Try and Try Again

Retailers experiment all the time. But Sears Holdings celebrates its test-and-learn culture as a matter of corporate pride. Lampert’s idea is that he can, using data and good business sense, eventually figure out what’s wrong and fix it. “One of the great advantages of having approximately 2,300 large-format stores...is that we can test concepts in a few stores before undertaking the risk and capital associated with rolling out the concept to a larger number of stores or to the entire chain,” he wrote in a letter to shareholders.

Lampert’s tests are peppered throughout the country. In Zephyrhills, Florida, the company put a Sears within a Kmart. In Houston, it’s trying out a huge home-appliance showroom. In Rockford, Illinois, Sunderland and his team are testing a new Kmart design that has an outdoor-marketplace feel. Duluth, Georgia, has a retro-themed store. Maureen McGuire, Sears Holdings’ chief of marketing, says that testing is now so embedded in the culture that the company put two different covers on its famous Christmas staple, the Sears Wish Book catalog, which it reintroduced this year after a 14-year hiatus. The blue one with stars tested better than the red one with pictures of Christmas cookies in the shapes of power drills and high-heeled shoes, she says.

The problem, though, is that the constant experiments can be redundant, especially when there is such high turnover in the executive ranks. Institutional memory is lost. In late 2004 through early 2005, Padilla came up with a diagnosis for what was wrong with Sears. The result was an experiment in Vernon Hills, Illinois, featuring a store designed around the room concept, emphasizing products for the home. The flow of customers through the store was planned to be more logical, moving them from a garage area to a workroom to an expanded area for backyard products.

But the Vernon Hills model was never rolled out widely. Lampert didn’t want to put as much money into the store as the plan called for, and he tended not to embrace initiatives that weren’t his own, insiders contend. The result is that, two years later, elements that are awfully similar to the Vernon Hills plan are still being tested just a couple states over, as Sunderland showed me near Cincinnati. It’s possible that if Lampert had seen the Vernon Hills plan through, the pavilions and the Oracle might never have been necessary. (Sunderland says Vernon Hills wasn’t the inspiration and that he and his team started with a “clean sheet of paper.”)