Sears Selling Land's End

Discussion in 'Classic Menswear' started by Millerp, Mar 16, 2005.

  1. esquire.

    esquire. Senior member

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    I think that everybody is forgetting that Sears also bought Land's End to gain a better understanding of how to use the internet as another channel distribution. If Sears was able to do that, then it wasn't a total loss.

    From what I understand, Sears never promoted Land's End effectively in their stores. The merchandaise was always scattered and hidden. And, the two brands had different customer bases that didn't overlap. But, I still think that the Sears/Kmart combo could have had a place for Land's End and turned things around. But, I doubt it since it seems the CEO is intent on cutting corners and using them as a cash cow.

    quill,
    I don't know understand what you have to fear since you have the anonymity of the internet.
     
  2. quill

    quill Senior member

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    Thanks for the note of confidence, esquire. But I think we all know that anonymity and internet are no longer always mutually exclusive of each other. You may well be right --and I hope you are -- but I'd rather be safe than sorry. That's all. Personally, I think that Sears' chairman Alan Lacey has, during his tenure, done nothing of value for Sears, when you look at their flat performance over the last three to four years. So it came as no suprise to me that he/Sears never did anything of note with LE. And bear in mind that even though the public saw a "blend" of companies during the Sears/LE buyout, the overall sentiment of those working on a daily basis at LE was never really fully disclosed to the public (which is to be expected). I for one have always believed it was a mistake, given customer demographics. I mean, come on, it's Basic Marketing 101. The people who really benefited from the deal (and will do so again with the K-Mart/Sears merger)? Only the top echelon, who stand to make vast fortunes in stocks and other perks. So it's a game of high rollers, despite and in spite of the outcome for the public.
     
  3. faustian bargain

    faustian bargain Senior member

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    how did LE come to be bought by sears in the first place? were they in trouble financially? i always thought lands' end had their mail-order system down pat - it doesn't seem logical that they would necessarily need to expand into a B&M presence. (unless, like i asked, they were in trouble financially and needed more market exposure.)
     
  4. quill

    quill Senior member

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    I don't know that I have a definitive answer for you, faustian bargain. It just "happened" without us knowing it (believe it or not). So it was obviously something that had been in the works through "upper" channels. There were supposedly some goals in both regards (better apparel presence for Sears, more retail exposure for LE), but this wouldn't be the first time in brand history where the obvious flaws and outcomes of decisions have been made by those who supposedly have "more experience and business savvy." That obviously doesn't hold water. Or sales revenue. Editing to include this Motley Fool link: http://www.fool.com/News/mft/2005/mft05031821.htm
     
  5. esquire.

    esquire. Senior member

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    LE had been for years talking with Sears about a possible merger. Their growth had plateaued, and they needed a new channel distribution to increase sales and recognition. Not everybody has heard of LE or willing to buy clothes without trying them on in a store.

    I still don't think it was a bad move for both sides. Just because it didn't work out doesn't mean it was doomed from the beginning.

    LE still needs to hook up with a retailer with deep pockets and distribution. Ideally, it would be better if it could expand via its own network of stores, where it could control its customer service and quality. That was one of the fatal flaws with selling LE within Sears. LE had no control over the Sears staff and customer service. It would have worked better if it had sold as a boutique within Sears. But, realistically, there were external market forces that would have hurt LE regardless of it hooking up with Sears.

    I don't think LE was necessairly a bad fit with Sears. Look at Martha Stewart collection in KMart. Sometimes a collection like that can be much better than your other merchandaise, and will help drive in a new set of customers to your stores. Sears needs to get stronger in apparel to be able to compete. If not LE, then what? Sears cannot soley rely only on its applicanes and hardware since this is what Home Depot and Lowes are also strong at.

    quill,
    We're discussing some of these same issuses in current events, in a thread about Kmart's stock price. It would be interesting to get an insider's perspective.
     
  6. quill

    quill Senior member

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    esquire, you make some wonderfully astute and very intelligent observations. There is much to comment on, and this discussion could go into much greater depth than anyone here would really care to listen to. So let me see if I can be succinct. I guess my feeling is that yes, I agree, it could have worked. But there has to be a "brand buy in" from the beginning. Lands' End built itself on its customer service (bingo. THAT ain't gonna happen at Sears). Land's End built itself on in-depth product knowledge, advantages and copy (bingo. again; another strike against Sears). And Lands' End built itself on key products -- BD Oxfords, polos, chinos (bingo #3. Sears has those products; why would a customer want to buy Lands' End's version for twice the price? Well, without persuasion, good customer service, and stylized presentation, they won't. And haven't. In addition, the customer demographic I refered to is different enough in both house files that neither Lands' End nor Sears has benefited from the deal. As for product mix, I can't speak to why Martha Stewart works in K-Mart. I suspect that her products are so radically different in quality than what K-Mart offered, that the contrast somehow actually works in sales revenue. Whereas with Sears, they offer several parity lines of apparel that are close enough in price (though less expensive) to Lands' End's as to make the price differences "competitively apparent," and therefore self-defeating to Lands' End's presence. That's an uneducated guess. And all things being equal, yes, who knows what forces would make/break Lands' End? Our former CEO, Dave Dyer, now runs Tommy Hilfiger. It's an incestuous business in all directions. esquire, it's very engaging to hear your thoughts, and I appreciate your taking the time to share them. If my own current events allow me time to get over to Current Events, I'll see if there's anything of value I can add. Thanks for the invite -- and thanks for your compelling perspective. [​IMG]
     
  7. esquire.

    esquire. Senior member

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    quill,

    Actually, I'm a geek and would like to hear you go into greater depth about these issuses. We probably should move this discussion to that thread about Kmart's stock price in current events.

    Obviously, since you work for LE, you have a better understanding of the company and what would work or wouldn't work. In fact, I don't even know too much about LE. I've never bought it, and only recently heard about it from this forum.

    But, to address the issues you listed about why it wouldn't work, what about this scenario:

    Sears doesn't touch the catalog. Even if that occured, you would have had sales from this source go down anyways due to canabalization from store sales.

    And, what if Sears had bundled all the best sellers of LE together, and sold them as if it was a boutique in their department, separate from the other clothes. I'm thinking of the big department stores, and how they have Ralph Lauren section, etc... Also, you use a seperate employee work exclusively for this LE boutique, separate from the rest of the Sears' employees, who knew all about LE merchendaise. And, give this LE boutique a prominent area, instead of being hidden. Maybe even as close as possible to Sears' hardware. I would have rolled out LE only in areas where you knew it had a following, using data you got from sales via catalog and internet.

    The reason I mention hardware is cause I don't believe that Sears' and LE markets don't necessairly match well. I would imagine that the person who buys Sears' tools is a middleaged, middle class white person. That also seems to be the person who would buy from LE. The problem for Sears is that the person who buys their hardware doesn't then buy clothes from Sears. When I think of Craftsmen and Kenmore, I think of high quality but still affordable brands. LE clothing would seem to be the equivalent of this for apparel.

    And, imagine the cross promotional selling oppurtunities once Sears started selling Martha Stewart's colletcion. It seems that we're talking about the same market.

    I just think that Sears is blowing a big oppurtunity by selling LE like this. Once it merges with Kmart, its going to have all these exclusive proprietary brands. They could have used it as a linchpin to differentiate themselves as the source for solid, quality things at a resonable price: Kenmore, Craftsman, Martha Stewart, Land's End, etc...
     
  8. quill

    quill Senior member

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    Thanks again, esquire. And again, very perceptive. Your "outside" assumptions are very keen. I'd just add that while the guy buying Sears' appliances may be similar in some ways to the guy buying Lands' End apparel, he is also different in very crucial ways. Chief among those being buying patterns. That's the demographic that matters most, and in that regard, the two demographics are markedly different. Having said that, all of your ideas are bang-on and intelligent. But you don't work for Sears' administration. And that's the problem. Sears doesn't have, under Lacey, an imaginative bone in their corporate body. They need to offload him and get people like yourself in positions of authority. I agree with you: in the right hands, the potential is -- and was -- enormous. But they've blown a great opportunity. That is, unless Eddie Lampert does some of what you've proposed. Could happen, I suppose. But to corral the brands you mention and make the most of the whole package, you need a marketer with fire and vision. And industry analysis would indicate that currently, such person is persona non grata. Bottom line: some of the things you've touched on have already been proposed over the last few years. But nothing has been done with any of them. And there isn't much to indicate that this will change. I think everyone realizes that Sears COULD have turned the tide to their advantage, but most retail industry reports are woefully disappointed with their performance. So when it comes to buyers, the question now is: "Next?"
     
  9. esquire.

    esquire. Senior member

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    quill,

    I'm curious as to what you think the differences in buying pattern are between Sear's hardware customers and LE customers? Perhaps, merging Sears hardware and Circuit City electronics might be a better fit, and just spin off apparel?

    If you know of any openings.... If you ever see Lambert in person...

    I think most analysts think that Lambert is more interested in using his Kmart/Sears holdings as a cash cow by selling them piece by piece for the value of the real estate.

    I wonder about the true value of the real estate, and if people are overestimating its value. From what I understand, Kmart leases its stores. Can they then sell these leases to another company? Already, there seems to be too many companies using a similar strategy, so you're going to have a glut of real estate on the market which is going to drive down prices. Its too bad. It seems a lot of people will be laid off to make only a few rich people even richer.

    At some point, Lambert will have to focus on the retail end if only to maximize the value of the real estate. You're not going to sell off a store for as much as you can get if it and the surronding stores are doing poorly. But, I have to question if Sears will ever be able to turn itself around when Home Depot and Lowes have cannabalized its greatest assests.

    I read that Sears is thinking of now selling groceries, which my gut tells me won't really work.
     
  10. quill

    quill Senior member

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    esquire,

    I'll send you a PM, since our conversation seems to have become a dialogue rather than a forum of public interest.

    Catch ya' soon.
     
  11. imageWIS

    imageWIS Senior member

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    Not really, I'm interested in further reading (of course I'm a business major, so other members miles may vary).

    Jon.
     
  12. AskAndyAboutClothes

    AskAndyAboutClothes Senior member

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    Andrew V:

    That Lands' thing was a typo made in the original catalogue printing. They just decided to keep it.

    Andy
     
  13. esquire.

    esquire. Senior member

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    quill,

    We could always move this discussion to current events if you think this is getting too business orientated.

    What are your thoughts of LE opening its own set of stores assuming it could get a investor with deep enough pockets? Would it be able to compete with J Crew's stores? I don't know much about them, except they're both preppy. Are the prices and quality similar?

    I looked it up, and my suspicions were verified. Sears used Land's End online experience to help its own website. From what I can tell, Sear's site is pretty decent.
     
  14. quill

    quill Senior member

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    esquire,

    I don't know if I'll answer all your questions, but as for the buying patterns, it may seem on the surface that because a Sears customer has bought higher-ticket items like appliances, they would also be in the same bracket for buying Lands' End apparel.

    Such is not the case.

    The demographics are different in enough in economic brackets, education levels, and spending patterns (clothing, entertainment, hobbies, recency and frequency, etc.) as to have not paid off for either Lands' End or Sears. Perhaps ImageWIS or someone better versed in Marketing can explain it better than I.

    As far as Lands' End's quality vs. J. Crew (whose parent, Texas Pacific, expressed interest in acquiring Lands' End), I'd rather not comment on that. That's for members of the forum to chime in on. Everybody has their opinions, and I have mine, but I'm sure those opinions will vary considerably based on experience.

    I don't know enough about retail to predict intelligently the feasability of Lands' End stores. I know that certain LE inlets and outlets have outstanding square foot return on their real estate, but beyond that I couldn't say.

    Finally, yes, Sears grabbed up Bill Bass as fast as they could. He was our Internet guru, pretty much made LE's site what it was, and Sears knew it. Bass was featured on the cover of Inernet Retailer only a few weeks before Lands' End fired some 400+ people, and Bass went over to Sears full time. Kudos to Sears for using him, and shame on Lands' End for not keeping quality people.
     
  15. Andrew V.

    Andrew V. Senior member

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    While one could argue that Lands' End and J. Crew are equally preppy, there are still big differences in their style. I'm not sure how well I can describe the difference, but somehow Lands' End style can be a little frumpy-preppy and stuck in the 1990s - it reminds me of back when I mainly shopped there and at Eddie Bauer. I prefer J. Crew style even though Lands' End's quality is probably better in general.
     

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