Last September 54-year-old Arthur Martinez stepped into the chairmanship of the Merchandise Group of Sears, Roebuck and Co. Less than five months later he announced sweeping changes in the way Sears does business.
He moved to close the legendary catalog division, close 113 department stores, close more than 120 specialty stores, offer early retirement to 4,000 full-time workers, eliminate back-shop services in Sears auto centers and reorganize the Merchandise Group into three divisions from its former seven. In the process, 50,000 full-time and part-time jobs are being cut, and 2,000 independently owned catalog stores will close or be converted to small retail outlets for hard-line goods.
It was the latest, but by far the biggest, convulsion to grip Sears since it began trying to come to grips with its costs of doing business and stop the slide in which it has found itself the last five years.
Martinez, who came to Sears from Saks Fifth Avenue, says the changes were needed if the company was to survive. In an interview with Tribune retail writer John Schmeltzer, financial editor Thomas Cekay, and associate managing editor for financial news Owen Youngman, Martinez last week talked about the new Sears-in a way, his Sears. This is an edited version of that interview.
Q-You said you plan to increase the branded label assortment in women’s apparel to 50 percent. But financial industry analysts question whether the likes of Liz Claiborne will sell to Sears.
A-It’s a fair question. First of all, I’ll tell you that increasing to that level is a relatively modest lift from where we are today. We’re running about 40 percent branded in the women’s apparel category. So going to 50 percent is not a revolution; it’s more an evolution. It is also a fair question as to whether a Liz Claiborne or a Leslie Faye or another major upper-moderate manufacturer will sell us their first-line goods. . . . We may not be ready and it may not be appropriate for them to sell us their top-line label. But in terms of either using a branded label that they have today, like Villager inside Liz, or a branded label that might be created to support our needs, that’s a very distinct possibility. So accessing their design capability and accessing their production capacity, accessing their cooperative marketing support with a recognizable brand is what we’re talking about. It isn’t necessarily just a top-line brand.
Q-That’s a strategy that worked for J.C. Penney. They got some houses to create lines specifically for them.
A-But still having the branded recognition in the mind of the customer. As I mentioned at the meeting (with analysts in New York recently), those branded lines offer a certain recognizable quality to the customer. So there is an umbrella under which or against which we can play off our private branded goods.
Q-What is the message you are trying to communicate to your targeted customer?
A-I want that customer to recognize that we have great values every day in the store, as well as even bigger values when we go on sale and promote the business. I want our customer to understand that, in the assortments we build in the business, we are competitive and have great values every day . . . and when we go on sale it’s an incredible value. I would like our customer to know when she needs something, or is ready to buy something for her family or her home, that she will recognize that we have something for her today at a great price and will come to the store today-and not wait a week, or two weeks or three weeks when we’re on sale.
Q-What is the fashion message going to be? You’re not going to be couture.
A-Mainstream. There’s no need or point in being cutting-edge fashion except possibly in our juniors business. (That) is a very young-attitude business, but a business that’s been on fire for the last year, running 40-, 50-, 60-percent increases. . . . So we’ve got to be a little more ahead of the wave in the juniors business. But in the rest of our business, the so-called missy business, we’ll be a lot more mainstream. Stuff that’s right, that’s not so far out that your friends raise their eyebrows when they see you in it and that kind of thing. Stuff that’s appropriate to wear to work. Well-designed, conservatively presented, day-in and day-out apparel.
Q-There have been complaints for years about the level of service in Sears stores. But people who shop in department stores expect a certain level of service, perhaps, that is not expected in the category of your $15,000 to $49,000 target customer.
A-Our format is and will remain a departmentalized service and checkout environment where you go into a department, you’re waited on by sales people in the department, and you purchase your merchandise in the department at a customer-service center, cashwrap, register or whatever you want to call it. We’re not going to be a checkout kind of environment like a Target or a Kmart or a Kohl’s even. So our customer has a right to expect when she comes into a department an appropriate level of service.
The question is, Do we have enough sales people on the floor? I don’t think we need a significant incremental amount of sales personnel on the floor. What we need is to put our people on the floor when the customer is there. And I think we have been doing less of a good job of that in the past. We’re putting in place new scheduling tools this spring based on transaction history, traffic history, customer shopping patterns, that will enable us to put the resources on the selling floor when the customer is there.
In the past, and I’ve seen it in other stores, people are scheduled on the basis of their own personal family needs, based on how the department manager feels about when he or she wants to take a lunch break. They were scheduled for lots of reasons, most of them having little to do with when the customer is in the store wanting to shop. . . . So, I think it’s a fair criticism of the company in the past. We’re very aware of it, store organizations are very aware of it, and we are doing a bunch of stuff to get that right.
Without appearing defensive about anecdotal evidence, you know everybody has got a bad experience and it is the hardest stuff to deal with when you are talking about our size and a store organization as big as ours. We track every month customer-satisfaction measures. We have seen a consistent improvement during 1992 in what our customers are telling us about service levels in the stores. But the ultimate answer to good service is having our own associates believe that it’s important to the company and believing that’s what their first mission is.
Q-The problem with anecdotal evidence is that it spreads like wildfire among those who perhaps used to be customers who aren’t now customers.
A-I realize that. Anecdotal evidence is a little like guerrilla warfare. You never know where the sniper is, so it’s very hard to figure out whether it’s a systemic problem or just a one-of-a-kind of event.
Q-How can you get your message to the people who aren’t in the stores regularly?
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A-The ultimate test of whether it’s working or not is whether a customer will recommend the store to a friend. And that’s a question we ask in our customer-satisfaction surveys. As we track that we will have the ultimate measure.
Q-There is a level of openness that people have not seen at Sears in years. Why is it necessary to make this marked departure?
A-I’ll leave it to the Sears watchers to compare the past to today, but it’s a matter of personal style for me. How can you get an organization galvanized behind a strategy or an initiative without sharing it with them? Sharing the good news as well as the bad news. What’s working and what’s not working. I don’t think you can leave it to their imaginations to figure that out if you’re going to lead this company. You have to stand up there and tell them exactly where you want them to go and get them allied with you. I just don’t think there is any substitute for that. I don’t know how to do it any other way. They’re all mature adults. They can handle the facts. They can handle the interpretation of the facts. They should be able to handle the good news as well as the bad news. And they should view, and I think they do, that the changes we’re making are the beginning of something rather than the end of something.
Q-You’re being asked to take Sears and put it back to where it once was or as close to it as you can. How do you feel about that?
A-I think this is the best job in America. I wouldn’t take it if I didn’t think it was the best job in America. I’m not Don Fisher or Les Wexner or somebody who invented a retailing business. I’m a professional manager. And I’m proud of that. And when somebody presents me with professional challenge of a lifetime to take this organization, this business, and restore some of the luster, how could you say no, unless you believe it can’t be fixed, which I clearly didn’t, or you have any lack in confidence in your own abilities. And I don’t have any of that.
Q-What do you do to deal with it all?
A-The last five months I haven’t had a chance to do much else but work. But I’m a big believer in physical exercise where available as the way to liberate your mind a little bit. It’s steadily been six days, and more than half the occasions seven days, a week. This is a major undertaking and it needs a lot of energy behind it early. I believe that you want to make as many decisive moves as early in your tenure in a job like this as you possibly can, while making sure they’re all the right moves. So that you get all this behind you. There’s nothing worse than a lingering situation where people wonder where you are taking the company or what you are going to do with the company. So I thought there was a great premium on making as many big decisions as we could early so the organization could start focusing on the future and be less focused on the past and what I was going to do.
Q-Do you ever wonder what this does to you?
A-The hardest of this is that it touches 50,000 lives. You can’t escape that. And I’ve gotten more than a few letters from associates who have been affected by this who were very eloquent. But I’ve got to think about the 300,000 that remain to make sure there is a vital future for this company so that the 300,000 who remain have a job and good prospects for earning a living. There are multiple constituencies that are affected here, and it is very hard for those people to understand why me, and it is painful stuff for sure, but we try to look a little bit past that to those who remain.
Q-Do you take pride in making those decisions?
A-I’m very comfortable making them. I think people have written, and I kind of laugh about it, about my draconian reputation. Draconian means to me to be mean-spirited and difficult for the sake of being difficult. All I felt that I did here, and what my mission was, was to make some very clear decisions about the business and where it was going, assuming that I was in a position to do them. I don’t think that’s draconian. I think that just good management practice. And I want to be remembered when my journey through this company is done as the guy who rebuilt the company, not who tore it down the first six months. Closing things and tearing things down is necessary, but not happy work, is the only way I can describe it. The fun part of the job comes from taking us from this point forward and building something.
Q-How will you be spending your time when this is behind you?
A-The thing that I enjoy is getting out of the office and getting into the stores. I’ve been sort of landlocked here for the last couple of months with all the decisions that we’ve had on our plate. But I think this organization here serves our field organization. That’s where the customer comes in the door, that’s where things happen and that’s where the best intelligence comes from. So getting out there to where the customers are and where the front-line people are. And looking at what’s working and what’s not working is what I like to do, and that’s where I like to spend my time and that’s where I think our people should be spending their time because that’s how they get feedback on whether things are working for them. And then bringing that information back for planning and strategy meetings.
Q-You’ve said several times this morning that Wal-Mart is not a competitor of yours. This sounds very much like the Wal-Mart strategy of getting people out of the headquarters and into the stores and back for those Saturday meetings.
A-It’s Retailing 101. Wal-Mart has raised it to a new art, I will acknowledge that. There are no successful retailers who run a successful, high-performance business out of their office. I think it’s just very basic to how you run a business, to how you run this business.