Attention, IBM: if the stock analysts allow you one telephone call, make it to Sears. The retail giant last week killed off its trademark catalog-much as IBM must now de-emphasize its mainframe computer business-and slashed 50,000 jobs. And in September, Sears brought in an outsider to rough up the comfortable corporate mindset-a desperate act for a company where store managers rose to be CEOs. Still, Sears's task is so much tougher. IBM still stands for quality. But many Americans have no idea what Sears stands for. They haven't stepped into a store in years.
Can Sears reverse its losses to more fleet-footed discount and specialty stores like Wal-Mart and Toys "R" Us? The answer just changed from No Way to Maybe. Sears's fate is in the hands of Arthur Martinez, the new head of the company's flagship merchandise group. He's making the hard calls that used to land takeover artists in hot water: cut the work force, throw losing businesses overboard and to hell with tradition.
Martinez's prescription is short on grandiose biz-speak about changing the corporate culture, longer on ideas for getting the cash registers to sing. Martinez, 53, says Sears must deal with three key problems: indifferent service, dull stores and even duller apparel. To spruce up the Sears experience, the former Saks Fifth Avenue executive plans to remodel many of the chain's 746 stores--changes like brighter lighting, wider aisles and classier, department-store-like decor are on deck for the Craftsman crowd. "No matter whether you're selling lettuce or lawn mowers, retailing is theater," Martinez told NEWSWEEK. Martinez is cutting back on paperwork and other chores, forcing his salespeople to, well, sell. He calls all this the "pure selling environment."
The nation's third largest retailer still plans to peddle its array of tools and appliances. But the key to Sears's future might be sprucing up the fashion departments, which could attract more female customers. After all, they account for about 70 percent of Sears's business. Customers have complained, not always fairly, that Sears apparel is dowdy. "We don't want to be cutting edge," Martinez says. "We do want to be in line with mainstream fashion trends at terrific prices." He plans to stock much broader selections of cosmetics, jewelry, scarves, belts and other accessories. But he'll spend less time than his predecessors trying to win back up-scale customers who fled to pricier stores. The company's new focus is on households with incomes of $18,000 to $48,000. That means Sears will abandon the gospel of being all things to all customers. "There are plenty of families in America who fit those characteristics," says Martinez.
But will those customers be enough to jump-start the $31 billion retailer? Overhauls have been so frequent at Sears that they seem like annual events. As retail analyst Walter Loeb says: "Sears is an amorphous mess." Some critics also sniff that Martinez is a finance guy, not a merchandiser. Still, he may have a fighting chance to save Sears. Steven Kaplan, a University of Chicago finance professor, figures Martinez has one important advantage: a newcomer can make big changes without alienating the employees.
What's in it for Martinez? For one thing, the satisfaction of doing a job many others couldn't do. But reviving America's erstwhile merchant king would put Martinez first in line to succeed Edward Brennan, the Sears, Roebuck and Co. chairman who hired him. The company's past may be Martinez's best guide. Last week's weepy obituaries for the catalog left out some early history. Richard Sears's first catalogs were tailored not for the rural masses but for urban Americans able to buy fine watches, jewelry and silverware. Sears switched strategies in the 1890s to chase higher profits. A century later, Arthur Martinez is doing much the same.
