Sears perks up its profits by putting some fresh sparkle into its stores
'Twas the month before Christ-mas—and retailers everywhere were poised for what could be the best selling season in five years. Last week the release of two important economic measurements confirmed the upbeat forecasts.
Personal income, a key gauge of buying power, jumped ahead by 1.2% in October, the biggest surge in more than two years. At the same time, the Consumer Price Index rose only .4% during the month, continuing a trend of moderate increases that this year have pushed the rate of inflation ahead only about 4%. Says Consumer Expert Fabian Linden of the Conference Board, a business re-search group: "All the pieces are in place for a lively Christmas season."
No company is in a better position to profit from this spending surge than Sears, Roebuck. The giant retail chain and catalogue merchant, largest in the U.S., is on a hot streak. After a decade in which profits sagged and the 97-year-old company seemed to have lost its sense of direction, Sears has found its way. During the first nine months of 1983, profits shot up 89%, to $759.5 million, while revenue surged 18%, to $25.1 billion. Around the Sears Tower, the 110-story black steel-and-glass skyscraper in downtown Chicago that still bears the title of the world's tallest building, a mood as merry as Christmas exists. Not only is Sears' bold expansion into financial services and real estate paying handsome dividends, the firm's merchandise group, which once seemed to display all the deftness of a wide receiver with broken thumbs, is also on a roll.
Sears' new sparkle can best be seen in its dramatically restyled "stores of the future."No longer is the center of attention reserved for such hard goods as Craftsman tools, DieHard batteries and Kenmore appliances. Now the emphasis is on the color-coordinated, freshly fashioned displays of stylish clothes and jogging gear, modern furniture and gourmet cookware. While the likes of Bloomingdale's and Neiman-Marcus have long merchandised their wares with flair, the redesign and reorganization are a revolutionary departure for Sears. Says Joe Fragale, operating manager of the Oak Brook, Ill., store: "We had so many people think they were in the wrong store, we put up a sign YES! THIS IS SEARS." The company is betting heavily on the success of its new look. Twelve of the stores have opened in time for Christmas, and 99 more will be remodeled or built from scratch next year. By 1989, Sears will spend $1.7 billion to spruce up 600 of its 831 retail stores and build 62 new ones. It is the most expensive facelift in the company's history.