IMC Case Study: Saving Sears

Sears: Current Situation

• Sears’ stock has dropped from $193 a share in 2007 to about $37 today.

• Sears Chairman Edward S. Lampert has come under increasing scrutiny for raising prices, cutting costs, mismanaging merger with Kmart, and alienating customers.

Sears: Current Situation

• Critics: Sears is dumping high end products in older Kmart stores that haven’t been modernized.

• Marketing budgets have been cut.

• Continuous drop in same store sales since 2008.

• Sears Grand, a strategy to compete with smaller strip malls, has failed.

Sears: Current Situation

Sears: Current Situation

• The changes have alienated Martha Stewart, who sells a line of home goods at Kmart.

• She is now selling a

line of furniture at

Macy’s, a Sears competitor.

Sears: Legacy Perceptions

• A legacy of weekly sales has conditioned customers to shop only when Sears has sales.

• In retailing, perception is reality.

Sears: The Fallout

“Customers are avoiding Sears in droves. Indeed, at many Sears stores, clerks at times seem to

outnumber shoppers.”The New York Times, Jan. 27, 2008

Sears: The Fallout

“We just can’t avoid the cliché ‘rearranging the deck chairs on the Titanic’ when considering

the proposed new operating structure for Sears. The goal of making the merged Kmart

and Sears into a retailing success has become increasingly less achievable, as

same-store sales plunge and excuses abound.”

Carol Levenson, credit analyst at Gimme

Credit, an independent research firm in Chicago

CS Analyst Calls Sears Worth Only $20

“Credit Suisse’s Gary Balter has had an Underperform rating out for Sears for a while

now. After the company’s poor earnings report, Balter also has a report maintaining his $20

price target. If you want to know how positive or negative the report is, it is titled ‘Running Out of

Fingers to Stop the Leaking.’”

Sears: The Fallout

What Sears is Doing

• Management believes its strategy will result in a stronger, more profitable organization long-term.

• However, it recognizes it will need to make changes to deal with an uncertain retail market and counter perceptions that management is out of touch.

• Sears will close an additional 125 unprofitable stores and remodel all remaining Kmart stories in a multi-billion dollar investment strategy.

What Sears is Doing

• Continue to upgrade product lines and offer greater values than competitors.• Adopt a new pricing strategy that matches all legitimate competitor prices.

- If you can find a lower price, we’ll match it. - Aggressively compete on price to draw customers away from Target, Best Buy, Home Depot, and Lowes (like Geico). - Continue weekly sales on select items (mainly to draw people into the stores).

What Sears Needs From Us

• An integrated marketing communications campaign that aggressively and proactively repositions Sears as a vibrant retailer that has the will to reinvent itself.

What Sears Needs From Us

• It should reach consumers/prospects on a personal level and rebuild the relationship that has been shattered across the country (particularly in Middle America).

Elements of Our Campaign

• The campaign should feature consistent messaging to customers/prospects using:– Advertising (including a

campaign theme)– Promotions (to get

shoppers into stores)– PR, including:

• External/Media, including Social Media

• Internal/Employees• Social Media

Campaign ComponentsAdvertising

• Campaign will generate awareness of how Sears is changing, it’s new pricing structure, and benefits of shopping at Sears.

• A memorable campaign theme.• Ad strategy and concepts for campaign

on:– TV – Radio– Print– Electronic– Social Media

Campaign Components

Promotions• Develop spring promotional

campaign that complements advertising effort by providing short term incentives for consumers and prospects to shop at Sears.

• Campaign can feature:– Coupons– Discounts– Trips – Frequent flier mileage– Joint promotion with selected

partners (Hilton Hotels, rental car agencies, NASCAR, etc.)

Campaign ComponentsExternal/Media Relations

Campaign Components

External/Media Relations

• Media campaign will aggressively position Sears new strategy/pricing structure in commercial media and retail trade press.

– Primary focus: competitive pricing, great value, products.

– Place Sears executives in media, broadcast talk shows, opinion forums, important electronic sites.

– Secure interviews for Lampert in high profile local broadcast forums (morning talk shows, early news programs, etc.)

– Makes better use of Sears’ external web site to showcase key messages/positions.

Campaign Components

Internal Communications

• Develop proactive internal campaign using all available media (electronic/employee intranet, print, face-to-face, video messaging) that:– Galvanizes employees behind

company’s new direction.– Enhances understanding of

need to improve customer service and leverages them as public ambassadors.

– Informs employees about progress/problems before general public.

Goals/What We Hope to Achieve

• Begin the process of re-branding the company by:– Reversing public perception that Sears is a sinking ship – A retailer that’s out of touch– Can’t adapt and compete in today’s super-competitive

retail marketplace.

What The Campaign Will Do

• Portray Sears as a company that is:– Fighting back– Aggressively addressing the structural,

organizational and competitive challenges that customers and Wall Street are reacting to.

– In touch with its customers, anticipating future needs, and providing products that they want.

– Using every available means to get its message across to general public.

Immediate Objectives

• Stop media hemorrhaging.

• Portray Sears as an organization that “gets it” when it comes to customer service.

• Focus public attention on Sears’ new direction.

• Long Term: No other retailer does more for its customers than Sears.