In 1893, Sears began its adventure and has changed the way Americans shopped from clothing to furniture to appliances. Sears has earned tremendous success and managed to last through numerous changes in the world of retail market. However, in the last decade, a few companies rose with a better strategies and improved customer experience that affected their overall performance. These issues fall in the insight of the costumers, identity crisis, ongoing brand image and unmanageable long-term tactic for profit generation. Sears department stores slowly failed to retain the similar level of hospitality and importance that they provided to the customers in the past. With the introduction of online shopping, the demand for a physical location to shop became obsolete.
Sears began its downfall when it failed to compete with big box retailers like Walmart in terms of pricing of the goods as Walmart offered everyday low pricing to attract customers. Instead of adopting and changing their methods to meet the existing competitors, Sears merged with another troubled retailer Kmart, to form Sears Holdings. Eddie Lampert, the CEO of the company believed that by divestiture he could save both companies (Isidore, 2018). However, due to rapid growth of the competitors, Sears failed to invest online and plan to deliver high quality and low cost products to rebuild the business. Sears lost most of its customers to the online retailers like Amazon as it failed to keep up responding to the increased online shopping. Sears fell behind in the implementation and investment of new technologies for efficient operations. Sears failed to keep up the employee morale, as it didn’t focus on training and development, salaries and benefits of the employees.
According to Yahoo Finance, in this era, the customers are ordering more and shopping less which resulting for Sears to attempt and corral the customers into unsuccessful rewards programs via online (Santoli, 2013, para. 2). In addition to this, Sears slowly failed to communicate their brand image. When the image that the company promotes is not completely clear, it is difficult for the company to be remembered in a customer’s short-term memory. In a result, customers shop at Walmart for its low prices and Nordstroms for its quality. The unclear brand image starts from their partnerships with other business brands and variety of products that they retail. In long-term, it affects their strategy of retaining a competitive position and sustaining growth in the market. According to Brian Sozzi, a chief equities strategist at Belus Capital Advisors, Sears will eventually lose assets to retail to increase cash for funding operations (Lutz, 2014). With the uprising of technology, Sears is now facing with tech savvy customers, unclear brand image, and lack of financial strategy in long-term operations. In order to persist in the market and compete, the issues must e addressed.
Sears’ stock market price has plummeted drastically in the last decade. From stock price of $177 in 2007 to currently valued at $17 (Leong, 2016). Edward Lambert, CEO of Sears, blames the drastic downfall on department sales in those such as apparel and consumer electronics. These departments may offer low margins but they also represent large percentages of sales. With sales strategies implemented to help electronic and apparel sales, but failed, stockholders have realized there is no hope left for Sears comeback (Wahba, 2015). In summary, a drop in retail sales includes sales in overall departments. There is no exact department to blame. Sales have continued to drop.
Some opportunity that Sears can potentially untapped is the foreign markets. When entering international market, Sears needs to look into the multi-domestic strategy; the company must achieve the local responsiveness by providing products that match the customers’ desires. The American market is saturated with department store retailers but in emerging markets such as China, Japan, and India are less developed and Sears could potentially have great success in entering them. Sears is most threatened by the intense competition among U.S. department stores. Many other companies such as Macy’s, Nordstroms, and even Target have greater brand recognition and rapport with the consumers that they reach. To remain relevant while also competing effectively Sears must consider all the elements of their SWOT analysis and put them to use to their benefit in reaching their target consumer. With all of the issues that Sears facing, the company needs to focus on the profitable areas rather than whole; Sears must reinvent its experience by leveraging the valuable equity in private brands by effective and unique merchandise and products in small retail units and utilize online platform. Sears must stop Kmart because people are attracted towards other competitors for their discounts and offers.
The company would also need to redesign their customer experience by reinventing the experience to retain the customers and gain brand loyalty. Sears would have to make significant cultural changes within the management and closing the non-performing stores. The design, ambience, customer experience and profit with effective management can bring lots of success to Sears in the future.
Sears need to adopt an effective digitalization of mail order and catalogs by improving its online presence and site. Sears has to create visual merchandising to enhance customer experience. Sears must improve its mail order through upgrading its website as user friendly and products sales and offers. With high value customers, Sears must focus on positioning strategy to offer a high relevant value proposition to narrow targeted high value customers and retain them. Invest high efforts on the brand stores which are loved by the prospective customers and remove the weak brands. Lastly, Sears must bring an effective communication among its management and members to make them perform their duties with one common goal.
