性视界

 

Brick and Mortar Beginnings

Founded in 1886, Sears鈥� early success was built upon the traditional retail model, selling commodity like products to Middle America.[1] Today, the company also promotes a mission of 鈥渟eamlessly connecting the digital and physical shopping experiences to serve our members.鈥�[2] Sears鈥� profitability, however, has declined in recent years due to competition from online and low cost retailers; the firm has posted $8 billion in net losses since 2010.[3] Nevertheless, the firm remains the third largest seller of appliances in the United States[4] with a presence in over 13 million homes.[5] Can Sears save itself by transitioning from selling discrete, reliable products[6] to selling and servicing smart, connected appliances?[7]

Launch of Connected Solutions

Sears has historically been an early adapter of technology, becoming one of the first retailers to use bar codes[8] and utilizing big data to price products to consumer preferences.[9] In 2014, the company announced the launch of Connected Solutions, a new division within the company, promoting the integration of appliances and technology. Connected Solutions began the transition of Sears鈥� business model from selling discrete, reliable products to developing smart, connected appliances, which dynamically adapt to a consumer鈥檚 lifestyle.[10] The Connected Solutions business line includes home automation products such as thermostats, smart locks, lighting, sensors, smart watches, fitness products and home monitoring cameras.[11]

To enact this new business strategy, Sears has begun to revamp its operating model from brick and mortar stores to interactive retail outlets and from reactive repairmen to proactive repair services. Because these smart products are more expensive and complicated than their traditional counterparts, Sears realized the company had to move the products to a separate section of the store in which customers could interact with the appliances to identify their perceived value relative to price.[12] The sales staff in the Connected Solutions department has been trained to field questions on product compatibility and installation.[13] The firm has also begun to utilize the data collected via its service repairmen and Sears-branded smart appliances to accurately troubleshoot appliance failure either on the phone or on the first home visit.[14] The firm, for example, has set a goal of reaching a 95% resolution rate on the first diagnosis attempt versus an industry average of 75%.[15] Sears also recently announced that it would seek to sell select business lines such as Kenmore outside of its own stores to reach a broader consumer market.[16]

Taking the Next Step

While Sears is directionally taking the correct steps toward connected appliances and remote-service diagnosis, the company has been restrained in rolling out these measures. For instance, while brands such as Samsung and Whirlpool also offer appliances with smart functions, Sears has only begun to provide remote-service diagnosis and monitoring for its own Kenmore line, despite selling both competitor brands at its retail stores.[17] With smart home platform competitors such as Nest increasing their compatibility with multiple brands, Sears risks losing market share as customers will seek those platforms that provide the flexibility to choose between Kenmore, Samsung or Whirlpool appliances. Somewhat paradoxically, if Sears widens its adoption across brands, then it can capture customers and performance data across its appliance competitors, increasing its control over the smart appliance and services market. This performance data will also increase the competitive advantages of its services business. With the data to pro-actively service all appliances, not only will Sears become the 鈥済o to鈥� repair servicer, but it could become the 鈥済o to鈥� appliance manufacturer, as it can use the data to increase the efficiency and quality of its own products. Like Nest, Sears should also seek to pass energy saving measures to its customers as they now value new efficiencies gleaned through the data generated by the appliances.[18] The company can set timers for dishwashers, for example, to start cycles during off-peak energy hours.[19]

In the end, Sears鈥� Connected Solutions strategy is still in its early stages. While Nest may be a first mover, Sears has established name recognition and home presence. The company will, however, need to expand its partnerships to ensure that it becomes the 鈥済o to鈥� retailer and servicer of connected appliances.

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[1] Sears Archives, 鈥淪ears History 鈥� 1886,鈥� , accessed November 18, 2016.

[2] Sears Holdings, 鈥淥verview,鈥� , accessed November 18, 2016.

[3] Fortune, 鈥淪ears CEO Makes Big Bet on its Debt,鈥� , November 18, 2016.

[4] TWICE, 鈥淪ears Slips to Third Place on Top 50 Major Appliance Retailers Ranking,鈥� , accessed November 18, 2016.

[5] Sears Holdings, 鈥淪ears Brings Connected Living to Life with New Connected Solutions (SM) Shops Powered by Shop Your Way,鈥� , accessed November 18, 2016.

[6] Iansiti, Marco and Lakhani, Karim R., 鈥淒igital Ubiquity: How Connections, Sensors, and Data Are Revolutionizing Business,鈥� 性视界 Business Review (November 2014), 3.

[7] Porter, Michael E. and Heppelmann, James E., 鈥淗ow Smart, Connected Products are Transforming Competition,鈥� 性视界 Business Review (November 2014), 5.

[8] CNN, 鈥�5 Stunning Stats about Sears,鈥� ,鈥� accessed November 18, 2016.

[9] The Wall Street Journal, 鈥淗ow Sears Uses Big Data to Get a Handle on Pricing,鈥� , accessed November 18, 2016.

[10] Sears Holdings, 鈥淪ears Brings Connected Living to Life with New Connected Solutions (SM) Shops Powered by Shop Your Way,鈥� , accessed November 18, 2016.

[11] Ibid.

 

[12] Mobile Commerce Daily, 鈥淗ow Sears is Repositioning Itself as a Smart Home Tech Hub,鈥� , accessed November 18, 2016.

[13] Ibid.

[14] Fortune, 鈥淪ears鈥� big-data strategy? Just a service call away,鈥� , accessed November 18, 2016.

[15] Ibid.

[16] CNBC, 鈥淪ears Ports Bigger Loss, Explores Options for Two Businesses,鈥� , accessed November 18, 2016.

[17] Consumer Reports, 鈥淪ears Makes a Big Bet on the Connected Home,鈥� , accessed November 18, 2016.

[18] Iansiti, Marco and Lakhani, Karim R., 鈥淒igital Ubiquity: How Connections, Sensors, and Data Are Revolutionizing Business,鈥� 性视界 Business Review (November 2014), 3.

[19] Ibid, 7.