How Late Is Too Late For Sears and Kmart?

downloadSears Holdings (which includes the Kmart brand) is slowly crawling its way to its potential demise. However, Sears will not give up without a fight, and not without spending $560 million in media per year. Apparently, there is revenue to be seen, to the tune of $20 million. So why is Sears Holdings experiencing difficulty in attracting an ad agency to help them out of their downward spiral?

Sears’ latest ad teams Tentsu and Omnicom Group dropped out, leaving Sears to find another agency that can transcend their ongoing branding issues. The greatest underlying problem for Sears is the brand’s perceived as being out of date and slow to adapt to market innovations. Sears’ latest attempt at combatting online retailers, such as Amazon, is their very own online shopping experience, However, the consumer-membership service is received with skepticism, even from the three ad teams that have reached the final round of the big Sears Holdings review.

Although a media spend of $560 million may seem substantial, Sears’ agency compensation has dropped. Sears has also cut costs by reducing investment in stores and by selling off assets and real estate holdings. This proves that Sears is experiencing a severe cash-flow issue. There are even projections that the company will run out of cash in 2016 if they continue on the path they are walking. So many ask, is advertising enough to get Sears Holdings out of the deep hole they have dug for themselves?

The former CEO of Sears Canada, Mark Cohen, made a very clear and strong statement supporting the idea that no amount of marketing will be enough to help Sears Holdings. Cohen stated, “No level of marketing effort with regard to quality or quantity can reverse the damage that Sears has incurred. Without appropriate leadership, product assortments, pricing and acceptable levels of productivity, a sinking ship like this will just continue to founder. There is no viable strategy in place that customers find attractive or compelling.”

On the other side of the coin, there are the ever-optimistic ad execs that recognize the Sears brand as being iconic in the sheer fact that it has existed for so long. They acknowledge that the brand has rebounded numerous times, and this is just another dip in the perpetual cycle. And naturally, there is the ego appeal for an agency to be able to bring an “iconic” brand back from near death.

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