From the Department of Redundancy Department, it’s time to say a little something about Sears closing more stores…again. This week they announced another 40 would go away, which will leave them with only about 500 in total. This is mind-boggling when you realize at one time the company had more than 3,500 stores and as recently as this past February there were still 1,000 locations under the Sears and Kmart banners still open for business.
Why does J.C. Penney keep rolling out all these lame incremental merchandising programs when what it really needs is a top-to-bottom merchandising reset? Its latest intro is from yet another B level celeb — Ayesha Curry — for a home program. Wasn’t Lionel Richie enough?
This retailer has to come up with a big, compelling story to tell its increasingly turned off — and diminishing — customer base. And it needs to do it quickly.
What happens when you put all your muscle behind a plan…and that plan isn’t the right one? I’m not saying that’s what’s going on at Bed Bath & Beyond but the troubled retailer has come up with a new marketplace positioning strategy that I have my doubts about. Maybe it will ultimately work…but maybe it’s what we call around here Stupid. Guess we’ll find out. Here’s my take on Forbes.com.
What in the world becomes of J.C. Penney? And what does the ongoing mess that Sears is making mean for the beleaguered retailer? All of this could mean some good things for Penney…but then again it might mean just the opposite. The correct answer, as I surmise, in this Forbes.com posting is probably a little bit of both. We’ll find out soon enough if they are smart…or whether this becomes another example of Stupid Retailing.
Shed some tears, but mostly you should have genuine fears for what happens to Sears next. The pain and suffering is far from over.
First off, Eddie Lampert is far from removed from the situation. As the largest creditor, he stands to be in a position to convert his debt into equity when that mechanism invariably rears its ugly little head during the bankruptcy process. He could end up owning even more of the company than he did before. And since much of the most valuable former assets of the retailer — the best real estate and other assorted treasures — are owned by Lampert under other corporate entities he remains deeply involved in what happens next.
And if you thought he did a rotten job managing Sears before all of this, just watch what he’s capable of doing next. Employees, suppliers and shareholders should be scared…very scared. Another case of Stupid Business laws and practices.
Our friend Fast Eddie Lampert has signaled game over for Sears. By bringing in a bankruptcy advisor, reportedly stopping paying vendors and indicating he is not going to pay the debt bill coming due next week it appears the Sears saga will come to its natural conclusion probably as early as next week.
Of course, that’s not exactly true. Lampert owns or has the rights to most of the best assets of Sears and no doubt has a plan to exploit them even further after any bankruptcy filing. The man has been ten steps ahead of everybody else on this entire thing and there’s no reason to believe he hasn’t thought this through to the next steps.
In the meantime, I did this piece on Forbes.com on the plight shared by Sears and Penney and the common denominator for the slide of both retailers. Spoiler alert: Gordon Gekko said it best.
For retailers — for generations — a surefire way to grow your business was to buy up a competitor and add their stores to yours. The number of times this happened — particularly during the go-go days of the 90s and early 2000s is staggering.
But what was once smart is now just plain dumb. It’s a lesson the folks at Mattress Firm learned the hard way. For much of the past decade they had been buying up the competition and rolling up a pretty impressive operation. The crowning achievement was buying Sleepy’s in 2016, taking the company’s store count to 3,500 units. That’s when the strategy hit the fan…so to speak. Turns out that 3,500 often overlapping, sometimes poorly situated and generally unimpressive stores was not such a good thing.
Mattress Firm filed for bankruptcy this week and immediately announced it was closing 700 doors. Don’t be surprised if that number climbs before the bankruptcy process is said and done.
Mattress Firm was basing its business model on an out-of-date premise and it is now paying the price. What else would you call it but Stupid Real Estate Strategy.