The U.S. retail industry would have preferred to bask in the glow of its own record-breaking Christmas retail sales results for the 2011 holiday season a little longer before getting yanked back to post-holiday reality by the Sears (SHLD) and Kmart store closing announcement. Immediately after the Sears and Kmart store closings were announced, analysts and journalists began concluding that ending an old year and starting a new year with major closings by a major U.S. retailer signals trouble for Sears Holdings (SHLD), trouble for the economy, and a generally unhappy New Year.
All three of those conditions might be true in 2012, but the outlook for the economy, the Sears business, and the New Year are not necessarily related, connected or causative. Considering the behavior and performance of both Sears and Kmart in the past few years, the closing of Sears and Kmart stores is not a surprise, and not an economic indicator. It's an inevitability that just happened to unfold at a time that broke the spell of Christmas retail magic.
Sears has been running Hail Mary marketing plays for at least the past two years. Ever since the Selena-Gomez-Air-Band-Casting-Call-Lands-End-Pack-Pal-Facebook-Campus-Ready-Senior-Day-Christmas-in-July marketing mish mash in July, 2009, it's been hard not to notice the desperation that's apparently been driving Sears leadership decisions and running the Sears and Kmart operations.
The decisions of the Sears leadership team to pimp out their brands, drastically reduce their inventory, and literally give away the store one subsection of real estate at a time wreaks of desperation. That's a vibe that everybody can feel. It's not attractive, it's not particularly fun to be around, and at some point it starts to be a little pathetic. Consciously or unconsciously people don't really like to be associated with pathetic.
Unfortunately my June, 2010 assessment of the Sears identity crisis and its crippling effect on the ability of the Sears retail business to function effectively in a rapidly shifting retail environment still seems to be correct. Sears can only hope that this is a mid-life identity crisis because that would mean that there is at least another 118 years in its future. Sears investors can only hope that Sears leaders figure it all out before another one of the great American retail brands proves that there is no such thing as too-big-to-fail in the U.S. retail industry.
Closing 120 stores is busy business, and hopefully Sears Holdings leaders won't get distracted by the details of all of that in 2012. If the occupants in the Sears boardroom give all their attention to short-term "doing," they won't have any time or focus on their long-term "being." It is a certainty that if Sears and Kmart leaders can get crystal clear about what they want their retail business to "be," then what they need to "do" to regain their balance and reclaim their retail territory will also become crystal clear.
If the 120 store closings aren't dramatic enough to change the trajectory of the Sears leadership strategies, perhaps the recent 27% drop in stock prices are. Nothing is quite so motivating to most retail industry leaders as portfolio shrinkage. That's when things get personal.
More About Sears, Kmart, and Store Closings:
- Can Sears Regain Its Identity as One of the Great American Brands?
- Hail Mary Marketing, Desperation, and Sears
- Sears 2012 Store Closing Locations
- Complete 2011 Store Closings List
- Is Kmart Fulfilling Its Mission?
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