vacuum cleaner works great.

    Would I go back to look around and shop? Nope. Not a chance in hell.

  28. nursetim says:

    I buy hand tools at Sears because of their lifetime guarantee, and I have had to use it a couple of times. The day they discontinue that policy, and it could very well happen, I will have no reason left to shop there.

  29. nardo218 says:

    Sears near here (Pennyslvania) is always packed. Is IS a mall dpt store, so I dunno if that affects it. I haven’t seen any of the complaints you all have for Sears at my Sears.

  30. skizmal says:

    Most everybody is dead on about Sears being outdated. Everytime I go into one it feels like I,ve time warped back to the 70′s. They could probably clean up their act if their buyers and store designers realize this is 2007.

    Have to say though, I’ll always go to Sears. After my brother lost his life (suicide), they were the only company that waived his credit balance clean (my parents were reponsible for paying off his debt).

  31. deadlizard says:

    The source is the Chicago Sun-Times, so maybe Sears is still big in Chicago. Chicagoans can’t still let go of the 80s. I think it’s because the last time Chicago was on the cutting edge they had John Hughes movies, the Superbowl Shuffle, Air Jordans and Sears was the top store.