Sears Holdings chairman and CEO Edward Lambert may be many things, but uninteresting isn’t one of them.
Watching the decline of once big-time retailers Sears and sister store Kmart has been illustrative of changes in how we shop today, and provided a glimpse into the mind of one of the most unusual and controversial CEOs in America.
Retail industry observers hold Lambert largely accountable for Sears’ decline since he joined Sears Holdings as chairman in 2004. Lambert has struggled to maintain an image of growth and “transformation” despite the closure or sale of more than 850 Sears and Kmart locations and the elimination of 50,000 employees since he came on board.
An avid follower of libertarian theorist Ayn Rand, Lambert has imported elements of Rand’s philosophy to guide his business decisions. Consider this quote from Lambert about his business: “The role of the store is changing. It’s got to be both experiential, but also utilitarian. We want to be on the right side of behavioral change. But the business model has to support the experiential model and vice versa.” Ayn Rand, indeed. But can philosophical musings help Sears and Kmart?
Not so far. Sears Holdings is bleeding money, with some commentators going as far as stating that business is in a death spiral.
Efforts to integrate online and retail sales, like the Shop Your Way rewards program, have fallen short. The program was designed to make online shopping more appealing to Sears patrons, but the reality is that Sears and Kmart shoppers attract older consumers who prefer in-person shopping. In the stores, the process of attempting to sign up shoppers for the rewards program took so long at check out that many people got frustrated and simply walked out.
Still, Lambert insists he can turn things around for Sears Holdings. Just recently, Lambert gave Sears a $500 million lifeline in an attempt to save the business from going under. It’s unclear what the transformation strategy will be this time.
Shoppers at both Sears and Kmart stores report that the stores look dated and unorganized, and often there isn’t an employee to be found when you need help. The numbers back up this observation. In 2012, for instance, Sears Holdings spent $1.46 per square foot, on average, on its stores. Four of its peers – J.C. Penney, Target, Lowes, Walmart and Home Depot – spent an average of $9.45 a square foot.
The bottom line suggests that Lambert isn’t being kept up at night by Sears Holdings’ continual decline. Despite funneling money into the spiraling business, Lambert has a safety net – he has set up the business so he has a financial fallback if the company does fail. Money that Lambert loans to Sears Holdings is backed by company real estate that goes to Lambert if the loans aren’t repaid. How’s that for experiential?