Sears, with its famous, thick product catalog, was once America’s largest retailer, the Amazon of its day. Like Amazon, it brought a wide variety of goods to a national market, through its catalog and department stores.
In the last several years, Sears struggled to compete, at first with Walmart, then with Costco, and finally with Amazon. As recently as 2005, Amazon’s sales were only 17% of Sears’, but by 2016, Amazon’s sales had grown to $136 billion compared to Sears’ $22 billion. Then in October, Sears declared Chapter 11 bankruptcy. If the brand continues to exist in some form, it will likely be greatly diminished.
Jeff Bezos, CEO of Amazon, was recently asked about Sears’ failure. Surprisingly, he responded that one day Amazon will also fail, when it loses its focus on the customer.
Sears suffered many management failures that contributed to its demise, but it has also been slow compared to many other retailers in implementing technological advances. Swifter and more thorough adoption of retail technology would have helped Sears compete in an increasingly customer-focused market.
In the following, we’ll look at five technologies that could have helped save Sears.
Targeted Marketing and Personalization
Today, retailers have a wealth of customer data, including records of which items sell and when, as well as local demographic information. Machine learning and predictive analytics allow retailers to use this data to customize product assortments, create store-specific promotions, and inform future buying decisions.
This retail technology makes it possible for each customer to receive targeted marketing focused on products that algorithms predict are most relevant. This is particularly important as consumers are more likely to respond to personalized marketing than they are to mass marketing.
Sears, one of the original mass marketers, continued to offer a uniform product assortment in its stores and stuck to played-out techniques like newspaper inserts to reach potential customers. Sears’ refusal to let go of this one-size-fits-all mindset as the market evolved was a big part of the brand’s death sentence.
Integration of Brick-and-Mortar Experience with Online and Mobile Sales Channels
One advantage of brick-and-mortar stores over e-commerce is that the customer can get products in their hands faster. Many brick-and-mortar retailers capitalize on this advantage by making many products from their website available quickly in store. Sears was actually one of the first retailers, in 2014, to allow customers the option to Buy Online Pick Up in Store (BOPIS). Ironically, 2014 was also when Sears’ online sales began to decline.
What accounts for Sears’ sales decline synonymous with such a forward-thinking technological investment? While Sears turned their eye toward online and mobile technology, they lost their focus on the in-store shopping experience. One observer recalls the in-store environment at Sears being “depressing,” describing a company that “showed so little regard for its own merchandise [that it] sent a distasteful message.” What happened to Sears shows that an omnichannel mindset works only when the in-store customer experience remains at the forefront of a brand’s philosophy.
Supply Chain Technology and Inventory Control
Supply chain challenges plagued Sears. Sears’ competitors, such as Walmart, use retail technology extensively for supply chain management, balancing product availability against the cost of carrying inventory. Large retailers need automated reordering tools and predictive analytics to project demand. Supply chain optimization (like JDA Network Design or Infor Network Design) would have allowed Sears to better forecast and mitigate disruptions and risk to their supply chain to stabilize the business.
Once inventory arrives from suppliers, savvy retailers employ inventory control technology to maximize profit and maintain customer satisfaction. Some retailers, like Macy’s, are moving to radio frequency identification (RFID) to allow for real-time monitoring of inventory. RFID tags are attached to each item, allowing retailers to track merchandise from supplier to warehouse to store. Sears could have better managed the flow of merchandise into its stores by employing similar retail technology.
Augmented Reality
In augmented reality (AR), virtual objects are added to what one sees in the real world. AR blurs the boundary between online and in-person shopping. Online retailers like Wayfair and Home Depot are implementing AR retail technology so customers can picture virtual goods in their homes. Sears would have been perfect candidate for AR technology, given their concentration in appliances, home goods, and remodeling services.
Customers rely on retailers to perform important tasks they cannot do themselves. AR technology offers the unique benefit of helping customers envision how their homes will look after remodeling. If Sears had employed AR technology, the retailer could have re-emphasized brand value in the eyes of their customers and provided a service to enhance brand value.
Artificial Intelligence to Improve Customer Experience
In a recent Reuters article, previously loyal Sears customers describe poorly stocked stores, missing “the products their core customers need.” Yet advancements in artificial intelligence, machine learning, and pattern detection have enabled algorithms that can detect fluctuations in a single store’s consumer demand for specific SKUs. This means that store teams know exactly when products their customers love are failing to meet anticipated demand–and can fix the problem promptly, improving customer experience.
Sears would have benefited from a technological tool to bring stores managers’ attention to underperforming products, empowering them to act and correct issues. Such technology has the added benefit of engaging sales associates, which is a major coup in an industry known for high employee turnover. It’s no surprise that Sears’ customers complained that the brand lost sight of customer service. Sales associates are only as productive as the tools you give them.
An example of one such a tool is in-store cameras that track live foot traffic through stores using a network of sensors. Retailers can see how long customers are waiting in a checkout line or review other in-store operational issues that might have a negative effect on customer experience. But it’s not necessarily about investing in high tech cameras. Applying advanced machine learning pattern detection to just basic POS data can do wonders for correcting operational issues of high demand SKUs.
Conclusion
Sears was a big part of America for over a century. It generated substantial employment opportunities and had a big impact on many communities. But retail is changing, and many of those changes are associated with new technologies like the five discussed. If Sears had had a more customer-centric vision, bolstered by some of these technologies, the retailer would have enjoyed another hundred years of success. But it is unusual for companies that thrived in one kind of economy to aggressively adapt to a new one. The key to enduring success in retail is an unflinching determination to deliver what your customers want and understand where your brand stands in delivering it. Today, machine learning retail technology is the game-changer helping retailers keep their eyes and ears to the ground.
Take a look at our solutions page to learn how CB4’s machine learning software helps retailers elevate customer experience and improve operational efficiency.
