Sears Stores Adjust in Search for New Markets

Stefanie Powers doesn’t appear on the newest Sears catalogue just because she’s a famous actress. Market studies indicated that she is popular among women, and the tastes of women are a key part of Sears’ strategy these days.

“We want female customers to feel more comfortable in our stores,” says William I. Bass, chairman and chief executive of the Sears Merchandise Group. “We want them to take the time to browse rather than just come in to buy some specific thing.”

Powers follows popular model Cheryl Tiegs whose “signature” sportswear line has helped Sears establish a new and successful merchandising direction. Edward A. Brennan, now president and chief operating officer of the parent firm, steered the chain out of the turbulent 1970s when the lack of a firm merchandising strategy hurt sales and profits.

Today, Sears is increasing its attention to fashion. The chain is remodeling existing stores with its new “store of the future” format designed to emphasize soft goods such as apparel in a more contemporary environment.

Appliances and other durable goods account for 66% of Sears’ total sales but the chain is attempting to increase the proportion of soft good sales. Sales of durable goods began to slow last July and is continuing that pattern this year. Sears Merchandise Group sales rose 0.8% in the first quarter, while profits fell 6.3%.

“We had planned for a difficult first and second quarter and more opportunity in the third and fourth quarter,” Bass says. “So far, it’s been more difficult than we had anticipated.”

Growth among the maturing mass merchandisers in general has slowed. This year, retail sales industrywide are expected to rise 6.9%, the smallest gain since 1982.

Chains such as Sears and J. C. Penney can no longer grow by simply building new stores. High real estate and construction costs and a saturation of stores are forcing the chains to make existing stores more profitable.

The fastest growing area of retailing today is specialty stores--small outlets catering to a specific product or consumer group. Sears is moving into specialty retailing with down-sized Sears stores and other formats such as its paint and hardware stores.

Bass says market studies revealed that Sears is not serving small communities of 20,000 to 100,000 as well as it could. In February, Sears opened an 8,300 square foot prototype store in Alma, Mich., that offers paint, hardware, electronics, appliances and a catalogue department. Bass said sales in the Alma prototype have been running at $300 per square foot. It will add three more Alma-type stores in North Carolina, Nevada and Georgia this year. Fifty more are planned for 1986.

A summer opening is planned for another small store prototype. The 35,000 to 40,000 square foot outlet will sell apparel and home fashions but its location has not been disclosed. Sears plans to open 15 of these stores next year.

A volatile computer retailing environment has resulted in a freeze on plans for 45 additional Sears Business Systems Centers this year. “Business is extremely difficult but, whatever happens, we will be a major player,” Bass said of the 104-store chain.

Sears also will open seven more Paint-and-Hardware stores in Chicago, bringing the total to 11 in New York and Chicago by year end. Sears will add five more surplus stores to its existing 108 stores which generate annual sales of $400 million by selling excess merchandise from Sears’ catalogue and headquarters warehouses.

The chain will open nine new regular department stores.