Sears, Roebuck and Company

1
Sears, Roebuck and Company

• Situational Analysis

2
Situational Analysis

• An assessment of the current situation in the
  retail industry and Sears operation in general.
• Areas of assessment
• Analysis of Current Situation
• Market Situation
• Competitive Situation
• Marcoenvirnomental Situation
• Past Product Performance
• Key Issues
• Threats
• Opportunities
• Strengths
• Weaknesses

3
Analysis of Current Situation

• Market Situation
• The total market capitalization for Retail
  (Department Discount) is substantial, amounting
  to about 341 billion.
• Softlines, specifically home furnishings, are
  growing in popularity, due to increase
  do-it-yourself television shows like Trading
  Spaces.
• Sears total share of the market place is 3
  compared to Wal-Marts market share of 68.
• Sears has been around for 117 years and has
  strong brand name loyalty, however, strong
  competition from non-mall based discount
  retailers have eroded their market share in all
  product areas, specifically in the clothing
  products.
• Sears consumers have a negative perception of
  their shopping experience malls, parking lots
  and cramped aisles.

4
Analysis of Current Situation

• Competitive Situation
• Sears home appliances and hardware market share
  is strong but will continue to take a hit as Home
  Depot and Lowes continue to eat up market shares
  in the market place.
• Sears clothing line will continue to be flat
  until they can catch up to the marketing
  strategies of Target and Kohls.
• Sears will continue to have pressure from higher
  quality stores, such as Wal-Mart and Target and
  pressure from lower price stores, such as Kohls.
• Sears diverse product line allows them to
  compete in all areas of the market place however
  concentration in some key products, like
  clothing, needs to be addressed immediately.

5
Analysis of Current Sitaution

• Macroenvirnomental Situaiton
• The current state of the economy, which is
  stagnant, has put pressure on Sears net sales,
  as consumers are being more frugal with their
  spending.
• Increasing number of women are tackling the tasks
  of home renovation and home decorating increases
  sale potential of tools and home appliance.
• Sears full-line stores are attractive to the
  time crunched consumer which is attracted to a
  shopping environment where they can buy
  everything they need in one stop.

6
Analysis of Current Situation

• Past Product Performance
• While net revenue has increased in the last year
  for Sears, sales volume has continued to
  decrease due to non mall-based discount retailers
  competing against Sears.
• Profit Margin for Sears has increased even more
  than net revenue due to the downsizing of the
  employee force lowering operating costs for
  Sears.
• Sears clothing line slump has continued due to
  less than effective market campaigns, however,
  Sears has consolidated there clothing line brand
  in order to create a brand name. Also, Sears has
  purchased Lands End in hopes of taking advantage
  their customer base.

7
Key Issues

• Threats
• Lack of growth in all product lines, including
  their number one brand name product, Craftsman.
  This trend must be a top concern for Sears
  executives
• Lack of recognition in the market place in
  regards to their clothing line.
• Sears is behind in the industry strategy of
  Supply Chain Management.
• The inventory turnover of 8x is a threat to the
  companys bottom line.
• Consumers negative perceptions of hassles with
  shopping at malls.

8
Key Issues

• Opportunities
• The acquisition of Lands End shows hopes for
  increase sales volume in Sears clothing line.
• Trends in the growth of the home furnishing
  market suggest that Sears brand name loyalty
  with Kenmore and Craftsman can potentially
  increase sales

9
Key Issues

• Weaknesses
• Previous attempts to penetrate market share have
  failed.
• Previous attempts to increase sales in their
  clothing line have failed.
• Store floor plans are out of date and consumers
  have a negative perception of shopping because
  they feel lost and cramped while shopping.
• Mall based stores becoming a thing of the past

10
Key Issues

• Strengths
• 117 years of experience in the market place.
• Number of stores across the market place is high.
• Brand loyalty built over the years Craftsman,
  Kenmore, Lands End, DieHard and Covington.
• Strong market share in home appliances.
• Being a follower in implementing an effective
  Supply Chain strategy will allow Sears a higher
  chance of implementing the strategy correctly
  because they will have access to better
  technology and access to what not to do when
  implementing the strategy.