Sears Case Study free essay sample

Sears is our nation’s fourth largest retailer. With over 4,000 stores in the United States and Canada, Sears has grown from its humble beginnings. Sears is a leader in apparel, home appliances, home, lawn and garden, tools, automotive repair, maintenance, and electronics. Sears also provides home service, serving 11 million service calls yearly. Richard Sears founded Sears as a mail order company and it grew to be one of the largest retailers. He opened the first department store in Chicago in 1925. Sears found success and by 1928 three more stores had opened. Now Sears employs 249,000 employees and it has grown quickly. In 2005, Sears merged with K-Mart and has helped both evolve and the merger proved to be both successful and positive. Although they have faced challenges along the way they have been able to gain a large market share because of their product mix, quality services, products, and solutions. No matter what difficulties they have faced Sears has been a leader in the retail industry and they will strive to be sure that doesn’t change. We will write a custom essay sample on Sears Case Study or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Sears has come a long way from its beginnings as a catalog. Sears has many unique attributes that make it a place that people want to shop. Despite their great accomplishment and striving to become one the largest and most competitive retailers, Sears is facing several key issues. Sears must reevaluate their internal and external environment in order to implement the changes and solutions necessary to get Sears back to where it needs to be. This has definitely been key to their success because they are able to tailor their products to their customers needs using an integrated cost leadership/differentiation strategy. Sear is competing in a very competitive industry and if they follow through with their differentiated strategy they will continue to improve. Sears was able to pursue low cost and provide differentiation to their customers. Rosa Corporate Financial Position Sears financial position is currently improving. They are dealing with not only a let down on their fourth quarter losses but the sales have decreased as well in both their department stores and Kmart unit. To deal with their losses they are in the process of selling 11 stores to make up for their finances which has made their stocks go up at 19% (MarketWatch, 2012). If they sell these properties they could earn around $270 million in proceeds. It could go either way though since when sales decrease selling assets may not be the right way to bring in growth in the future. Also if they follow their plan of moving Sears Hometown and Outlet stores they could bring in between $400 million to $500 million of proceeds during the third fiscal quarter (SHLD: Nasdaq, 2012). Sears net income has dropped continually year after year from $235. M to a mere $133. 0m. One reason being is the percentage of sales has been more focused on the SGA (Sales General Administration) costs which has made it go from 23. 69% to 24. 09% (SHLD:Nasdaq GS, 2012). Core Competency The main core competency would have to be in there customer service. They offer great service to their customers which has gave them a comp etitive advantage against competitors. They use this to differentiate themselves from competition. They have built up a good customer base. They make sure they have their best associates available for customers especially through peak hours. They try and do all possible that will let them have a good customer relationship with their customers. Sears also likes to make sure their customers are completely satisfied with their shopping experience. Strengths/Capabilities/Resources †¢Strong balance sheet †¢Holds valuable assets-substantial liquidity($3. 2 billion total) †¢Strong retail network †¢ Economies of scale (3,847 stores in U. S Canada) †¢Brand mix is balanced †¢Extensive product offerings †¢Top market position †¢Many different lines to offer (appliances, automotive, lawn and garden, tools, home electronics, clothing, etc. †¢Dependable to the customers †¢Service Departments Weaknesses †¢Poor operating performance (high operating expenses than competitors) †¢ Store sales volumes are low †¢Inventory turnover is low †¢Negligence towards quality control †¢Weak in specialty retailing †¢High administrative costs †¢Sustainable growth †¢Too much diversification (offer too many services) Firm’s External Environment Amy Demographics Please note, I didn’t include any information about Sears’ target markets. I was not sure if this would go in the demographics section I thought it might flow better under strategy. I can certainly add more to this section as well, if any of you have any thoughts/suggestions. Thanks! Currently, worldwide demographic trajectories show that the fastest growing age group is people over the age of 60. As this age demographic continues to grow, younger populations are projected to decrease at the same rate. The under 15 age group is currently 26% of the global population, which will decrease to 20% by 2050. (Market Potential of Maturing Customers) This will drastically change business strategies in the future, as younger generations are target less marketing becomes more adult-focused. With an increasing older population, this will create additional buying power and opportunities for the retail market. Currently, individuals over the age of fifty own 80% of the U. S. financial assets and have half of the discretionary income needed for retail spending. Additionally, worldwide consumers over 60 years older are projected to spend $15 trillion by the end of the decade, which is a massive increase over the $8 trillion recently spent by this age demographic in 2010. (The Market Potential of Maturing Consumers) By focusing on this age demographic, it may provide great growth opportunities for Sears in the future. Changes in target age demographics will also change the dynamic of shopping. Mature consumers are likely to spend more time in-store, looking for a quality shopping experience. This will likely change the dynamic of retail service, store layouts, products, and prices. Sears and its competitors may become more focused on limited, high-quality products at low prices, rather than unlimited, low-quality, low-priced products. With these changes, there will also likely be a shift in marketing strategies, customer service focus, and product designs.