The Sears Tower in Chicago is shaking this week after Sears, Roebuck and Co.'s top-secret five-year business plan was leaked to a Chicago business publication.
The "Headquarters Merchandising Plan 1979-1983"-known as The Yellow Book inside Sears' headquaters in the worldhs tallest building-provides details never before disclosed about the operations of the world's biggest retailer.
The report apparently was leaked by someone at Sears to the editors of Crain's Chicago Busines, a six-month old local business weekly published by the company that owns Advertising Age.
Devoting eight full pages to the Seats report, Crain's Chicago Business sold out in the Chicago Loop in two days. A shorter version of the story in Advertising Age quickly circulated through the New York Retailing community.
The report is must reading for merchants, not only because Sears is the biggest in the business-its sales amount to one percent of the United States' gross national product-but also because the chain is in the midst of a major change of direction.
The report details Sears' plans to reduce its advertising spending and cut back on price-cutting promotions. Although these moves are expected to reduce Sears' sales, ultimately they should increase profits.
Ernie Arms, Sears' top public relations man, sought yesterday to minimize the impact of the leaked report, but acknowledged, internally, some people are upset.c
Sears' employes already had been briefed on the company's new strategy, he said, but after the report appeared, the company gave employes additional information to correct what Arms called "misinterpretations" of the report.
There was no formal response to the leaked report from Sears Chairman Edward R. Telling, who took control of the company in February and changed the direction of the giant corporation.
Telling has led Sears to abandon its recent practice of boosting sales with heavy price-cutting promotions
The advertised price cutsforced the chain to raise its markups on everyday merchandise, but resulted in lower overall profits, the report says. Telling's strstegy is lower everyday prices, fewer promotional sales, and hopefully higher profits.
The report reveals the business philosophy of Sears executives in the kind of self-conscious assessment rarely heard outside corporate board-rooms.
"Sears is a family store for middle class homeowning americans," the report declares.
"We are the primier distributor of durable goods for these families, their homes and their automobiles.
"We are the premier distributor of non-durable goods that have their acceptance base in function rather than fashion.
"We are valued by middle-class Americafor our integrity, our reputation for fair-dealing and our guarantee.
"We are not a fashion store. We are not a store for the whimsical, nor the affluent. We are not a discounter, nor an avant-grade department store. We are not, by the standards of the trade pressor any other group of bored observers, an exciting store.
"We are not a store that anticipates. We reflect the world of middle America, and all of its desires and concerns and problems and faults."
Turming from observation to objectives, Crain's Chicago business extracted Sears' sales for major merchandise categories and the chain's projected sales growth for the next five years.
Sears had sales of $17.2 billion last year and, according to thereport, projects a total retail and catalogue volume of $28.7 billion by 1983, representing an 11 percent compound growth rate.
The company's 1977 sales and the 1983 goals for major merchandise categories are: home appliances, $2.6 billion, $4.73 billion, up 82 percent: home fashions, $2.08 billion $4.07 billion up 95 percent; women's apparel, $1.06 billion,$2.06 billion, up 93 percent; men's apparel, $1.07 billion, $1.92 billion, up 79 percent; children's apparel, $1.13 billion, $2.15 billion, up 90 percent; accessories and specialties, $1.34 billion, $2.6 billion, up 93 percent; home improvements, $3.58 billion, $6.93 billion, up 93 percent; automotive, $1.35 billion, $2.44 billion up 80 percent; recreation and leisure, $1.02 billion, $1.75 billion, up 71 percent.
The internal document reveals Sears' assessment of its own weaknesses, pointing fingers at the women's wear departments, which the report says suffer from"a male-dominated image."
"As we view Penney's and the other major competition, our retail floor space is woefully inadequate. Our displays, our compensation policies and our overall ambience continue this chauvinism."
The report says Sears will abandon the budget priced women's clothing business and will also stop carrying fabrics, making the move next year.
Sears will reduce the number of suppliers who make its merchandise, but does not indicate how many of the company's 12,000 resources willbe pruned. In the future Sears plans to buy only direct from manufacturers, eliminating representatives and other middlemen.
Other changes under study include the possibility of fast food restaurants in Sears stores. CAPTION: Picture, Publication of Sears' secret, company-wide market plans through 1983 had corporate offices at the Sears Tower in Chicago buzzing yesterday.