It is with mixed feelings I watch the “Hedge Fund Guru” decide to play retailer. After banking a zillion dollars being a very successful, yet ruthless, hedge fund genius, Ed Lampert decided that retailing seemed like a great way to spend some of that zillion dollars. The fact that the latest Wall Street wizard chose retailing, amongst all other industries, was, I guess, flattering in some ways to our ancient profession. Since most people do not stick up their hands and declare they want to be a retailer when they grow up (or even want to interview out of college), maybe this was a turning point in the industry. Maybe, just maybe, under the white hot lights of one of Wall Street’s most successful people of the 1990’s, retailing as an industry and as a career would finally get its due.
But alas, it has been a bit of a joke, in my opinion. I would welcome yours.
Since purchasing Sears to be integrated with his already purchased Kmart, Mr. Lampert has installed himself as the “chief merchant” which, in my mind, is the ultimate insult to our profession. No disrespect intended to Mr. Lampert who has the knack and the intellect to create and nurture value (as he did in this case at the outset with Kmart specifically). However, he should not be thinking that he can run a retail organization and oversee the merchandising aspects of national retail brands.
Case in point…As I mentioned in an earlier submission, the purchase of the esteemed and established “Land’s End” brand was an interesting one, particularly because at that point, it had no bricks and mortar presence and the trend was (and still is) to ensure a retailer had both online and in-store experiences to maximize share of the customer’s wallet. On the surface, not a bad idea to add the catalogue component either, as Sears knows something about catalogue retailing. But, their execution, to this point, at least at retail, has been abysmal and has severely damaged a very solid and trusted brand. The in-store shops at Sears are poorly merchandised, sloppily maintained and dreadfully insipid. Peter Glen would have had a heart attack walking through these “shop-in-shops”.
Of course at the end of the day, it will be about the returns Mr. Lampert can generate over a set period of time. But I am disillusioned at the approach and the arrogance. It demeans merchants and retailers everywhere, who have grown up on the shop floors, have studied customer trends for decades, have walked hundreds of malls and conducted thousands of store visits at all levels. One doesn’t all of a sudden become a retailer or more specifically, a “chief merchant”.
I guess what I am trying to say is that retailers everywhere deserve more credit than what is evident in the Sears experience. I feel strongly that retailing is not a profession one can just “pick up” along the way. The great ones (even the good ones), have worked most of their professional lives in and around customers, stores and merchandising. They have worked on the floor with the customer. A former partner of mine once described it as “getting in your blood like an addiction”. This seems truer every day, but it takes time. Although there are now schools and courses and classes and degrees in the profession, it takes hands on experience on multiple levels and across multiple functions to truly appreciate it, understand it and most importantly to FEEL it.
Highly successful merchandising, at the end of the day, is about FEEL and instinct. I know that this causes rashes amongst investors, analysts and bankers, but these instincts are developed over time and experience in the business.
Ed Lampert cannot possibly possess the instinct for merchandising like he does for investing and generating above average returns for his partners. The Lampert-Sears-Kmart combination may turn out to be strange bedfellows after all and does not paint a flattering picture for retailers across the industry.