The Hard Road to the Softer Side: Lessons from the Transformation of SEARS

When Arthur C. Martinez moved from vice chairman of Saks Fifth Avenue to the top spot at Sears in 1992, his immediate duty was clear: use his outsider's perspective to remake a stodgy and floundering 19th-century retailer into one prepared for the challenges and opportunities of the 21st century. The problems he uncovered ran deeply enough to require two complete transformations, sandwiched around corporate legal problems that led to millions in direct damages and an incalculable loss in consumer goodwill. The Hard Road to the Softer Side tells how Martinez went about this conversion during his eight- year reign, the book's title playing off the ad campaign central to his efforts to reposition the company from a dowdy purveyor of tools and appliances to a modern outlet for fashion and fun. The key was recognizing that Sears's primary customer had shifted over the years from the man of the family to the woman, and that everything from store design and brand selection to prices and marketing efforts had to reflect that reality. To effect these changes, he unflinchingly confronted a succession of sacred cows--the most notable of which, the venerable Sears catalog, was losing so much money he was reluctantly forced to kill it. He also closed dozens of unprofitable stores, shed longtime affiliates like Coldwell Banker and Allstate, oversaw a cautious entry into e-commerce, and even adopted some concepts used by aggressive competitors. The specifics won't apply to many companies unless they also do $40 billion-plus in annual sales, but the story of Sears has always been the story of American retailing, and the principles behind its 1990s resurgence (focus intently on the customer, keep a close eye on the competition, don't be afraid of change) are generally applicable to enterprises of other sizes and types as well. --Howard Rothman