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Sears expanding in Grand style

Although still just a two-unit prototype, Sears Grand will be the growth vehicle for the giant multi-channel retailer.

The initial results, according to Alan Lacy, chairman and CEO of Sears, Roebuck & Co., "have been very encouraging. The results have exceeded expectations."

Calling Sears Grand "our principal growth vehicle," he said, "We will aggressively acquire more sites."

In discussing Sears Grand after the annual shareholders meeting, he said the current 200,000-square-foot size could well be reduced to 175,000 to 180,000 square feet. "But we also see large or small Sears Grands, with the smaller in the low 100's."

"We found the stores are too big and some businesses need to be fixed," Lacy explained.

Lacy declined to project the number of Sears Grand units nor the rollout timetable.

With one store open in suburban Salt Lake City and another in Gurnee, Ill., Lacy said the additional two scheduled for this year in Las Vegas and metro Los Angeles, as well as the Austin, Texas, unit scheduled to open in 2005, will reflect some changes from the first two — including pharmacy and wine.

The key issue, Lacy observed, "is that we want more stores. Sears Grand will open new trading areas which will produce incremental revenue and give us the opportunity to infill markets."

With the first two Sears Grand stores, the company has found there is more cross-shopping, and customers shop more often.

As for the 870 full-line stores, Lacy said, "They have improved organically. And home textiles is an outstanding performer."

But the performance of home textiles reflects a major change in the assortment, presentation and pricing structure of the department.

Home fashions was one of four business segments that underwent "major changes" in the last year, Lacy told shareholders.

Specifically, in home fashions, the department was upgraded. "We needed better private brands and styles and pricing," he said after the meeting.

This year, 400 doors will have completely new fixturing in the entire home textiles department.

Among the changes, he added, the towel department has gone from 27 colors to 96 in an assortment that now includes Martex and Utica.

Top-of-bed is being remerchandised, with some 70 percent of the assortment in the process of being changed.

Among the problems in the home textiles business, Lacy explained, "is that some businesses we held on to when we shifted to a self-select mode," such as closet shop and big rugs. Another issue was "shopability" which he said is addressed with the new layout and fixturing.

Whole Home continues with Colormate as the major private home fashions brand, and a new Whole Home collection rolled out in the upgraded mix.

Discussing multi-channel retailing during the meeting, Lacy noted that Sears.com and LandsEnd.com had sales of $2 billion.

This year, home fashions will join the Internet marketing with "My Virtual Room," a decorating segment using Sears products.

An important part of the multi-channel business, Lacy noted, is that more than 50 percent of online customers pick up their orders in Sears' stores.

Overall, Lacy said there will be an additional 116 store remodels and seven of 17 departments will be redone.

As for "The Great Indoors," Lacy told shareholders "there have been improved results and continued customer acceptance. It is important in the chain."

After the meeting, he explained, "We went too fast in the growth" of The Great Indoors, as well as making "poor real estate decisions." Last year, Sears closed three The Great Indoors units, leaving 18.

A major change in the way Sears approaches The Great Indoors "is that not only is there a need for a high average income, but also a high income value" in order to support the upscale remodeling and appliance part of The Great Indoors mix.

As a result of the changes, and improved performance, Lacy said, "By the end of 2004, I am hopeful that we will see a plan for new stores" for The Great Indoors.

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