Kmart and Sears - Defying Botton-Line Gravity

Every so often someone comes along to rewrite the accepted rules of their activities.

Henry Ford has rewritten the rules of cars do when they have decided to move partially assembled cars with permanent workers, reversing the accepted way of producing large products.

In 1879, Franklin Woolworth opposition rules of retailing with its concept of pricing a whole file to a single discounted price - 5 cents. When the store failed to attract customers, closing a few weeks after opening, the critical retail said that was proof the concept of operation with a low retail price it would never work. Woolworth to challenge their views when he opened a second store in the same year, the addition of a second price, 10 cents. The new store was a success and led to 1,000 s of stores under the banner Woolworth and dozens of imitations.

Today, Eddie Lampert is incredible analysts by ignoring the main indicator of retail comp-store sales (sales comparisons this year, last year in stores open at least a year), and his company still grows ! Lampert led K-mart Corporation bankruptcy, shrewdly building a cash reserve sufficient for the purchase of rival Sears. Both companies have been losing market share at the time of the merger, leading analysts to comment that Lampert would sell the real estate of the new company and then liquidate it. As a comp-store sales continued to decline, analysts were positive realty sell-off was the only salvation for the company.

Now, four years later the company continues to produce a steady stream of comp-store decreases, although the two-digit drops are comfortable in single digits. Although analysts continue to scratching his head, Lampert has once again the construction of a bankroll as useful are significantly. The position Lampert is that the production of a smaller number of sales at a higher margin is a recipe for success.

Lampert secret of success

Lampert secret of successful escapes another traditional belief of management activities. Lampert is running an organization with no experience off discount. Traditional logic clearly states that someone is not able to run a company without a knowledge of the industry.

Malcolm Forbes once said "the purpose of education is to replace an empty mind with an open mind." Lampert knew finances, how to generate profits, and how to deliver cash reserves. Yet the mind Lampert was empty at retail. How did you learn from the best minds at K-Mart and Sears, Lampert has managed to keep an open mind as a fertile field for the development of a strategy to rejuvenate the company.

His plan, to replace low gross sales of high gross sales. Its formula generates a smaller number of transactions, but transactions still sufficient to compensate for the costs. It 's almost the exact opposite of Wal-Mart philosophy. Or is it? It may be that Lampert is simply hone Wal-Mart concept?

Consider that Lampert has drastically reduced the number of temporary price reductions, just as Wal-Mart - but with the entry points higher price.

Relative success of Eddie towards users

Lampert's success is unusual only because others do not need to key in their learning. Here are some important points to consider:

1. Recognize your flaws. Are you sure you know your products, but need help to understand the sales process or negotiation? Maybe you know how to do your job, but you have the skills to teach others how to harness their talents? Surround yourself with experts.

2. Do not be afraid to admit you need to know more. No one is so smart that can not learn more or benefit from the point of view of another fresh. Set pride aside and get help in the form of a mentor or professional coach.

3. Think differently. Sometimes success is simply a matter of doing a deaf ear to the experts and with you gut. If you try it, you have to believe in yourself or give up too soon. The first Woolworth store failed. He thought he was proved right and the second attempt. Success takes time and trust.

Summary

Only time will tell if Lampert is correct - and if he is in the same league as Ford and Woolworth. Regardless, we can all learn from his success and use its lessons for our own benefit.

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