SEARS FLAGSHIP JUST A FLAG?

Implications: Two very important but unspoken implications of this article are that Sears cannot find a way to make money in their newest and most prominent store in their own home town and that they have not yet found a way to keep up with other department stores in generating on line business.

These two factors are but two more leading indicators of the health of Sears/Kmart as a viable retail entity in the coming years.

Analysis: Wal-Mart generated 23.7 million visitors to their web site in 2005 and 27.1 in 2006, Target 21.9 and 24.3, J.C. Penney 11 and 11.7, while Sears managed only 8.6 in 2005 and a meager increase to 8.9 in 2006. These numbers show just how badly Sears is falling behind their competitors in this all important category of web sales.

Sears solution seems to be to take an entire floor of their new Flagship store and convert it to web sales support instead of renting cheap office space nearby. I guess the thinking is that they can't make enough money in their newly fixtured and renovated sales areas to justify the cost of comparable rental space so they might as well spend the money to rip out their new store equipment and fixtures and remodel the space for office use.  WOW, what a commentary on their confidence in turning their stores around!

It should also be noted that the store, which opened in 2001, has yet to make money or to achieve even 50% of its original sales projections.  It was built with a $13.5 million subsidy from the city conditioned upon Sears hiring a certain number of employees.  Apparently they can't support the minimal number of sales people at their low sales levels and are compensating for the shortfall by bringing in office workers.