Sears Has a Lot of Catching Up to Do : Retailing: The 100-year-old company neglected its stores while it was diversifying into other areas. Now it’s looking for a comeback strategy.

Once America’s No. 1 retailer, Sears, Roebuck & Co. must now play catch-up with the competition. The question now is whether the century-old company can recapture its title as America’s “general store.”

“The merchandise group has to make up for 15 years of wasted time,” said Kurt Barnard, president of New York-based Barnard’s Retail Consulting Group.

After announcing Tuesday that it will divest its moneymaking stock brokerage, credit card and real estate businesses, the company plans to refocus on its ailing retail arm. Sears does not yet have a blueprint for its new efforts, but analysts said Wednesday that at least one change is relatively certain: a slimming down of the voluminous Sears catalogue.

And other mandatory improvements, analysts said, include better service and greater attention paid to the whims of a more sophisticated clientele.

Sears was sidetracked by its “alien projects,” Barnard said, while “nobody minded the store. . . . They must prove that they are worthy of the public’s next purchase.”

With the Chicago-based retailer dethroned as the nation’s No. 1 retailer in the 1990s, fast-growing chains such as Wal-Mart and J. C. Penney Co. grabbed a larger share of the market, and they show no signs of letting up.

“The competition is outrageously fierce,” Barnard said. “They (Sears’ competitors) are pleasing the consumers with appearance, price and service,” and Sears will have to do likewise.

However, Janet Mangano, a Burnham Securities analyst in New York City, said Sears is “much more attractive than they were in the past.” Some stores have remodeled, she said, and “the look of Sears stores has changed.”

But the changes have not gone far enough, and Mangano predicted that the Sears catalogue will be scaled down so more attention can be paid to the retail end of the business.

“I think they were too diffused,” she said of its non-retail units, such as Coldwell Banker Residential Group, Dean Witter Financial Services Group and the Discover card. But diffusion is not the only problem.

In past years, Barnard said Sears hurt itself by poorly imitating popular concepts incorporated by other companies. In the late 1980s, Sears followed a Kids R Us format with an unsuccessful McKids line that never blossomed.

Barnard said a lack of commitment and a series of poor expansion decisions left analysts wondering about Sears’ future--and led to its current debacle.

In addition, Sears also erred by not keeping pace with the American consumer. While other major retail chains remodeled and updated their stores, Sears largely maintained the store’s traditional old-style atmosphere, analysts said.

“It’s a very troubled operation,” Barnard said. “It will take a great deal of overhauling to salvage it. And there’s no guarantee of success.”

But the once-eminent retailer is praying that Arthur C. Martinez--the new chairman of its merchandise group--will bring salvation. Martinez, formerly vice chairman of Saks Fifth Avenue, joined Sears Sept. 1.