1. IMC Case Study:
Saving Sears

2. Sears: Current Situation
• Sears’ stock has dropped
from $193 a share in 2007 to
about $37 today.
• Sears Chairman Edward S.
Lampert has come under
increasing scrutiny for
raising prices, cutting costs,
mismanaging merger with
Kmart, and alienating
customers.

3. Sears: Current Situation
• Critics: Sears is dumping
high end products in older
Kmart stores that haven’t
been modernized.
• Marketing budgets have been
cut.
• Continuous drop in same
store sales since 2008.
• Sears Grand, a strategy to
compete with smaller strip
malls, has failed.

4. Sears: Current Situation

5. Sears: Current Situation
• The changes have
alienated Martha Stewart,
who sells a line of home
goods at Kmart.
• She is now selling a
line of furniture at
Macy’s, a Sears
competitor.

6. Sears: Legacy Perceptions
• A legacy of
weekly sales
has conditioned
customers to
shop only when
Sears has sales.
• In retailing,
perception is
reality.

7. Sears: The Fallout
“Customers are avoiding Sears in
droves. Indeed, at many Sears
stores, clerks at times seem to
outnumber shoppers.”
The New York Times, Jan. 27, 2008

8. Sears: The Fallout
“We just can’t avoid the cliché ‘rearranging the
deck chairs on the Titanic’ when considering
the proposed new operating structure for
Sears. The goal of making the merged Kmart
and Sears into a retailing success has
become increasingly less achievable, as
same-store sales plunge and excuses
abound.”
Carol Levenson, credit analyst at Gimme Credit,
an independent research firm in Chicago

9. CS Analyst Calls Sears Worth Only $20
“Credit Suisse’s Gary Balter has had an
Underperform rating out for Sears for a while
now. After the company’s poor earnings report,
Balter also has a report maintaining his $20
price target. If you want to know how positive or
negative the report is, it is titled ‘Running Out of
Fingers to Stop the Leaking.’”
Sears: The Fallout

10. What Sears is Doing
• Management believes its
strategy will result in a stronger,
more profitable organization
long-term.
• However, it recognizes it will
need to make changes to deal
with an uncertain retail market
and counter perceptions that
management is out of touch.
• Sears will close an additional
125 unprofitable stores and
remodel all remaining Kmart
stories in a multi-billion dollar
investment strategy.

11. What Sears is Doing
• Continue to upgrade product lines and offer greater values than
competitors.
• Adopt a new pricing strategy that matches all legitimate competitor
prices.
- If you can find a lower price, we’ll match it.
- Aggressively compete on price to draw customers away from
Target, Best Buy, Home Depot, and Lowes (like Geico).
- Continue weekly sales on select items (mainly to draw people into
the stores).

12. What Sears Needs From Us
• An integrated marketing communications
campaign that aggressively and
proactively repositions Sears as a vibrant
retailer that has the will to reinvent itself.

13. What Sears Needs From Us
• It should reach consumers/prospects on a
personal level and rebuild the relationship
that has been shattered across the country
(particularly in Middle America).

14. Elements of Our Campaign
• The campaign should
feature consistent
messaging to
customers/prospects
using:
– Advertising (including a
campaign theme)
– Promotions (to get
shoppers into stores)
– PR, including:
• External/Media,
including Social Media
• Internal/Employees
• Social Media

15. Campaign Components
Advertising
• Campaign will generate
awareness of how Sears is
changing, it’s new pricing
structure, and benefits of
shopping at Sears.
• A memorable campaign
theme.
• Ad strategy and concepts
for campaign on:
– TV
– Radio
– Print
– Electronic
– Social Media

16. Campaign Components
Promotions
• Develop spring promotional
campaign that complements
advertising effort by providing
short term incentives for
consumers and prospects to
shop at Sears.
• Campaign can feature:
– Coupons
– Discounts
– Trips
– Frequent flier mileage
– Joint promotion with selected
partners (Hilton Hotels, rental car
agencies, NASCAR, etc.)

17. Campaign Components
External/Media Relations

18. Campaign Components
External/Media Relations
• Media campaign will aggressively
position Sears new strategy/pricing
structure in commercial media and
retail trade press.
– Primary focus: competitive pricing,
great value, products.
– Place Sears executives in media,
broadcast talk shows, opinion
forums, important electronic sites.
– Secure interviews for Lampert in
high profile local broadcast forums
(morning talk shows, early news
programs, etc.)
– Makes better use of Sears’ external
web site to showcase key
messages/positions.

19. Campaign Components
Internal Communications
• Develop proactive internal
campaign using all available
media (electronic/employee
intranet, print, face-to-face,
video messaging) that:
– Galvanizes employees behind
company’s new direction.
– Enhances understanding of
need to improve customer
service and leverages them
as public ambassadors.
– Informs employees about
progress/problems before
general public.

20. Goals/What We Hope to Achieve
• Begin the process of re-branding the company by:
– Reversing public perception that Sears is a sinking ship
– A retailer that’s out of touch
– Can’t adapt and compete in today’s super-competitive
retail marketplace.

21. What The Campaign Will Do
• Portray Sears as a company that is:
– Fighting back
– Aggressively addressing the structural,
organizational and competitive challenges
that customers and Wall Street are
reacting to.
– In touch with its customers, anticipating
future needs, and providing products that
they want.
– Using every available means to get its
message across to general public.

22. Immediate Objectives
• Stop media hemorrhaging.
• Portray Sears as an organization that
“gets it” when it comes to customer
service.
• Focus public attention on Sears’ new
direction.
• Long Term: No other retailer does
more for its customers than Sears.