Sears also may expand bedding's reach
By Carole Sloan -- Furniture Today, October 28, 2001
CHICAGO — Sears aims to beef up its bedding sales as it restructures its full-line stores and trims its work force over the next three years, the company told analysts last week.
Alan Lacy, chairman and chief executive officer of the Hoffman Estates, Ill.-based retail giant, said that mattresses drove much of the sales gains in Sears' home fashions segment in the third quarter.
He said Sears will make a number of strategic changes to revitalize its more than 860 full-line stores, with a goal of raising operating profit by 50% through both sales growth and cost reduction. Steps include expanding The Great Indoors home decorating-home improvement division, as well as online, catalog and specialty merchandise sales and credit services.
In June, Sears rolled out bedding to almost 400 of its full-line stores, a move that was an almost immediate success and grew beyond plan, company officials said. Bedding now is in 430 stores.
Mattress offerings will be expanded, the company said last week. Some 50 stores are due for remodels next year, and these and other stores could have bedding added. Specific store numbers haven't been determined.
Sears bedding brands include Sealy, Serta and Stearns & Foster as well as the Sealy-made Sears-O-Pedic.
In another move, Sears plans to eliminate salaried salespeople in most departments in favor of hourly help at new central cash register islands. However, bedding, RTA furniture, major appliances and electronics will have "consultive," or commissioned, salespeople.
"We are moving away from a traditional department store business model," Lacy said. He said the company will become "more competitive with off-mall competition and more differentiated from mall-based competition."
Turning to The Great Indoors, which has been racking up significant comp-store sales increases, Lacy said the company will slow the expansion pace from 15 new stores this year to 13, with two deferred until 2002. Seven new Great Indoors are now slated to open next year.
"Customers love The Great Indoors," Lacy said. "The dilemma is that it works extremely well where there is an affluent customer. While we think we have a broad range of moderate product, we have to … increase its mass market appeal, improve installation capabilities and processes and reduce investment and operating expense structure."
Overall, he said Sears will emphasize its core categories, including home appliances and home fashions, and attempt to streamline and improve its apparel offering. It will move to more "better" products throughout the store, moving up from the "good" but not tipping into "best."
As part of the profit-building plan, Lacy said the company will eliminate 4,900 positions or 22% of the work force, including 1,300 at its headquarters and satellite offices by 2003, and 3,600 salaried positions from stores and the field organization over the next 12 months. The latter will include in-store managers for specific product areas, which will give store managers greater responsibility.
In an operational change, Gus Pagonis, executive vice president, logistics, has become executive vice president, chain management, with responsibility to develop effective supply chain management.
| Lacy |
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