With 120 Sears and Kmart stores about to be shuttered, the future looks uncertain for yet another iconic US retail brand. Here’s our view on what it might take for Sears Holdings to create a brighter future.

It’s an understatement to say the retail environment has become a slush pile in the past decade. Once a dominant presence in every major mall across the US, Sears is now a relic from the past struggling to find its way in a culture that no longer seems to care.

Same goes for Kmart– these iconic and once beloved brands (like Kodak) appear beyond transforming themselves into something that people will love again.

I remember growing up in the 60’s and shopping at Sears and Kmart with my Mother. She loved shopping in both those stores. Dad too. It seemed to me both these brands represented the idea that the good life was accessible to just about everyone everywhere. My family was no exception. My parents made all their major purchases at a Sears or Kmart store. They wouldn’t consider alternatives.  I grew up with a deep belief that these stores were somehow sacred places for a thriving middle class living the American dream.

Times change, Sears and Kmart didn’t.

Now executives at Sears Holdings find themselves in a scramble to figure out what to do with these brands that have become dinosaurs from a lost world–relics from a time when things were simple and uncomplicated.

Retail knowledge and expertise is not the core problem for Sears– it’s the investment banker management culture that has over time sucked the value out of these brands.

Profit has been placed above serving people with experiences they care about. As I have written in previous posts, iconic brands begin to die long before the cash they generate dries up.

Of course, there are many highly skilled and experienced people within the Sears organization that know the retail business inside and out, with far more depth than I will ever know in a hundred lifetimes. It’s time for the folks at Sears Holdings to transform the brand into something worthy of its heritage and a brighter future.

Sears’ brighter future is in the parts not the whole.

Despite tired merchandising and dingy looking stores, Sears store brands are a shining pot of gold that can pave the way forward to a brighter future. Craftsman, DieHard, Kenmore and Lands End are all highly valued brands that still matter to consumers. Trouble is, one has to go into a crappy Sears stores to buy them.

Maybe a tough decision could be made to sell these coveted brands through other retail channels. According to a recent post on Store Brand Decisions, that may already be happening as there is speculation the retailer may be getting serious about new channel strategies for its legacy hardline private label brands.

According to the post, Sears has made moves to expand its store brands beyond its own stores. Sears recently struck deals to sell Craftsman tools at Costco stores and is expanding this program to include Ace Hardware stores. This past September, Sears announced plans to sell its DieHard Gold auto batteries at Meijer discount stores. However, there have been no announcements about selling Kenmore appliances at other retailers, but there’s plenty of speculation.

That seems like selling off the “seeds” of their brighter future. Indeed it’s a logical short-term strategy for revenue and keeping the stock price up, but these coveted store brands own all the cache! When you can buy them somewhere else, who needs Sears?

Seems to me, reinventing the Sears experience by leveraging the valuable equity in these private brands through more effective and creative merchandising in smaller retail footprints and online is the smarter move. Get rid of everything else–including Kmart. Who needs a Kmart today when Target, Wal-Mart and a host of other discount retailers have that space covered in spades.

Create experiences people love.

The entire Sears customer experience must be purposefully reinvented and designed.  This is what IKEA accomplished. Despite the fact that people hate shopping for furniture, IKEA reinvented the entire furniture shopping experience–and did it in a manner that’s contrary to the conventional wisdom about furniture retailing.

Unlike most furniture retailers, IKEA does not deliver, and you have to set-up your stuff once you cart it home. And despite all this hassle, people love IKEA. It is one of the most beloved retail brands. People don’t buy furniture at IKEA they buy into an idea, an ethos, a certain way of living.

Sears could learn a thing or two about the value of designed experiences to differentiate itself from other big box competitors. To do this will require a tremendous culture shift within the ranks of executive management.  To people concerned more about short-term profits, it’s far easier to close down non-performing stores than create ones people love to shop in.

Leverage the iconic Sears mail-order heritage into a richer digital experience.

Back in the day when people cared about Sears, they also loved the Sears Catalog. Sears invented the mail order catalog. With online retailing now common, Sears seemingly missed the boat translating their iconic catalog into a rich online experience consumers crave today.

On the current site, there are over two dozen product categories offered with thousands of items. You can buy everything imaginable. Why?  Why not focus the Sears online shopping experience around the valuable and much loved store brands. Leave everything else to Amazon who does a much better job.

Online, Sears is a me-too generic site. If people don’t shop in your brick and mortar stores that represent an experience they love, why would they shop online in the face of other more capable alternatives?  If you visit the site, there is no visual merchandising of the beloved trade names, only generic descriptors like “refrigerator” or “washers and dryers”. You have to really dive deep to find the brand name Kenmore. In the desire to sell everything under the sun, Sears no longer means anything to anybody.  In the online world, Sears should leverage its mail order heritage and be the exception not the rule.

Focus and the art of sacrifice.

The toughest thing for an iconic brand to do is focus and sacrifice. To thrive, Sears must do both. Sears needs to focus on a compelling positioning that sacrifices a “be all things to all people” business with gigantic scale, and transform itself into a business that offers a highly relevant value proposition narrowly targeted to select high value customers.

Less is more. Put the marketing and merchandising focus on the much loved store brands. Get rid of all the other the soft lines. Retire or sell the Kmart brand.  Design a compelling retail experience in smaller footprint stores. Reinvent the online experience. Target higher value customers.

Can they pull it off? Time will tell.