CEOs Weigh in on How to Fix a Troubled Company

Chief Executive talked with a handful of people—CEOs, academics and consultants—about what they would do to fix these companies, but they were hard-pressed to come up with ways to straighten out the mightily struggling retailer that owns both the Sears and Kmart chains.

Hedge-fund manager and Sears CEO Edward Lampert has been running the company into the ground for a long time with few indications of a turnaround. Revenues are falling and same-store sales remain weak as Sears has been trying to streamline its operations by shedding businesses and closing locations while moving to a model focused on members rather than stores.

Lampert’s latest merchandising strategy is to shift focus from selling TV sets and other things individually and instead pursue a “connected living” approach for meeting all the needs of the customer, by selling appliances, fitness equipment, electronics and auto services. He also aims to overhaul Sears’ approach to apparel sales yet again after another failure in penetrating this soft goods market.

Kurt Jetta, CEO of the TABS consumer metrics company, believes that Sears’ emphasis on its “Shop Your Way” loyalty program—which accounted for 74 percent of sales during the fiscal first quarter, up from 68 percent a year earlier—is only “doubling down on a fatally flawed program.”

“Sears’ challenge is to get new people, marginal people, into their stores,” Jetta told Chief Executive. “When you put out offers and deals that focus only on what is a really limited base of regular customers, you’re basically creating an exclusionary program— when you should be doing everything possible to break down barriers to new people.”

Plus, Jetta said, Sears “isn’t in a strong enough position” to focus on brand loyalty these days. “There’s still a perception issue: Do people really want to even claim that they’re a ‘regular customer’ of Sears or Kmart? It’s presumptuous at this point.”’

Meanwhile, Seth Goldman, CEO of Honest Tea, a unit of Coca-Cola, says that if he were in Lampert’s shoes, he would try to “find a way to change the conversation” around Sears. One way to do that, he suggests, is to diversify into new businesses that are related to the retailer’s historical strengths and touch points, such as lawnscaping. Sears has a strong traditional brand in that arena with Craftsman lawn mowers and related equipment. Goldman suggests taking that equity in entirely new and even radical directions to attempt to revive Sears’s business in big chunks at a time.

“The point,” he says, “is that there are ways Sears could create new categories of services and become leaders in them, but based on their traditional strengths. They’ve got to try some [new] things.”

Watch for a more in-depth feature on this topic in the September/October issue of Chief Executive magazine.