Sears' Only Hope Is To Go Entirely Online

| About: Sears Holdings (SHLD)
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Passing by a local mall last week, I was both surprised and disappointed when walking by a Sears (NASDAQ:SHLD) store I had visited for years. Standing out front by the entrance door was a poorly displayed clothes rack offering a 25% discount. The deal may have been worth taking advantage of, but something inside me couldn't look twice at the slovenly decor that proved simply a precursor to what was awaiting inside.

Items strewn across the store's floor made a franchise that once seemed as refined as Dilliard's (NYSE:DDS) or Macy's (NYSE:M) suddenly appear nothing short of a flea market that even Walmart (NYSE:WMT) would overpower in class and etiquette. My eyes were taken off the shambles only when witnessing groups of employees standing in corners chatting and laughing with each other. They weren't avoiding work or abandoning customers, they merely had no customers to assist.

For those who assume this is something that can be turned around in an instant, a rude awakening is sure to come. Even steps to attract customers can only go so far when so much has been done to blatantly turn them away. Especially in an industry that offers so many other choices, better choices.

There is however, one remaining option. Granted by the further deterioration of stores, its probably an option most of the company's management has already considered. This would include closing all the remaining stores and going exclusively online. Although a project that would require serious undertaking, it would provide a number of benefits the company has already all but gone after.

Below are three benefits of Sears's turning exclusively to an online marketplace.

  1. Cost-cutting: The company's management has done little, if anything, to cover its attempts to lower costs. From announcing more store closings in December to clearly spending as little as possible on store upkeep, ridding themselves of the rigors of keeping open losing chains should be an enticing proposition.
  2. Lower Prices: The reason we have come to love shopping online is not necessarily a result of the ease of shopping from home or ability to save time, but the deals that are prevalent through such a channel. Without having to maintain stores or hire thousands of workers, the company saves money and is clearly able to pass on those savings to customers. Though good deals alone won't save the company, they are a start toward winning back customers.
  3. Flexibility: There is no question we live in a fast-paced society. What's great one day may turn obsolete the very next as Sears stores have shown us firsthand. Through an entirely online channel, Sears would no longer be handcuffed in trying to reinvigorate stores that are nearing the point of no return.

At this point, Sears may be slow to make such a brazen move. However, it's a move that the company should be forced to seriously consider. After all, it clearly doesn't have much time.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.