How Sears’ will turn failing stores into moneymakers

The ground beneath many retailers is crumbling as online shopping cements itself as the new norm. Best Buy, J.C. Penney, Sears, Barnes and Noble, and RadioShack are all companies scheduling closures of many of their locations nationwide. But one retailer has taken steps to turn their real estate portfolio into a high-demand product: data centers.

How Sears plans to slow their downward spiral

According to Sears executives, closing stores is one step to try and “slow the bleeding amid 24 consecutive quarterly losses.” By turning some of those closed stores into data centers they could bring in much needed revenue to offset their losses. Sears created the subsidiary called Ubiquity Critical Environments LLC in March of this year and the chief operating officer at the helm is Sean Farney, who previously managed Microsoft’s data center in Chicago. Sears Holdings Corp. owns more than 32,000 properties nationwide and plans to transform over 2,500 Sears and Kmart stores into data storage centers. The first store scheduled to be transformed is a Sears store along Chicago’s skyway.

Since the location of many Sears stores is next to highways and freeways, so the company also plans to use the rooftop space available on these properties to build towers, providing a great opportunity to provide wireless service and negotiate deals with carriers for use of the towers.

The losing battle fought against E-Commerce

E-commerce revenue in the United States reached $14 billion in 2012, and shows only signs of growth. Companies like Amazon and Zappos are huge e-commerce rivals that retailers like Sears have had a difficult time battling. Sears’ troubles also stem from the inability to maintain pace with “big-box” competitors like Wal-Mart and Target. Electronics, books, clothes, shoes, makeup – the question is, what can you NOT find online?

Once upon a time, a huge retailer was on top of the world.

Sears Roebuck catalog

Sears Roebuck and Co. was one of the pioneers in the mail-order business. The first catalog was published in 1888 featuring bikes, dolls, stoves, tools, sewing machines – all could be ordered through the Sears catalog. Sales exceeded $750,000 in 1895. In 1925, the first retail store opened in Chicago.

Fast forward to 2013. Our shopping habits have transformed tremendously. New technology and innovation has made online shopping more convenient for consumers and hugely profitable for sellers.

On the other hand, rent, employee salaries, and fixed costs leave retail stores coughing in the dust of a business model like Amazon’s, the king of online retail. Market research firm Nielsen projects that e-commerce will grow more than any other retail industry segment by 2017.

Online shopping cartA lesson for small businesses and large retailers alike

The good news is that big retailers and small businesses alike can take away many lessons from Sear’s predicament. If you own or manage a business, give your customers a great option to buy from you online and at the very least, make sure they can find you online.

Another lesson: Listen to your customers. Dilapidated stores and bad customer service plagued Sears for years, and while they made efforts to invest in upgrading their stores and their e-commerce platform, experts say it’s too little, too late.

The ease of online shopping has everyone running to the keyboard to shop for what they want. The control that comes with online shopping is another perk – customers can look at reviews, pricing, and choose to buy what they want, when they want. Make sure to give your customers that experience with a great website, or risk being left in the dust.

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