Life After Debt: Inside Sears

In this new economy, Sears is adapting to survive.
Inside the Sears flagship store in Chicago as customers look at merchandise, up in the second floor war room, Sears is looking at its customers and tracking their internet page clicks and purchases.

Jeff Hamm, IT Director at Sears says, "We're watching you and watching you buy stuff and learning from you."

As CBS News correspondent Anthony Mason reports, that research is more important than ever with the earthshaking shift in American shopping habits.

"All the metrics, consumer confidence, consumer spending have declined at a rate we haven't seen in 40 to 50 years," said retail consultant Michael Dart.

Richard Gerstein, head of marketing for Sears and Kmart says, "I think the customer is re-assessing their personal values and what value means in the world of shopping."

Inside the sprawling corporate headquarters, Sears executives are scrambling.

The company made a profit in the first 3 months of 2009 but overall sales were down nearly 12 percent from a year ago - to an average of just $64 a day according to a recent poll. That's down 38 percent from a year ago

Lisa Schultz, who leads the New York apparel team that designs for the 3,800 Sears and Kmart stores, says the economy will definitely affect the choices she makes.

To cut costs, Sears designers are actually developing their own fabrics. They're making blouses with machine washable polyester chiffon at $20. It looks and feels like silk that retails for $100.

"Price is very important," says Schultz.

Sears also is promoting a guarantee to replace any kids clothes that wear out.

Sears is the biggest appliance seller in the country, but sales have slipped. So soon it will allow buyers who lose their jobs to suspend payments.

And at store kiosks, Sears is even offering to find items it doesn't carry. They'll actually go on other websites to find the items you're looking for, and process it for you without charging you extra. He says, "we don't want you shopping anywhere else."

After closing 28 stores last year, Sears will shut another 24 this year.

In this recession, as shoppers are redrawing the retail map, Sears is trying to make sure it will still have a place on it.

  • Anthony Mason

    CBS News senior business and economics correspondent; Co-host, "CBS This Morning: Saturday"