call Vanessa
Written
It was all over the news this
week: Kmart Holdings purchased Sears, Roebuck & Company creating a new
company called Sears Holdings, based in
It is a marriage of two
similar, but still very different companies. Both retailers have been among the top
ten largest in
Sears is known for its Big Book
catalog, massive mall stores, and its unwavering stance on customer
satisfaction. Kmart is known as the
first discount department store to succeed nationally, for its Blue Light
Specials, and as of late, for its connection to Martha Stewart: lifestyle guru
turned Federal inmate.
But, in another similarity,
neither chain’s recent history has been worth bragging about. Sears has retrenched, sold numerous
divisions, and is muddled and unproductive, despite exclusive, popular brands
and universal name recognition.
Kmart has stumbled as well, closing nearly one-third of its store base
and shedding departments, and seems unable to shake its reputation for cheap
and shoddy merchandise, dirty stores, and poor customer service despite
numerous revival efforts.
Both companies lost their
leadership role in the industry in the 1980s, when specialty retail grew
stronger and more responsive, luxury stores traded down to get more customers
and category-killer retailers like Toys “R” Us and Lowe’s
chipped away at key businesses for both Sears and Kmart. Add to this the increased presence of
Wal-Mart nationally and a general misunderstanding of its core customer by both
retailers and it soon became the worst possible scenario for success.
As a single corporation, the
new Sears Holdings combines over two centuries of retail experience, 3,500
stores and nearly $56 billion in combined sales into the third-largest American
retailer. Iconic brands
But it also merges Sears’
struggle to reach customers increasingly turned off by the enclosed malls where
a majority of its stores are located with Kmart’s inability to remain
relevant to shoppers who now frequent discount peers Target and Wal-Mart. The new company is also saddled with
Kmart’s failing supercenter division and Sears
wavering Great Indoors home improvement chain.
Even with Sears Grand supercenters slowly opening across the country and record
earnings at Kmart since its emergence from bankruptcy, many retail analysts see
this marriage as a brief delay from the liquidation of a massive and profitable
real estate portfolio.
Is there any light at the end
of tunnel? Could there be a white
knight in the distance? Someone who
could lead Sears Holdings to the promised land of relevance and profitability? No one’s saying, but I have a
nomination, and it’s a good one.
Vanessa
Castagna, former chairman and CEO of JCPenney stores, catalog, and Internet.
Castagna, formerly with Wal-Mart during that
retailer’s largest growth period, was hired by Penney’s in 1999 to
help revive a seriously fractured retail empire. Primarily through her leadership, Penney’s
was rescued from near-bankruptcy with more efficient purchasing, fresher
fashions and marketing, and more frequent and relevant promotions. To reach customers fleeing to the
similar Kohl’s chain, Castagna oversaw a move
towards freestanding JCPenney stores in power centers
and new suburbs that lacked the company’s typical mall-based real
estate.
Today, Penney’s has
returned to growth and relevance as a retailer and is poised to give the
recently sputtering Kohl’s a run for the hearts and wallets of
Considering Sears plans to
amplify its off the mall presence over the next few
years and the aforementioned real estate prospects of the combined company, Castagna could be the missing link to help Sears prosper
and grow. Castagna’s
discount store experience plus her knowledge of the inner workings of Wal-Mart
could lead to a leaner, more efficient Kmart organization that can compete with
Wal-Mart on a more level playing field.
Vanessa Castagna
is certainly not the only person capable of saving Sears Holdings. Current Kmart Holdings CEO Edward Lampert has created a strong company from the ruins of
bankruptcy. Current Sears CEO Alan
Lacy has not had a particularly distinguished run, but did oversee the purchase
of specialty retailer Lands’ End, the development of Sears Grand and the
spin-off of the company’s credit card portfolio to Citigroup. But Castagna
has a demonstrated flair for merchandising and reaching middle market consumers
that Lampert and Lacy clearly lack.
What does the future hold for
the combined empire of Sears Holdings?
In the short tem, it seems that Sears will grow its off-the-mall efforts
as Kmart shrinks in scope. There
will be store closings in both divisions, and some layoffs are inevitable. Whether any of this will lead to a
strong concern created from two weak companies that poses
serious competition for Wal-Mart, JCPenney, Target
and the like remains to be seen.
But one thing is for sure:
securing the right leadership for the new Sears Holdings will help things along
considerably. In this
writer’s eye, that leader is a woman with a proven track record of
success: Vanessa Castagna. If she will accept the challenge, I
think that it could be the key in creating a new empire instead of writing a
sad final chapter for two former American retail legends.