The Chairman and CEO of Sears has been pushing his company to offer more higher-end merchandise through its Marketplace section of its website.  The Marketplace on Sears’ website features goods sold by third party vendors.  On Marketplace, browsers can search for Chanel bags, Rolex watches, Balenciaga sunglasses, Zac Posen dresses or Pour La Victorie boots.

This is a contrast from the washing machines, appliances, and tools that are typical of the downscale department store.  The Marketplace initiative is an effort by Sears to revamp its image and become more “hip.”  Sears is also investing more in e-commerce in order to position itself better with other online marketplaces.  However, stores still account for 97% of the sales for Sears, and retail analysts suggest the transformation should begin within the stores.

Many customers are confused by the breadth of high-end items on the Sears website.  Some are even questioning the authenticity of the merchandise because of the association with the department store.  But Sears is working to change that image.  The company has been actively soliciting highly regarded online sellers to use its Marketplace function as their online storefronts.  Sears collects a commission from the sales as well as a $39.99 monthly fee.  It is the third-largest online vendor market based on number of visits.  In June, Amazon had 98 million unique visitors, eBay had 69 million, and Sears had 18 million.  Additionally, when consumers search online for merchandise, results for both Amazon and Sears turn up fairly high in the rankings.  However, Amazon still holds an advantage on price.

Sears is trying to deliver a “differentiated” experience to its customers by creating a Shop Your Way loyalty program that integrates its online platforms with its brick-and-mortar stores.  However, Sears revenue has declined steadily over the past few years; the company lost more than $4 billion in revenue in 2011 and 2012 combined.  Analysts believe that Marketplace and Web initiatives won’t help turn Sears around unless it focuses on its brick-and-mortar stores.

Discussion Question:

Do you believe Sears new merchandising strategy is a sound one?  Why or why not?

 

SOURCE: Dana Mattioli and Suzanne Kapner, Wall Street Journal, July 21, 2013