Opinion: Can Sears Be Revived After Eddie Lampert Won Auction Bid, Saving Sears From Liquidation?

Can Sears be revived after Chairman Eddie Lampert won $5.2 billion auction bid to save Sears from liquidation?

When thinking of Sears I got nothing to be excited about! On the top of my head, I don’t even know what I care to want to buy at Sears. Whenever I need new clothes I think about stores like Kohls. Whenever I need new gadgets I think about stores like Amazon. Sometimes, Best Buy and Micro Center make to the top of my head for buying computer related items. Video gaming stuff I would just usually get from an online store like Valve’s Steam. Something needs to be improved for the home, I usually go to Home Depot. I usually go to Home Depot or Best Buy for big items such as the refrigerator. If I need everyday cheap, items I just go to Walmart. I still don’t see what I would need so much that I would rush to Sears to get it.

I think Sears will have a very tough uphill battle even it got itself out of liquidation. In order for Sears to be relevant, I think Sears got very few options. The first option is to find out what makes Sears unique in today competitive online/offline retailers such as Amazon and Walmart. If Sears cannot compete against Best Buy, Amazon, and so forth, then I think Sears needs to go with the second option which is to cater to luxury stuff only. Nonetheless, this would be like completely changing the business model of Sears inside-out. This would mean Sears would not even try to be competitive against brands like Amazon and Best Buy. Instead, Sears would just cater to the rich.

Let’s fantasize how Sears would just cater to the rich would be like OK? Let’s imagine instead of selling a normal refrigerator Sears now sells a gold plated refrigerator. This gold plated refrigerator is one of a kind since very few of them were made. The price is around $25,000. The refrigerator is not only gold plated, but it is also a tech hub center for the kitchen where the large glassy part of the refrigerator door could go translucent so you can interact with it like a smart TV or a computer. It also got a smart AI assistant to help stock up the refrigerator when something is about to run out. In this scenario, normal people wouldn’t buy this refrigerator since it’s too expensive and luxurious. Wealthy people though, they could buy this refrigerator without blinking twice.

If Sears targets the rich, then its business model would be completely different than before! The stuff Sears needs to carry in the store are going to be totally different than before. Furthermore, when targeting the rich Sears may not even need to care about being competitive against other players at all. How come? I think buying luxurious stuff is an experience! A few clicks of the mouse through online stores won’t get you the experience! Instead, I can see rich people would drive their supercar or Rolls Royce to Sears, get greeted by super friendly and helpful staff — feeling like a king when buying something — and feeling like a king when leaving Sears store afterward. Such an experience you would never get from online stores or from the stores that cater to the middle-income class. Sears can go this route to stay profitable even though Sears won’t be competitive against players such as Amazon.

Of course, there is always a third route which is to use the old model but providing better customer service. Nonetheless, I don’t see how Sears can stay competitive and relevant when people don’t have the need to go to Sears. Sears could learn from Kohls even though Kohls is just a retailer for clothing. Why? I think Kohls is really good at attracting me to buy clothes from its online store! Kohls got discount programs such as Kohls Cash, and these programs somehow encourage me to spend more. Although Kohls doesn’t provide free shipping unless you buy more than $75 worth of items (if I’m remembering this correctly), but this somehow encourages me to spend more than $75. Kohls always announces a new clearance sale, and so it’s like Christmas all over again. If Sears can learn how to give out discount like Kohls does, I think Sears can begin to become relevant in no time. Nonetheless, Sears must carry the stuff that when giving out discounts it does make sense for people to care to buy. Yep, even on discount, unwanted stuff won’t get sold.

Best Buy’s Weak Online Presence Adds More Doubts To Best Buy’s Future

Logo of Best Buy, US-based retail chain

Logo of Best Buy, US-based retail chain (Photo credit: Wikipedia)

Not too long back, I had posted an article on Best Buy’s closing down of 50 selected stores.  In the article I had mentioned how brick and mortar stores such as Best Buy can actually survive the onslaughts of online juggernauts such as Amazon.  Unfortunately, lately I have the feeling that Best Buy might never be able to recover and will find itself to go down the path of failed big box retailers such as Circuit City.  How come?  So far, Best Buy does not show any sign of taking customers away from its main competitors such as Amazon, and so Best Buy’s in store strategies are definitely not working to Best Buy’s advantages.  Meanwhile, personally and recently I had a bad online experience with Best Buy which confirmed my thinking now that Best Buy might never be able to regain the market dominance.

So, the story went like this.  I purchased Witcher 2 Assassins of Kings with Best Buy’s website.  I went for the digital download version.  I thought digital download version would be quicker than just drive to the store and grab a physical copy of the game.  I was wrong!  After the purchased of the digital version of Witcher 2 Assassins of Kings, I waited for at least forty five minutes to one hour more (something like that) before I received a confirmation email that contained the instruction and detail of game download.  Unfortunately, Best Buy wanted you to download Best Buy PC App first before you could download whatever digital contents you bought with Best Buy.  So I went ahead and downloaded Best Buy PC App, and I found out the app refused my login credential even though I had log into Best Buy account using the browser just fine, using the same credential of course.  I called up Best Buy for help but got redirected couple times before someone was able to help me solve my problem.  So, I thought finally everything would be smooth sailing!  Unfortunately, I found out that through Best Buy PC App, the download of the game was way too slow.  Sure, the game was huge in size, around 13 GB, but I had downloaded many things around this size so many times faster than the download speed that I got from Best Buy PC App.

My Internet connection was and still is capable of downloading stuffs up to 24 Mb/s, but my download with Best Buy PC App felt like the speed was lurking below 5 Mb/s!  I wasn’t downloading anything else at the time!  The download with Best Buy should not have any competition, therefore it should be able to download much much faster.  It wasn’t the case as you already knew!

The moral of the story was that Best Buy’s online capability is so limited that it hurts just to buy stuffs from Best Buy’s online presence (i.e., website).  The idea of downloading digital contents from Best Buy is to save time from driving to a store — an illusion of instant gratification.  Perhaps, I think in certain scenarios even this notion might not be so true when one does the math, to be exact.  (What if you live so near to a Best Buy that you can just walk to it?  So driving to the store might get you the game faster than downloading a really huge game over the Internet, right?)  Unfortunately, Best Buy’s online presence is too slow to deliver its digital contents, therefore Best Buy’s online competitors may not have a hard time in pulling certain customers away from Best Buy.  Don’t Best Buy know that their online customers might also be their brick and mortar customers?  When a brand is as huge as Best Buy fails to beef up its online presence, it tells the customers that Best Buy brand isn’t a serious brand anymore.  The feeling of Best Buy isn’t serious enough might translate into something much worse for Best Buy brand, because Best Buy isn’t the only brand in town that can deliver the goods.  So, I think Best Buy needs to beef up its online presence quick and they have to do it right or else time is running out for Best Buy, I think!

In summary, I really want to see Best Buy and other brick and mortar stores survive and thrive, because these stores allow me to experience an illusion of instant gratification — as in driving to a store and grab something quick.  Nonetheless, when these stores fail to please customers on their premises, their only chance might be all about their online presences (another potential for delivering an illusion of instant gratification).  If these brick and mortar stores have weak online presences, in general isn’t this means that these stores are deliberately delivering a slow death to their brands?  It won’t be a good thing for customers when brick and mortar stores go away, because waiting for one day delivery is still one day waiting.  Sometimes, more days of waiting for a delivery can happen at chances.  So, I really want to see Best Buy and similar brick and mortar stores shape themselves up, quick and fast!

Best Buy Is Closing Down 50 Selected Stores, Is This A Sign Which Indicates The End Of Brick And Mortar Stores As Online Stores Take Supremacy?

So, you have heard Best Buy is closing 50 selected stores, but do you wonder why?  Best Buy is the behemoth of brick and mortar electronic stores, and it’s a surprise for people to hear Best Buy is closing down 50 selected stores.  Some people think when Best Buy is frantic over losing profitability to online stores and have to reorganize their business model and structure, it’s a telltale sign of the end of brick and mortar stores in general.  I think it’s quite the opposite!  No, I’m not meaning that Best Buy will be OK or not OK, because I don’t know the future!  What I do know is that brick and mortar stores have some advantages over online stores, but some brick and mortar stores are just so underestimating the online competitors or shooting themselves in the foot.

What advantages of brick and mortar stores have over online stores?  Let me mention few examples.  The first example is that brick and mortar stores can sell the products to their customers right away, because the customers don’t have to wait for their products to be shipped to them however many days later.  This is a very important point!  When people want something, they want it quick!  They want to have that wish of theirs to be granted quick, because one more day to wait is one more day to dream about something they want so bad.  When brick and mortar stores fail to cut prices of their products low enough or provide services that are attractive enough, the incentive isn’t there and so the customers might as well measure the pain between waiting for a product online to be shipped or dealing with the headaches of shopping in brick and mortar stores.  I think the main point is to make the advantages of shopping with brick and mortar stores stand out like an oasis in a desert.

Have you heard how postal service might want to save cost by cutting back a day or two for delivering mails and physical packages?  You see, ordering online products can be expensive if the postal service gets less efficient and practical, because the private delivery services can then raise prices as there is one less competitor in the market (i.e., the government).  This is why I think it’s bad idea for postal service to go out of business, but I’ve digressed.  Anyway, brick and mortar stores have the advantage of allowing people to see that they don’t have to deal with the headaches of shipping.  When selling products in brick and mortar stores, the shipping should not even be considered as the part of the business model unless the brick and mortar stores carry products in huge sizes (i.e., that cannot be hauled away by customers’ vehicles).  When shipping has to be included in the brick and mortar business model, the shipping has to be less painful than how customers have to deal with online stores’ delivery services.

Brick and mortar stores have the advantage of allowing the customers just to walk in and return/switch products as long the products aren’t being used past however many days, according to a product return policy.  Online stores’ do allow people to return products, but the wait between the shippings is just not so enticing!  Whenever a business model has a delay variable in it, there is less incentive for the customers to be attracted to such business model.  I think as long brick and mortar stores write good product return policy (i.e., within reasons for both customers and the business), I can see the customers prefer to shop with brick and mortar stores since they can return or switch the products within couple hours.  I don’t think online stores can do that!

Brick and mortar stores should concentrate on providing excellent services.  When I talk about excellent services, I mean the display of the products, the customer service, and the whole nine yard.  You see, online stores only have digital pictures and reviews and testimonies to boost the trust of certain products, but brick and mortar stores have the direct connection to their customers.  It’s befuddled me to see a direct connection to the customers is losing out to something less direct such as digital images and unknown reviews/testimonies.  Sure, popular online stores have the well known brand to back their products, but popular brand names can only back the products so far.  One example of the resiliency of popular brand names is the trust of delivering the products to customers fast and safe, but I don’t think the resiliency of popular brand names can guarantee that the customers will be 100% satisfactory with the products they purchase through online stores.  A direct connection with the customers through brick and mortar stores is instantaneous, therefore the customer service representatives can help solve the customers’ problems right in the stores.  When the customer service representatives fail to help the customers in the stores on a constant basis, how do you expect to have the brick and mortar business that is capable in competing against the super efficient online stores?

Brick and mortar stores can become the showrooms for online stores when prices of the products within the stores are pricing at unreasonable prices!  When the prices of the products are just a tad more expensive than online stores’ products, I think the customers rather buy their products through brick and mortar stores right away since they don’t have to wait for the products to be shipped.  Some popular online stores ship their products super fast, but the customers might just want to carry the products home and try the products out in an hour or two later.  This is why I think brick and mortar stores have to track the prices of online stores so they can price their products competitively.

I don’t go to business school, and yet I’m able to provide few pointers to brick and mortar stores.  How come?  It’s all about common sense I think.  Not to brag, but I think any customer can come up with the same pointers as I had.  Of course, I might have missed many more pointers, but I don’t intent to sit and think so hard on this matter (i.e., I’m not running a brick and mortar store).  In fact, I just want to prove how easy it’s for a customer like me to raise a few pointers in regarding to how to improve brick and mortar stores!  In the end, I think brick and mortar stores can compete against online stores if they do it right!  Plus, brick and mortar stores can also have online presences easily since creating online stores isn’t too hard or expensive nowadays.  What’s better to have an excellent operation going on through brick and mortar stores and then providing even more capable online presence?  That’s a killer combo I think!