As Sears, Roebuck and Co. slims down its corporate structure to reduce costs, not even its growing businesses are immune from the numbers-crunching scrutiny.
The Hoffman Estates retailer, which has 792 independently owned stores in small towns across the nation, last week trimmed the corporate staff that supports the so-called dealer network.
A total of seven managers and administrative workers in Sears' dealer store department left the company last week as part of a companywide cutback called Project Sharp. At least a couple of hundred headquarters jobs are expected to be eliminated from the payroll.
"Although this process was painful, it was necessary" to make Sears a nimbler and more efficient retailer, Penny Katsaros, head of Sears' dealer stores group, said in an e-mail. "This restructured organization will better serve customers and owners and will ensure that the dealer stores are more relevant."
The ability to recruit entrepreneurs willing to own and operate Sears' franchised stores hasn't quite kept pace with the company's earlier expectations.
In 1993, Sears had only 192 dealer stores, but their numbers grew consistently throughout the 1990s.
In 1998, Sears announced plans to have 1,000 dealer stores by 2001. But it has yet to reach that target.
The dealer stores average 5,600 square feet--a mere fraction of the 91,000 square feet in the company's 871 mall-based stores.
But the locally owned stores do give Sears the opportunity to sell its Kenmore appliances, Craftsman tools, DieHard batteries, electronics, and lawn and garden goods in the hinterlands.
Also, while sales in Sears' 871 full-line stores have dropped in four of the past five months, revenues in Sears' 792 franchised dealer stores have fallen only twice in that same time period.
In all of 2003, sales at dealer stores open at least a year rose 3 percent, bucking the trend of falling companywide sales.
Also, income of the average dealer "increased about 5 percent last year" to record levels, Beryl Buley, senior vice president of Sears' off-mall formats, said in April. "We're really happy with the business."
In fact, Sears has growth plans for the dealer format in 2004.
"We're going to open another 30 locations in 2004," giving Sears 822 dealer stores by year end, Buley said.
"We have a team here that actually goes to the towns. We go through the chamber of commerces, send people into the market and hold a meeting and talk about the opportunity. We have an Internet site we're working on for recruitment," Buley said.
Sears has an additional 200 markets identified in which it would like to find entrepreneurs to open dealer stores. That would enable it to surpass its goal of 1,000 stores.
But about 75 dealer stores, or about 10 percent of existing stores, also are for sale.
"At any given time people are looking to retire or do something else," Buley explained.
The start-up cost for a Sears' dealer store ranges from $43,000 to $117,000, depending on the size, merchandise assortment and location.