New strategy to grow business.

The once a revered US retail brand, Sears has launched a new appliance-focused store strategy at a time when it has been aggressively closing traditional stores. The move is part of a drive to transform the struggling department store chain into a nimbler, membership-focused retailer.

At Sears’ annual meeting with shareholders last Wednesday, chairman and CEO Edward Lampert said the company was planning a smaller-format appliance store in Fort Collins, Colorado.



This co-incides  with  the news from J.C. Penney that it will debut appliance showrooms this summer after a nearly 30-year absence.

The new Sears store will be much smaller than a typical Sears, at just 7,000 to 10,000 square feet, and will bring many of Sears’ online services in-store, Lampert said. A typical Sears averages 138,000 square feet.

“We have and we will be trying a lot of things,” Lampert explained, adding Sears will “probably” add more of the focused, small-format stores in 2016.

Appliances have been a strong category for Sears, and smaller stores are a way to keep a presence in communities where larger stores are closing, Lampert said.

Lampert appeared unconcerned about the competition from J.C. Penney.

“It’s very easy to put boxes in a store and put a price on them,” he said. “To be able to deliver, install and repair them, that becomes a lot more complicated.”

Over the past several years, Sears has dramatically cut its store count, ending its 2015 fiscal year with 1,672 stores.

Despite cost cuts, the retailer has seen five straight years of losses and nine years of sales declines. Fourth-quarter 2015 sales dropped 7.2% in Kmart stores and 6.9% in Sears stores despite heavy promotions, and the retailer reported a $580 million fourth-quarter loss, compared with a loss of $159 million a year ago.

Evercore ISI analyst Greg Melich who covered Sears, warned in a February report that the company was no longer “viable as a retailer in its current form.”

Lampert said Sears is “trying as hard as we can” to return to profitability this year. Sears has been cutting costs — in part by closing stores or leasing a smaller portion of its stores, or getting out of less-profitable product categories, like consumer electronics, which takes a toll on sales figures, Lampert said. It’s also been leasing back stores from a spun-off real estate investment trust, Seritage Growth Partners, which it sold properties to last year.

That sale is reported to have let Sears shrink its footprint more rapidly and focus on changes the company is banking on to drive its turnaround: its membership, called Shop Your Way, and programs combining online services and physical stores, like curbside pickup of online purchases.

Lampert said the company was ahead of the curve on predicting and responding to changes challenging retailers today, but seeing the payoff takes time.

“We’ve built the platforms, we’ve built the capabilities, but we’ve fallen short on getting people engaged,” Lampert added.

The company’s membership program has more than enough participants to have a “much bigger company,” he said.

Now they’re focused on getting those customers to make more frequent purchases, and a larger share of their purchases, at Sears in exchange for a better value and experience, he said.

According to Lampert, Sears is working to expand the network of partners where members can earn and use the rewards they’ve earned and increasing the number of reward points it issues.

“What we’re trying to do is identify our best members … and see if we can go deeper with them. It’s more frequency, and better spend, in return for a better value and better experience,” he said.