- The Washington Times - Thursday, December 29, 2011

Bonnie Knutson compares brand strategy to shooting a deer or pheasant: You aim beyond the prey. If you don’t, the animal is gone by the time the bullet gets there.

“This is what happened to Sears and Kmart,” said Ms. Knutson, a Michigan State University business professor who follows retail trends.

“They were aiming at today’s consumer rather than thinking of tomorrow. They didn’t anticipate. They didn’t keep up,” she said.

Sears Holding Corp., which owns the two ubiquitous retail names, announced this week that it would shutter 100 to 120 stores, citing poor holiday-season sales. The move came as little surprise to retail strategists who say the issue wasn’t simply weak 2011 sales.

Rather, they said, modernization and competition from both ends of the retail business have helped to fell the historic chains that gave us the blue-light special and pioneered catalog shopping in the past century. All the campaigns in the world can’t fool people, Ms. Knutson said.

“Oldsmobile, 10 to 15 years ago, created an ad campaign to attract young consumers: ‘It’s not your father’s Oldsmobile,’” Ms. Knutson said about the problems of the now-gone General Motors Co. brand. “Well, when these young people looked around, all they saw were people who looked like their fathers or their father’s friends driving them.”

The old-fashioned Kmart and Sears brands had similar problems with their rebranding efforts.

“No matter what Kmart or Sears said, they weren’t keeping the promise. Consumers are pretty sophisticated, and they walked into these stores and it was the same old place … without the freshness, the excitement or the interactivity of the experience,” she said.

The nation’s retail statistics for the 2011 holiday season won’t be out until mid-January, but the National Retail Federation projected gains of 3.8 percent over last year after strong Black Friday sales. Sales for Sears in the eight-week period ahead of Christmas, however, plummeted 6 percent while Kmart sales dropped 4.4 percent, sending Sears Holdings stocks tanking 27 percent just on Tuesday and prompting bankruptcy whispers this week.

On Thursday, Sears Holdings released a preliminary list of 79 store closings. The biggest store cuts are in Florida, which will lose 11 Sears or Kmart stores. Ohio, Michigan and Georgia each will lose six shops.

Sears customer Rachael Zylstra, who recently received a master’s degree, defended Sears for offering her stylish apparel without emptying her small budget. Her parents, she added, enjoyed purchasing appliances because of the stores’ long-standing customer service record on big-ticket items.

“I’m definitely sad that Sears and Kmart are in trouble,” said Ms. Zylstra, 25, of East Lansing, Mich. “I love the selection of clothes at Sears — the Kardashian Kollection, Land’s End and UK Style by French Connection. I was initially attracted to Sears a couple of years ago when I discovered that I could purchase trendy clothes at affordable prices, and I knew I’d be able to find what I needed because of its diverse selection of clothing … and all of it typically on sale.”

Consumer retail analyst Kristin Bentz said there weren’t enough shoppers who shared such fealty to Sears over the years.

“A lot of these publicly held retail companies that are historical big-box retailers like Sears and Kmart really have lost sight of who is shopping in their stores,” she said.

The stores also mirror economic divisions that have erupted in the nation, creating what Ms. Bentz describes as a bifurcated market.

“High-end [retail] is doing very well and so is low-end,” she said. “The middle is vanishing, much like what has happened to the middle class. Sears and Kmart are a perfect analogy to that and the middle market has fled. People have traded down to the Dollar Store, Dollar Tree, Family Dollar.”

Other large retail stores such as Wal-Mart, with its competitive pricing, and Target, with its hip merchandising, have captured the marketplace across income levels, particularly for those looking for a deal but also seeking a shopping experience, she added.

“Target made saving money cool. There has been a shift in value and being savvy, and they made it sexy,” said Ms. Bentz, a former Wall Street analyst at Lehman Brothers who now runs her own advisory firm, Talented Blonde LLC.

The shopping experience, Ms. Knutson said, is key for today’s consumers. “Otherwise, why would we go into Starbucks and spend $5 on coffee?”

The king of the coffee market provided something else, she said.

“It’s that feeling you get, the friendliness, that you can sit down by a fireplace and have a nice chat there with a friend,” she said, noting that older brands failed to deliver on this key detail.

Ann Mack, the director of trend-spotting for the global marketing firm JWT, lauds the hip fashion partnerships Target has forged with designers such as high-fashion house Missoni, whose Target collection sold out amid serious brand-buzz nationwide. It has attracted the upscale and the budget-conscious together.

“They have done cheap chic really well,” Ms. Mack said. “In organizing this high-low collaboration with designers, it really infuses modernity into Target’s brand.”

Other retailers such as Macy’s, which have tapped into the aspirational consumer marketplace, also have managed to use technology to keep their customer bases engaged, she said.

In 2010, Macy’s flagship store in New York City created a “magic” fitting room, a kiosk mirror linked to a tablet that could provide shoppers with a virtual try-on session. The new look was superimposed on the customer’s image and they could share that with their friends online.

Macy’s also created its “backstage pass,” which let customers use their smartphones to scan the codes and read more about exclusive style tips and advice tied to a particular clothing line.

Some retailers are even using their stores as centers for events beyond buying, Ms. Mack said.

“One of the trends we looked at is retail as the third space. As more people shop online, retailers must rethink their physical stores and they’ll have to provide more than just merchandise, interactivity and really good customer service. … It could be a place to relax, to hear someone speak, an event.”

Such personalization of the experience and connectivity with which other brands — even the online-only stores that have taken so much business from traditional bricks-and-mortar companies — have achieved consumer satisfaction left stores like Kmart and Sears out in the cold, Ms. Knutson added.

“We are such a mobile society. But we are still human animals, and people still need each other, so connectivity is very important. Take Amazon. They say: ‘Welcome back, Bonnie.’ Or ‘Here are some other books you might enjoy.’ They have used technology to establish a real relationship with a customer that is taking the place of the old neighborhood store,” Ms. Knutson said.

“Walking into Sears and Kmart today, you don’t feel special.”

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