|Sears full-line stores, located in many of the nation's
finest shopping malls, remain at the heart of the company's retail
strategy. Their dramatic transformation over the past five years speaks to
Sears commitment to create a compelling shopping destination for the
Fifty-seven million square feet of space in these stores has been remodeled since 1993. More than 14 million square feet of selling space has been added in apparel departments alone, through remodels, expansions and new stores. Today, two out of every three square feet of selling space is dedicated to apparel, accessories and home fashions, key shopping categories for Sears target female customer.
Sears also is adding new full-line stores. Of the 23 built in 1998, 11 were relocated stores for a net gain of 12, bringing the total to 845 nationwide. Going forward, plans call for constructing 18 to 25 new stores in 1999, 6 to 8 of which will be relocations, for a net gain of 12 to 17 stores. Some of these stores will serve urban locations, where higher real estate and operational costs are offset by greater store traffic and productivity. Some will be in smaller markets that have been underserved by national retailers of Sears quality.
Sears full-line stores offer a complete line of merchandise - apparel and other softgoods, home and automotive products, and the company's legendary hardgoods, including hardware, home improvement products, appliances and electronics. Sales performance in 1998 was affected by increasing competition in apparel from discounters and department stores, which partially offset solid hardgoods results in home appliances, electronics, and lawn and garden.
Powerful stable of brands in softgoods and hardgoods
In hardgoods, the addition of Maytag appliances for the full-year 1998 makes Sears the only retailer to offer consumers all six major appliance brands: Amana, Frigidaire, General Electric, Maytag, Whirlpool and Kenmore, the number one selling appliance brand in the country and found in one out of every two American homes. The company will continue to build its market share in appliances through brand selection, price leadership, credit and service, as well as innovative new products. Introduced in 1998, for example, the Kenmore Microwave Hood Combination exceeded sales expectations, and the Kenmore SmartReach refrigerator with freezer on the bottom was added to specialty refrigerator products.
In home electronics, where big screen televisions and camcorders are best sellers, especially during the holiday shopping season, emphasis will be placed on high-end brands such as Sony.
In hardware, Craftsman products continue to define Sears authority in tools, complemented by nationally-recognized brands such as DeWalt and Makita. In 1998, American consumers ranked Craftsman second among all national brands based on quality. Customers responded enthusiastically to Craftsman Driver Light, a lighted screwdriver, and Craftsman Redi Drill, a 12-volt drill with drill bits stored inside for easy changing - just two of the 60 new tools introduced in 1998.
The company has made great strides in diversifying its retail presence geographically and now operates more than 2,000 specialty stores nationwide. Most of these stores are in free-standing, off-the-mall locations or high-traffic neighborhood shopping centers. They are accessible to a large number of American families and include hardware stores, dealer stores and automotive stores. The latest format is The Great Indoors, a new concept in home remodeling and redecorating.
Home stores performed well in 1998
Both Sears Hardware and Orchard offer convenient neighborhood locations that are ideal for serving the maintenance shopping occasion. They also provide additional outlets where customers can purchase Sears exclusively branded products, including Craftsman tools, WeatherBeater and Easy Living paints, Kenmore appliances and DieHard batteries.
Another of Sears innovative formats, locally-owned and operated dealer stores, continued to grow rapidly - to 653 units at year-end 1998. Called America's rural superstore for appliances, electronics, tools and lawn and garden equipment, they serve smaller communities. Sears added 77 dealer stores in 1998 and plans an additional 170 stores in 1999, which will bring the total to more than 800 nationwide.
The company also demonstrated its commitment to innovation by opening a 150,000 square-foot prototype store to serve as the woman shopper's single destination for home decorating and remodeling projects. Called The Great Indoors, the store opened in early 1998 near Denver, Colo., and finished the year with strong results. It is designed by women for women and emphasizes the four basic rooms of the home: kitchen, bedroom, bathroom and great room. Current plans call for three additional stores by late 2000.
Changes refocus Sears automotive business
Sears automotive business now operates through two formats, Sears Auto Centers and NTB. Each format is unique, and taps into different customer shopping expectations and behaviors, although both have the ultimate objective of providing peace of mind to customers. The Sears Auto Center customer has a preference for shopping "on-the-mall," and likes the excellent values and the broad assortment Sears offers. NTB provides "off-the-mall" growth as the industry expert, with competitive prices, nationally branded products, and associates skilled in solving customers' problems.
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