Sears 2007 Annual Report Download - page 22

During January 2008 Holdings announced that we would implement a new organizational structure and
operating model designed to simplify the way our business lines are managed and create greater autonomy,
accountability and focus for our business unit management teams. The new model is intended to provide clarity
and resolve issues more quickly, as well as allow us to optimize our resources to operate our businesses more
effectively and efficiently. While we have begun the process of transforming the organization to this new model,
it will take some time to build the processes and information systems necessary to support the structure.
Specific actions taken by us in 2007, which were intended to build long-term customer relationships and
improve the profitability and/or daily operations, include:
• completed development of new Internet technologies and migrated our selling websites to an improved
e-commerce platform. This new platform positions us to attract and retain customers using a
multichannel service approach to create a consistent experience across the channels and enhance the
offerings and the shopping experience where channels intersect. Examples include store-to-Web,
Web-to-store, special order catalogs and the sales hotline. Multichannel represents the potential for a
sustainable growth vehicle for our company and represents an opportunity for us to unify and integrate
the customer’s experience.
• improved Holdings’ on-line capabilities by launching searsprovider.com, a new and efficient way to
recruit independent service contractors to help us grow our Home Services business. A significant
amount of money is spent each year in the U.S. on home repairs and remodeling projects.
Searsprovider.com allows our current and future service contractors to provide detailed information
about their skills and the trades they service. This knowledge will help us support current service
needs, identify capabilities and launch new service offerings. Finding small businesses for select home
projects is a new market and Searsprovider.com positions us to take advantage of this growing market.
• worked to enhance our marketing efforts to better communicate the benefits of our product and service
offerings. For example, in August 2007 we introduced the Ultimate Appliance Promise campaign. The
purpose of this campaign is to show our customers that we are uniquely positioned to meet their
appliance needs by offering the largest selection of appliances, a price guarantee, one year of free
service and support, and next day delivery and installation in many markets across the U.S.
• continued to open Lands’ End at Sears shops, providing customers a convenient location to purchase
Lands’ End-branded merchandise. The consolidated specialty “store-within-a-store” presentation
carries merchandise for the entire family and incorporates dedicated consultants for enhanced customer
service as well as Internet kiosks connecting customers to the direct-to-consumer Lands’ End
business. The Lands’ End at Sears shop network grew to 200 stores in 2007, including an enhanced
20,000 sq. ft. layout. Holdings currently intends to roll out additional Lands’ End at Sears shops in
2008. Holdings further intends to assess the applicability of the insight gained from the Lands’ End at
Sears shop format to other potential brand-based “store-within-a-store” opportunities.
• expanded our dealer store operations by adding 40 stores during the year. These independently-owned
stores have historically been located in smaller communities, however we are beginning to open dealer
stores in more urban areas. These stores are smaller than full-line stores and carry select merchandise,
including Kenmore, Craftsman and Diehard brand products. We plan to continue our expansion of
dealer stores in fiscal 2008 by continuing to open stores in both rural and urban neighborhoods across
the U.S.
• remodeled approximately 30 Kmart stores to include Sears-brand products. We intend to continue our
rollout of home appliances, including Sears Kenmore-brand products, into Kmart locations over the
next several years as a means of expanding our points of distribution in response to competitor store
growth. As of February 2, 2008, approximately 280 Kmart stores, including certain of the remodeled
locations, offered broad assortments of home appliances.
• continued the process of converting the information technology systems of the Sears Domestic and
Kmart segments to a common platform. During 2007, we implemented a new common accounts
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