The 'Great' debate

Three years ago, I happened to be standing within earshot of The Great Indoors' then-president Bob Roberts. He was approached by one of the industry's top suppliers, who grabbed his hand and said: "I hope you grow. I really need you to grow."

Last week, Sears announced that it would in fact shrink The Great Indoors, albeit just a little. Sears plans to fold three of the chain's 22 stores and will convert a fourth unit into an outlet. In the meantime, it plans to retrofit the remaining stores in hopes they will improve their flabby profitability.

Shedding a few doors isn't necessarily a calamity, and the good news is that Sears is at least making some moves toward fixing the format — which is equally beloved by the vendors that do business there and the consumers fortunate enough to live in its few markets.

Nor did the news come as a complete surprise. Sears put the brakes on rapid expansion plans for The Great Indoors back in 2001. A new prototype set to launch earlier this year was pushed onto the back burner in the spring. Then last month Sears informed the Securities and Exchange Commission that is was considering the chain's fate, with an eye to restructuring "and/or" closing it down.

That piece of news set off the alarm bells — particularly in the era of uber-investor Ed Lampert, the hedge-fund honcho who holds a 10 percent stake in Sears. A recent Business Week piece questioned whether Lampert would divert cash from the sell-off of Sears' credit card division into a big stock repurchase scheme rather than reinvesting in the retail business, adding that Lampert had no great love for the The Great Indoors.

Which doesn't necessarily mean all is lost for The Great Indoors.

Remember that Home Depot spent five years tweaking the Expo Design Center concept before rolling it out, and during that laboratory period Expo operated no more than five stores. Today it operates 58 units, a size that in some circles still constitutes a nice little piece of business.

The Great Indoors got a later start but began pumping out new units at a faster pace. Granted, throwing open 22 doors over a five-year period doesn't exactly qualify as an explosive rollout. But Sears was frank from the beginning about problems with the profitability formula for The Great Indoors, whose units now average about $30 million annually in sales.

From that standpoint, it's hard to argue with Sears' plan to fix the basic model. After all, it hardly needs to roll out more white elephants. In the meantime, fans of The Great Indoors will have to cross their fingers and hope that Sears gives the project its due.