Sears looks to reinvent Great Indoors format

Carole Sloan, May 13, 2002

Hoffman Estates, IL — While Sears said its Great Indoors format has been well received by customers, shareholders have been frustrated with inconsistent results, forcing the retailer to refine the format.

The company is definitely moving ahead with The Great Indoors, Alan Lacy, chairman and ceo of Sears, told annual shareholders at their meeting here last week. But, he emphasized, there are a number of issues that need to be resolved before major expansion can go forward.

Key among these are "improvement in costs and profitability and improved customer service and a lower investment cost." Lacy said that the division, now numbering 18 units, "is in its incubation mode." The business will add two more units by yearend, and there is no rollout planned at this point for 2003.

Of the 18 existing units, five opened this year, and the two additional units for '02 will open in Arlington, TX, and Woodbridge, NJ.

Lacy, in November of last year, stated that the rollout of new stores for this business would be slowed to expand the reach of the format, "which requires more mass appeal than it currently is delivering."

A new prototype is expected to be developed by 2003.

Discussing the full-line stores, Lacy said, "Home fashions has tremendous growth potential. We're expanding the square footage and introducing new businesses, including closet shop, home accents and housewares." Mattresses were launched in a rollout last year.

The company is repositioning the full-line stores. "We are not a department store nor a discount store," he emphasized. "We are a broadline merchant with credit and service features."

The focus, Lacy explained, "will be on better product (in a good, better, best lineup), consistent product, an enhancement of customer experience, more effective marketing and a lower cost structure."

Discussing the customer experience issue, Lacy pointed to improving sales help in areas that required better product knowledge, a quick and convenient shopping experience, simplified presentation and consistent and better signage.

An important move for the redefined full-line stores, Lacy added, will be improving promotional efforts — away from too much price promotion but retaining the high/low price structure and emphasizing the Sears brand and proprietary brands.

In organizational moves, Lacy said the full-line stores have moved away from the "traditional organization," putting emphasis on cashiering and replenishment, as well as in-store marketing.

In line with this, Lacy said the company is looking to open a greater number of full-line stores outside shopping malls. In an earlier presentation to the Executives' Club of Chicago, Lacy said expansion in malls is limited because fewer malls are being built. And Sears' mall-based stores face competition from companies such as Wal-Mart and Home Depot, whose sites are often between shoppers' homes and malls. Further details are expected to be released in the fall.

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