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WILL SEARS’S TECHNOLOGY STRATEGY WORK THIS
TIME?

S ears, Roebuck used to be the largest retailer in the United States, with sales represent-
ing 1 to 2 percent of the U.S. gross national product for almost 40 years after World War
II. Since then, Sears has steadily lost ground to discounters such as Walmart and Target
and to competitively priced specialty retailers such as Home Depot and Lowe’s. Even
the merger with Kmart in 2005 to create Sears Holding Company failed to stop the downward
spiral in sales and market share.
Over the years, Sears had invested heavily in information technology. At one time it spent
more on information technology and networking than all other non-computer firms in the
United states except the Boeing Corporation. Sears used its huge customer databases of 60
million past and present Sears credit card holders to target groups such as tool buyers, appliance
buyers, and gardening enthusiasts with special promotions. These efforts did not translate into
competitive advantage because Sears’s cost structure was one of the highest in its industry.
The company has been slow to reduce operating costs, keep pace with current merchan-
dising trends, and remodel its 2,172 stores, many of which are run-down and in undesirable
locations. It is still struggling to find a viable business strategy that will pull it out of its rut.
The Sears company tried to use new technology strategies to revive flagging sales: online
shopping, mobile apps, and an Amazon.com-like marketplace with other vendors for 18 million
products, along with heavy in-store promotions. So far, these efforts have not paid off, and
sales have declined since the 2005 merger. The company posted a loss of $3.1 billion in 2011.
Sears Holdings CEO Lou D’Ambrosio, thinks he has an answer—even more intensive use
of technology and mining of customer data. The expectation is that deeper knowledge of
customer preferences and buying patterns will make promotions, merchandising, and selling
much more effective. Customers will flock to Sears stores because they will be carrying exactly
what they want.
A customer loyalty program called Shop Your Way Rewards promises customers generous
free deals for repeat purchases if they agree to share their personal shopping data with the
company. Sears would not disclose how many customers have signed up for Shop Your Way
Rewards, but loyalty-marketing firm Colloquy estimates around 50 million people are members.
Shoppers who use their smartphones to “check in” to some Sears stores will be greeted
by Sears employees, who find them using the global-positioning systems on their mobile
devices and then direct them
to the flat-panel televisions and
French Connection ankle jeans
they searched for earlier online.
“It’s the equivalent of walking
into a coffee shop and not hav-
ing to say anything as someone
prepares your coffee with just
the right amount of cream and
sugar,” notes Michael Archer of
Kurt Salmon management con-
sultants, who had helped design
Citibank’s American Airlines
loyalty cards.
The data Sears is collecting
are changing how its sales floors
are arranged and how promo-
tions are designed to attract
© OleksiyMaksymenko/Alamy
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