There is a wide competitive landscape that Sears must contend with. Some of its top competitors who are turning to the Internet to increase consumer connectivity are transforming the retail sector. Brick and mortar stores risk losing market shares to online competitors such as Amazon. Segments that are assumed to be rather safe from online competition, face increased competition from e-commerce retailers like Amazon. In 2016, total US e-commerce sales were estimated at $395 billion (8.1% of total retail sales), an increase of 15.1% from 2015. Amazon captured more than half of online sales growth in 2016. “Some analysts view e-commerce as a maturing and well-penetrated market, pointing to Amazon’s high-profile forays into web services and video streaming and eBay’s growth rate, which has stabilized in the 15-20% range” (Hao, 2013). …show more content…
Understanding the financial condition and make strategic decision that will determine the best approach surviving the challenge of staying relevant in the retail sector. Sears should focus on more interaction with companies where a combined effort would develop synergy. Because of its insufficient capital structure, Sears must commit to investing in its retail stores that will produce earnings for its shareholders. Synergy will enable Sears to be participative in the retail sector. It needs the empowerment to create possibilities and solutions that will support growth. The ideas and possibilities with the right decision-making strategies about the location of stores in appealing places increase brand value and consumer trust. Stores that specialize in services like Sears focus on powerful urgency for sales and customer service, knowing that loyal customers will support the
Lowe’s grew through strategic choice by heavily focusing on key functional areas involving research and development (R&D), marketing, and logistics. Lowe’s important R&D investments included the creation of two prototype stores. The first prototype with 147,000 square feet catered to large markets and the other with 120,000 square feet catered to smaller markets (Rouse, 2005). Lowe’s used these store prototypes to help guide their continued growth and store placement. The prototypes also aided the company in designing future stores more efficiently with respect to energy and sustainability (Lowe’s Companies, Inc., n.d.). Furthermore, Lowe’s marketing strategy concentrated on attracting new customers and enhancing current customer satisfaction. To bring new customers to the store, Lowe’s engaged in a pull marketing strategy (Wheelen & Hunger, 2012). The com...
They first want to know, within the market for the potential location, who are their direct rivals? The demographic information they have collected will help in determining this. They’ll also want to determine the size of these rivals, and what their performance is within the market. Assessing popularity, as well as strengths and weaknesses of direct competitors will be helpful in determining how Eddie Bauer’s performance could match up against their competition, as well as how they might gain competitive advantage. Not only will the new store’s performance be affected by its surrounding competitors, but taking a look at competitor performance can help them to determine the popularity of these types of products within that market. (Aaker, Day, Kumar, & Leone,
History”, n.d.). But the unbelievable pace at which Amazon added new products and new customers proved to be a formidable barrier for any competitors. Within the first 10 years Amazon accomplished an unbelievable feat; it had 49 million customers and 6.9 billion dollars in revenue, and it had done so by selling some products at a loss to build market share (Rivlin, 2005). At times it was difficult leveraging so much capital to grow market share, but Jeff Bezos’ focus on the customer and long term growth of the company proved to be the real reason Amazon didn’t fall prey to the .com bust like so many other internet
Some core competencies that must be exploited are: Brand Kmart is an existing well-known and trusted national brand in USA Kmart has private label and designer clothing that is well endorsed Infrastructure Kmart has a large number of well-located, low-cost, leased stores in urban far away from competitors through out the country ( Appendix B ). Staffing Confidence by the market in Kmart is created by the achievements of its staff and management. With the turn-around strategy in place, new blood has been put into the top management structures. In any renewal there will be retrenchment as unprofitable stores are closed. This can be used as an opportunity to retain and move high performing staff to where they are needed and to get rid of non-performing staff. Anderson the chairperson of Kmart is well supported by Wall Street and the board of Directors. These new staff members enter the company with needed skills to address problems in certain areas that previously were poorly managed such as inventory control and merchandising. Store locations, layout and Performance Stores conveniently located away from competitors like Wal-mart and Target therefore less to compete for customers face-to-face. There are 250 non-performing stores who have already been identified as being more cost effective to close than continue with running costs. Expertise exists in-house for the planning of store layout and appearance to meet different customer segments. This concentration of effort will enable focus on key areas Technology Kmart has already invested in good retailing systems. The system can be use to control inventory, supplier payments, track customer buying and monitor income versus profit margins across all stores. Research and Development The planning department is well established and in cross-functional to provide various perspective. The planning department to ensure that strategies at all levels are executed can further use the access to past data and knowledge of changes in buying patterns. Financial Backing JP Morgan Chase has agreed to support Kmart to avert the current threat of closure due to bankruptcy.
This is a point that rings very true. Store development is important, but there are other key features that need to be considered for continued growth
On January 22, 2002, Kmart filed for Chapter 11 bankruptcy protection becoming the largest retailer ever to do so in U.S. history. Most industry analysts attributed the immediate cause of the company's bankruptcy filing to a dull holiday season and stiff competition from WalMart and Target as the chain's more fundamental problem. But competition wasn't the root cause of Kmart's consistently poor performance. The real reason for Kmart's poor performance is that Kmart never had a marketing strategy. Kmart completely misunderstood its market and was positioning itself in the wrong direction. Also, on the strategic side, there are issues of where stores were located. On the whole, Kmart stores did not seem to be sited as well as the stores of the competition. Then there was the issue of technology. While Wal-Mart was becoming the relentless efficiency engine that we know today by investing in technology and streamlining the supply chain, Kmart held back. As Wal-Mart developed an infrastructure that enabled it to lower prices, Kmart slipped into a price disadvantage. This paper discusses these strategic problems that led to Kmart's poor performance.
By the 1980s, just before the rise of Wal-Mart, Kmart had become complacent. It believed it would be the king of discount retailing, now and forever. It didn't perform an accurate SWOT analysis, but to be fair, who could have seen the rise of Wal-Mart to the position of the world's number-one retailer? Still, as Wal-Mart built new stores in town after town, supported by cutthroat pricing and solid logistics, Kmart's complacency would cost them. Part of the problem was that as Wal-Mart was pouring money into information technology (IT), Kmart's IT budget continued to shrink – not just once, but several years in a row. While Wal-Mart's logistics and supply chain management got sharper, Kmart's stagnated. And while Wal-Mart was able to squeeze more value out of its stores and its systems, Kmart lost ground. By the time Kmart had finally decided to start devoting more resources to IT, it was so far behind Wal-Mart that catching up would have been a near-impossible task without the recession in the early part of this decade. With the effects of the recession taken into account, Kmart instead was consigned to also-ran status among discount retailers.
Our Strategic Issue for SHC is, "How can Sears Holdings Corporation strengthen Kmart's position and regain its competitive advantage? Our recommendations are as follows: 1. Differentiation Strategy: Appeal to low and middle income families with children, Quality clothing and decorating store. 2. Stable & Effective Management: Retention, Value Chain Analysis: Supply Chain, Inventory Control (Product Selection), Technology (Reserve), Overall Consistency, Continue Value Adding Strategic Alliances, Similar to alliance with Joe Boxer. 3. Continue to Evaluate Store Portfolio, Focus on owning more/ Premium space. 4. Meet Customer Expectations, Customer Service, and Continuous Research & Development.
Poor organizational management, failure to innovate and adapt to the environment, and an outdated brand image have all contributed to Sears massive decline. By not setting a clear organizational strategy, executives of Sears strayed away from innovation, allowing for competitors to attract Sears loyal customers to their organization. In addition, the outdated brand image of Sears has failed to meet the ever changing customers of today’s society. Overall, there are many reasons that have led to the downfall of a once powerful retail giant.
Some complimented Kmart’s acquisition of Sears. Those most positive look to opportunities to cut unnecessary administrative expenses, increase buying power and cross-sell well known merchandise between Kmart and Sears. There are those who are very concerned about the acquisition. They are afraid that Wal-Mart, being their biggest competitor, will still be so much bigger than the combined Kmart and Sears. The name of the merged company will be changed it won’t be called sears. The acquisition of Sears cost to Kmart organiza...
Launched by Jeff Bezos, the Amazon.com website started in 1995 and is today considered as one of the most prominent retail website on the internet with a record turnover of US$ 14.87 billion in 2007. Jeff Bezos’s intention was to create an internet based company with the most dedicated product portfolio on the internet where customers could find anything they might want. Amazon’s success is based on technology, services and products (Jens et al., 2003).
The key issues for K-Mart strategies are finding the right cost level for an opportunity to be aggressive, and differentiating the product for consumer in terms of different consumer and different intangible product attributes. K-Mart and Sears should be combined with a new overall corporate competitive strategy using a cost focus. This may turn out to be the only sensible strategy, and the one which best describes the strategy adopted. Strategies of cost leadership and product differentiation are often described as if they were mutually exclusive you can either pursue one or the other, but not both.
In section V, I will give my analysis of Sears and some suggestions for things that they can do to change their strategies such as keeping customer’s and employees happy and staying out of trouble with stakeholders.
In fact, during the period 1995 to 1997 shows a shift in Sears in the distribution of their premises, with a growth of the smaller premises (Home Stores) and a reduction of the largest local (Full Line Stores and Auto Stores) . The Home Stores showed a growth of 8% over the total number of premises, about 5% of the total area and 6% over total sales area. For their part, the Auto Stores and Full Line Stores showed a decrease of 6% over the total number of local, 4% of the total area and 5% on total sales area.
The Amazon was founded in 1994 by Jeffery Bezos with a sole aim of exploiting the internet to reach more and more customers given the fact that internet was increasing at a rapid phase. However, the company was at first focused on online bookstore but as it grew it invested in other goods such as electrical appliances. Currently, the company is placed in top 100 lists of fortune companies despite the ever growing competition in the online retailing business in the world today. However, the company has never fallen short of ideas, concepts, and strategies aimed at monitoring and developing plans that can put Amazon at the leading place in the global Internet retailing industry. This assignment will attempt to cover in details how Amazon can