There is no room in the middle

Implications: Sears has a fundamental structural problem with its format, market appeal to the consumer and ability to resnate the differences shopping with them represent. The shift to the warehouse channel is a permanent one that greatly impacts those retailers who have in the past lived in the market somewhere between a specialist and a discounter. Sears still has tremendous brand equity through its name and its private label goods which is being squandered through a lack of strategic vision for change.

Analysis:  Sears has a fundamental structural problem with its format and needs to consider a reevaluation of how many KMart and Sears stores the market can support while seriously considering a private label strategy derived from its Craftsman, Kenmore and other brands into a warehouse concept of its own.The market shift to Costco and others like them is not going away. In identifying a new warehouse style format to compliment a reduced Sears and KMart footprint in the nations top 100 markets, Sears could potentially leverage some of their remaining brand strengths into a place people wanted to shop and begin to transform the company towards the future. Retail is very simple at its most basic level. While execution and brands are important, fundamentally the more successful concepts resonate clearly with the consumer for what they stand for and market the most important brand which is themselves in a way that consumers know before they visit why they want to shop there. (See Best Buy, Costco, Apple Stores, JC Penney, Amazon, etc.)
Those that fail to get this flounder until extinction under a host of failed strategies usually accompanying a never ending series of cost cutting moves to appease the short term interests of investors. ( See Radio Shack, Circuit City, Dillards, etc.)
The market has permanently changed and there is no room in the middle. Sears has been bleeding market share for 20 years and unless a complete overhaul is taken that completely addresses the shifts in the market, their appeal to consumers and an executable growth strategy to replace those consumers they have lost due to better positioned concepts, they will continue to lose share until they are listed with Montgomery Wards and others whom we hardly remember.