Retail Observer

RETAILOBSERVER.COM JULY 2018 54 O n January 8, 2018, Sears Holdings Corp., the parent company of Sears and Kmart, announced yet another round of store closings as the once proud retail behemoth inched closer to bankruptcy. The department store chain's ignominious slide into oblivion amid declining sales is indicative of the pitfalls of the current retail industry. Traditional brick-and-mortar stores like Sears now struggle to survive in an increasingly hostile environment where their customer base has largely shrunk. The digital revolution has enabled e-commerce giants Amazon and Wal-Mart to snatch large swaths of market share away from aging retailers by appealing to online shoppers. The decline of Sears will certainly benefit retail giants such as Home Depot, Lowe's, and Best Buy. Yet, the void created will be large enough that independent retailers stand to gain as well. In fact, Sears' demise may prove to be a monumental boon for small retail operations who are ready and able to attract new customers with their high level of service. Sears' seemingly endless run of quarterly losses has unleashed a firestorm of predictions of how long the company will last before it is forced to file for Chapter 11 bankruptcy. Waiting in the wings to benefit from the fall of the venerable retail institution are some of the country's largest stores. In an article from The Street entitled, "If Sears Goes Under, These 3 Retailers Will Be Big Winners: UBS," Kinsey Grant mentions that The Home Depot, Lowe's, and Best Buy will be the three biggest beneficiaries of the collapse. In fact, Grant predicts a veritable feeding frenzy by the trio of retailers if Sears goes under. According to the article, "The three could capture more than 75% of Sears' estimated $3.5 billion in major appliance sales this year due to the strength of their own appliance offerings and their stores' close proximity to Sears locations." The article further speculates that the three stores will split the majority of the $950 million in home improvement spending and $850 million in electronic sales left up for grabs if Sears closes its doors. Besides The Home Depot, Lowe's, and Best Buy, Dick's Sporting Goods, Pier 1 Imports, and Williams-Sonoma are also expected to win market share through the loss of Sears. The ripple effect of Sears' disappearance from the retail industry will be significant. Yet, the benefits are certainly not exclusive to the larger stores. It also presents enormous opportunities for independent retailers who are often hard-pressed for ways to gain an advantage on their box store competitors. Historically, the Sears customer has always desired a quality product backed by a more personal store experience. Independents could very well accommodate them. Through a combination of competitive pricing and strategic digital marketing, retailers may be able to gain inroads into the market vacuum left by Sears' demise. If Sears continues to close stores, independents should engineer and implement plans to lure those former customers in. Advertising for deals or bargain busters should be ramped up accordingly. Independents should be prepared to woo former Sears' customers with a business model, which emphasizes loyalty, product quality, and consistent customer service. Family owned stores should not hesitate to highlight their business' commitment to the buyer throughout the years. It is often this type of personal service that most clearly distinguishes independents from the big box stores. The current forecast for Sears' continued longevity remains poor. In the event of its disappearance, the retail landscape will change dramatically. The demise of a competitor occurs so infrequently that independents should prepare for it. In acknowledgement of the rare opportunity that awaits them, owners must go on the offensive to win the market share that now hangs in the balance. Independent retailers must make customers aware of their presence and their willingness to fill the void left by Sears. In doing so, they can effectively stake their claim to the market share left behind. Although the lights are dimming for Sears, it may be the beginning of a whole new chapter for independents. AS SEARS FADES AWAY, INDEPENDENT RETAILERS GET OPPORTUNITY TO SHINE Chad Evans Appliance Trends Chad Evans, GM of Merchandising Brand source RO

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