In April, Lands’ End was split off from the Sears Holdings Corporation…

This was the first time it had been an independent company in twelve years.

Was it a smart move?

Well… in the first quarter since the split, Lands’ End has increased its sales by 3.6% and seen profits rise by 48.1%.

Impressive results for Lands’ End…

But for the Sears department store… it’s just another sign that the once great brand is now in decline.

The spin-off was a result of increased operating loss and declining sales at Sears.

The department store, once an icon of middle class aspiration, has been struggling for a number of years.

Its share price is down over 76% since 2007…

But why does Sears appear to be dying a slow death?

What lessons can we learn to avoid making similar mistakes?

Let’s take a look:

Failure To Understand Their UAP

For a company to succeed in today’s market, it must have a Unique Advantage Point (UAP)…

For Sears, that was the experience of shopping at their stores and the quality of the products.

What Sears doesn’t do is compete for the cheapest prices – they left that to retailers like Wal-Mart.

Unfortunately, Sears does appear to have neglected their own value proposition by failing to reinvest back in the business…

And their lack of investment back in the company certainly showed.

Thanks to social media sites like Twitter, pictures of empty shelves and poor product selection spread quickly, strengthening the idea that Sears wasn’t a place that anyone would want to shop.

Not good.

Not Adapting To The Current Market

Sears has also been slow to adapt to the way that shopping has changed – in particular, the importance of ecommerce, a trend which is affecting everyone in the retail industry:

Business-to-consumer (B2C) ecommerce sales are expected to increase by 20.1% in 2014, hitting $1.5 trillion! (Source)

Interestingly, Lands’ End is doing a great job in that department…

A large part of the success as a spun-off company is Lands’ End’s online marketing savvy – they make 84% of revenue from internet and catalogue sales.

The brand has adapted to the age of “social selling” by using a curated blog, building a large Twitter following, and keeping a popular Tumblr account.

The Sears brand, however… just hasn’t kept up. 

Sears Doesn’t Compete On Price, But… Doesn’t Compete On Value Either!

In the “Predictable Profits Playbook,” I explain why competing on price is a losing strategy…

But simply charging your customers more for the same products isn’t a winning strategy either.

You need to support those higher prices by offering greater value too. Customers have more shopping options than ever before, and put simply, there just isn’t a compelling reason to shop at Sears.

In contrast, a brand like Nordstrom has been able to continually charge higher prices because they focus on delivering tremendous value:

• An extremely generous “return anything” policy – and they mean anything
• Employees that are willing to go the extra mile for their customers
• An exclusive shopping experience that makes you want to buy

These are all things that Sears should be doing as well, but they won’t achieve them by under-investing in the business…

Hopefully, Sears will make some much-needed changes so that they can resume their place as one of the great American retailers…

But whether they succeed or not, the faltering company has provided some valuable lessons about building a thriving business in today’s market.

What else can we learn from their mistakes?

In your corner,

Charlie