Sorry folks but if you want to predict the future
I think the Ward's story has a lot of what is in
store for S. First the credit card portfolio went out
of control, higher bad debts. But this is what drove
the sales increase, not some Martinez merchandising
miracle. Then the stores were totally focused on
incremental ad ons, like credit card protection, warranties
and the like. The store managers (bonus linked to
this) and selling staff turned into hucksters vs.
customer service driven associates. It was a turn off to
walk into a store and have all of these knaves
pestering you for this crap.
Then like Bernie
Brennan did at Ward's cut your staff and we don't care
how you do it. The old boy network stayed in place
keeping the incompetent while getting rid of those that
challenged the status quo. This will continue in cycles,
needed due to the bloat at Hoffman Estates, but the
wrong way to do it.
The next step will be a
reduction in capital spending like Wards, the older stores
in the B and C malls will really start to look
shoddy. Store payroll will then be cut in an earnings
spiral. The private label soft lines will not be able to
compete with brands at Kohls and Target. The hardlines
with low margins and cut throat competition will be
pressed to the limit forcing more credit to start the bad
debt cycle again.
I agree with those posters
that a price of $20.00 or less is in the future, maybe
by year end. The only difference is Sears sold their
tower a few years ago, Ward's just did it, in
No one needs Maintenance on televisions. To pay
10 years for an appliance M.A. the customer could
have purchased several new appiances.
is almost ALL PROFIT. The customer gets nothing
worthwhile! The value of the M.A. is misrepresented to the
customer through LIES!!!!
You are a thief ANCRLONG.
You think lying to sell a product is o.k.
gone to many Sears stores and I 'know what to ask' and
I can get many, many salespeople to LIE when
explaining the M.A. to me!!!!
Wards showed healthy and growing net income also
for the years prior to 1995. But let's not argue
amongst friends. let's see what happens. Either I will be
right or you will be.
Letters, godd point about
the tractor but the buyer has to realize that they
have to haul the tractor to a service center. How many
have asked for refunds based on that?
credit card went south for a long time in Wards
w/o any control they gave credit cards to anyone
until forced to retrench by their new owners.... S
throttled back credit and raised credit standards as soon
as problems became relevant (that = about 2 years of
'looser credit standards', significant difference in
store managers bonus is based largely on store
profitability and customer service scores stores aren't
profitable if they don't sell merchandise. the sales
managers bonus is based on customer meeting sales plans &
modified up/down some percentage based on customer's
ratings called service scores. and since you can't sell
add ons if the associates didn't sell merchandise
that statement is contradictory too!!
customer complaint (year after year) not enough associates
on sales floor...interesting to note your's is too
many associates bothering me...i think an elegant
solution to this dichotomy is a virtual associate that
would materialize beside you w/ the anwers to the
questions you were just about to ask (under your breath or
in your own mind because you don't want to be
'knaved' to death)...
i agree there is 'pork' in
the hoffman barrel, but it is so hard to cut back w/o
sending all the wrong signals to the investors,
customers, & associates, i think that's why most publicly
held companies & government bodies over staff... the
flip side to this is the reduction of work force
almost always requires a near-total redesign of the
internal processes something that is also very scary to
insiders. not many people like change so it takes dire
circumstances, generally speaking, to get the ball
capital spending, you obviously don't watch S much 'cause
BILLIONS (i believe the number is ~$4B in 1999 alone) have
been spent in the last 3-4 years remodeling the
stores, with a very high (i believe a percentage in the
90's) of stores have or will be remodeled by the end of
2000. they did start w/ the larger and/or more
profitable stores were first but that would be your best
bang for the buck!
private brands are doing ok
(canyon river blues etc.) and are will do better under
the new and more aggressive advertising.
finally the most telling line in your post, the last,
shows the difference in S & Wards... in took bankruptcy
to wake up Wards and S sold their tower years ago
when it was clear that it was the right thing to
do!!!! thanks for the closing statement to tie my
rebuttal together, how ironic we have the exact same
'closing statement' and yet we see it as 'proof' of our
opposite arguemnets....that's what makes debates &
viewpoints so fun!
As the stock sinks below $40 (as I write) to a 52
week low, I think you missed some of what I was trying
to convey probably due to my poor communication
GE owned a majority of Wards (and all of the credit
card portfolio) since the LBO in 1988, Wards (Brennan)
was dumb enough to enter into an agreement (see the
10k's) with GE that they absorbed credit losses up to a
point, Wards assumed all above that. GE figured out the
aceptable loss rate and told Wards to give to the customers
all they want (via in store credit) and we will give
them a card. Wards thus let loose a torrent of bad
credit risks to goose sales, just like S, and ate the
losses. S will do this again and I question if their loss
reserves are adequate. Credit is like heroin to S, they
As for the knaves, a lot of the posts
deal with forcing associates to sell ad ons, vs.
taking care of csutomer service, My point is that this
is a turn off period. Are store managers incented
directly for add ons? I think this is the
Regarding bloat, smart companies (and governments) don't
add staff unless they add value. S didn't. I agree
with your observations on process change, it will
never happen at S thus my comment as this is the first
of many mass layoffs to come just like Wards. They
can call Wards for guidance on how to sell the
corporate buildings too!!!
Regarding capital, you
missed my point. They have been investing in stores with
NO RETURN! Now they will cut back capital worsening
the situation. Also a lot of capital has been for the
new corporate building out in Hoffman (Bloatsville),
specialty store concepts like Home, that is a total bust
and basic infrastructure. Anyone can build buildings,
you gotta have a return.
advertising, I heard that before, "Let's advertise more to
drive sales" this means markdowns are coming, folks,
big time. Advertising has a diminishing return and
they are past that level to drive incremental
I also agree it is fun to debate and welcome your
professional demeanor and courtesy. What other companies do
I am a big Sears proponent but I agree that a
serious change is needed.
Martinez has lost the
edge that he had when he came in with his 100 day plan
and the closure of unprofitables etc.
is needed at the store level- those in home office
should be forced to change the culture by spending more
time working at store level each year.
the late 80'2 early 90's the store support have lost
the sight of the impact of small decisions at the
Ever been to an IKEA, Crate and
Barrell or Target? What do they all have in common?=
minimum out of stocks and the perception of customer
service. Go into a Sears and out of stocks are plentiful-
and while more sales people roam- the perception is
that they do not.
I believe that Martinez does
have another re-invention up his sleave. If he does
not then the board should demand someone who does