Getting the right merchandise in each of its 833 department stores has been a major challenge for Sears, Roebuck and Co. For years, the retailer’s centralized buying operation sent the same winter coats, bedding and appliances to locations as diverse as Miami, Los Angeles and Chicago.
Of course, some items that did well in the Midwest flopped on the coasts or in the Sunshine State. The mismatches weren’t lost on Sears chief executive Arthur Martinez, who made micromarketing a top priority after he joined the Hoffman Estates-based giant more than five years ago.
Now, Sears’ top guns are hoping IBM’s Makoro software system for merchandise planning is the answer. Makoro is sophisticated enough to handle sales forecasts for Sears’ full-line stores as well as its 2,697 specialty outlets.
The program assimilates all those forecasts into “one version of the truth,” explains John Ehmann, principal in the Consumer Driven Solutions unit of IBM. Previously, Sears relied on a hodgepodge of software programs and spreadsheets to come up with a unified buying program.
In recent years, the retailer did pretty well at customizing fashion offers at individual stores, said Ann Raives, Sears’ vice president of merchandise planning. But it didn’t have the computer firepower to do the same for basic apparel, appliances and hardware.
“Once in a while we sent coats to Puerto Rico,” she said.
Take the lawn mower dilemma. Sears carries a wide variety of lawn mowers, including side-bag, rear-bag, gas-powered, electric and sit-down tractor models.
But different stores need different assortments of mowers. St. Augustine grass in the Southeast requires a heavy-duty lawn mower. California restricts certain types of gas-guzzling lawn mowers, and desert dwellers need only lightweight, inexpensive models.
Makoro allows buyers to consider those needs and then makes sure the right lawn mowers arrive in the right locations. If stores have what buyers want, there should be fewer markdowns and higher margins, Raives said.
Makoro is currently being tested with selected lines of Sears merchandise. It should be up and running across the full-line stores in the first quarter of 1999, and eventually throughout the company, Raives said.
Fewer coats winding up in Puerto Rico is a good thing.
Building boom: Despite some cautionary signals in the retail economy, Chicago-area developers are raring to go in 1998. They plan to add some 6.2 million square feet of new and expanded shopping center space this year, nearly double the 3.3 million square feet added in 1997.
Most of the construction will be devoted to food stores, multiplex theaters and home improvement centers, according to David Bossy, principal with Mid-America Real Estate Corp. in Oakbrook Terrace, which surveyed developers. Thirty new grocery store projects are in the works.
Some of the boom will be focused in Chicago itself as the huge success of the Clybourn Corridor in West Lincoln Park encourages retailers such as Target, Home Depot and T.J. Maxx to seek other urban locations.
Yet the advent of these big players with deep pockets will undoubtedly lead to the demise of some weak retailers who are now limping along with little competition, Bossy notes.
Safer sidewalks: There’s good news for the hordes of pedestrians terrorized by daredevil in-line skaters. After years of dramatic increases, it appears the sport’s popularity is beginning to slow.
Manufacturers’ sales of in-line skates and accessories declined an estimated 18 percent to $520 million in 1997 from 1996, according to the Sporting Goods Manufacturers Association.
Much of the falloff is attributed to excess inventories, heightened by an influx of new companies in the industry.
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The in-line skate manufacturers aren’t giving up, however. They are coming out with “soft boots” that make skating more comfortable. And several have designed skates with quick-release wheels and boots that can be used for walking.
Keep watching your back.