- The Washington Times - Wednesday, November 17, 2004

CHICAGO - Sears, Roebuck and Co. was once on top of the world, reveling in the popularity of its “big book” catalog from company headquarters in the world’s tallest building.

But the last catalog went out in 1993, and the once mighty Sears Tower was sold and has been passed by taller buildings, while its namesake company now operates from the Chicago suburbs.

Sears’ status as a retail star is also long gone, due both to missteps on the part of Sears and a change in the way Americans shop — something Sears officials now hope to combat by combining with Kmart Corp.

The $11 billion deal will foist yet another new identity on Sears, a company that published its first general catalog in 1896 and opened its first retail store in 1925.

After decades as an American icon in the retail industry — more than half of the country’s households had a Sears credit card in the early 1970s — it was dethroned by Wal-Mart Stores Inc. as the nation’s leading retailer in 1991.

Since then, the company has been buffeted by a series of competitive and financial threats and hasn’t been able to shake its image as stodgy and old-fashioned.

The catalog was discontinued in 1993, and two years later the headquarters were moved to suburban Hoffman Estates, Ill. In 1999, the company was removed from the Dow 30 Industrials.

With discounters like Kohl’s Corp. and Target Corp. siphoning off shoppers, Sears has been in search of a niche that would connect with consumers.

A ‘90s campaign focusing on Sears’ “softer side” fizzled, taking away business from its strengths in hard-line goods such as tools and home appliances — a market it still dominates.

Sears Chairman and CEO Alan J. Lacy, who took over the top job in 2000, overhauled the layout and inventory of Sears’ full-line stores, bought the Lands’ End specialty catalog and sold the credit division to Citigroup.

In September, the company even adopted a new logo — only the fourth in its 118-year history — to give it what it describes as a “fresher, friendlier” look.

But the preppy Lands’ End clothing line has failed to connect with consumers in inner-city and rural areas, and the sell-off of the credit unit put more pressure on apparel and retail for improvement, which they have not yet achieved.

Adam Hanft, who runs a New York-based branding and advertising company bearing his name, said Sears has not been able to make its brand relevant to younger, more sophisticated consumers who are accustomed to shopping at Ikea, Gap and Target.

“Legacy and heritage mean less and less in this short shelf life culture we’re in,” he said.

Mr. Hanft said he wishes Sears would have tried to publish a hip, 21st- century version of its catalog, or traded on its long history with an ironic marketing strategy, like Altoids and Burberry have done. The takeover by Kmart instead seems to be going the wrong way, he said.

“Neither of these companies has had much retail imagination. It seems like you’re creating a colossus with less response to trends and consumer demand,” Mr. Hanft said.

However, retailing consultant Faith Hope Consolo said she thinks the new combined company might persuade consumers to take another look at Sears and Kmart, especially with Christmas approaching.

“There are two ends of the spectrum — either discount or luxury, there’s nothing in between. I think with discount being the darling, it’s the right time [for this combination]. Everything is cheap chic and fast fashion,” said Ms. Consolo, vice chairman of New York-based Garrick-Aug Worldwide.

But retail analyst Robin Lewis said he didn’t hear anything in the statements of Sears and Kmart executives yesterday to indicate they will reposition brands or find a way to resurrect Sears’ once-great history.

Mr. Lewis, who published an exhaustive report on Sears’ long history last year as part of his subscription-based Robin Reports, said he views the combined company strictly as a financial, cost-cutting move.

Sears had a chance in the late 1980s, Mr. Lewis said, to focus on home products and become what Lowe’s and Home Depot are today.

“They had great brands that stood for value and quality with consumers. Instead they went deeper into apparel, which they were never good at,” Mr. Lewis said.

He said time will tell whether the association with discount retailer Kmart will hurt the reputation of Sears, which has always been known for customer service. “There’s more harm to be done to the Sears brand now being connected to Kmart than good,” he said.

Chicago-based retail consultant Sid Doolittle has closely followed both Kmart and Sears for decades, because for 30 years he worked at Montgomery Ward. It was another venerable Chicago retailer that, like Sears, struggled to compete with Wal-Mart and the other big-box discount stores, which used bulk and other cost-conscious methods to take market share from traditional retailers.

Montgomery Ward went out of business in 2001, and Mr. Doolittle thinks Sears’ combination with Kmart is — in some ways — an admission of defeat.

“For Sears board and senior management, I think it’s a recognition that they have failed to make Sears a wonderful retailer again,” Mr. Doolittle said.

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