Sears to cut 4,900 jobs and ditch its department-store mentality

  • Wednesday, October 24, 2001 9:00pm
  • Business

Associated Press

CHICAGO — Sears, Roebuck and Co. is slimming down and becoming more of a discounter, taking cues from competitors that have enjoyed shopping sprees at its expense in recent years.

The nation’s fourth-largest retailer announced a makeover Wednesday that includes elimination of 4,900 salaried jobs, other cost-cutting and a new merchandising strategy that plays to its strengths — home appliances and home furnishings.

While falling short of some of the radical changes suggested by some analysts, such as ditching its sluggish apparel business, Sears’ overhaul marks a bold departure from its traditional department-store model.

It also signals a new direction under chief executive Alan Lacy, the Sears credit whiz who took over a year ago and is experimenting to try to regain retail ground lost to such discounters as Kohl’s and Target.

His solution: More discounting, more self-service, increased emphasis on home appliances, less "clutter" of weak-selling products on the sales floor and a leaner administrative staff.

As part of the changes, Sears is making its biggest job cuts in eight years, trimming about 22 percent of its salaried corporate and regional staff.

Lacy spent several hours outlining the plan in Chicago to retail analysts, who have been clamoring for change since Lacy took over a year ago from longtime Sears head Arthur Martinez.

"Our new approach to merchandising reflects a distinctive competitive positioning, a clear emphasis on home and family, and a lower-cost operating model," he said.

After acknowledging earlier this year he had considered dropping apparel, Lacy said the company will put an even stronger focus on it. Merchandise will be upgraded, the depth of assortments will be improved and the company will establish a Sears casual brand for its men’s, women’s and children’s clothing.

Sears also is eliminating "less productive" promotional activity, allowing it to invest more heavily in marketing the Sears brand.

Customer service changes include more service for big-ticket items but more self-service overall. Centralized checkouts will be installed in about 140 stores by year’s end and in all stores by mid-2002. Store signs, fixtures and layouts will be revised.

Retail analyst Kurt Barnard said the plan was the best news he’s heard from Sears in 10 years.

"For many years Sears has been stuck in the mud while its rivals were moving forward," said Barnard, a consultant and president of Barnard’s Retail Trend Report.

Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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