Sears Holdings Corporation - Case Study Example

Insert of Sears Holdings Corporation Sears Holdings Corporation is one of the leading American retail corporations with about 2500 fully operational stores in both United States of America and Canada. The Sears retail corporation was founded in the year 2005 through a merger between Sears of the Hoffman Estates and Kmart of the state of Michigan. The corporation is headquartered at Hoffman Estates in the state of Illinois, United States of America. It is among the largest retail companies in the region as well as in the entire world. According to the United States retail companies rating 2010, Sears was rated tenth in the united states after similar retail companies in the region such as Best Buy, CVS Caremark, Lowes, Costco, Wal- mart, Target, Krogler, Walgreens and The Home Deport. Based on the rating above, the company has the tenth largest holdings in the region operating over 4000 retail units in the United States and Canada. This makes it the fastest growing corporation in the region and beyond as far as the area of specialization is concerned compared to the others in the same field. Besides, the company is as well one of the largest employers for many in the regions where it operates her businesses. This continues to define its prosperous abilities in the region and beyond. The Sears Corporation deals in retail products such as; home services, lawn and garden tools, fitness equipments, automotive repair and maintenance, appliances, consumer electronics, sporting goods, outdoor living, home fashion products, apparel, footwear, jewelry, accessories, health and beauty products, pantry goods, household goods and toys. Sear’s key proprietary brands include Kenmore, craftsman and Diehard. The company also offers a wide range of apparel under the Kmart sections such as the Kardashian collection, Kenmore, Craftsman, Diehard and Jaclyn smith and Joe Boxers labels. It stocks one of the best quality materials in the region and by this fact; it has attracted the interest of an increasing number of customers around the globe. The location of the corporation in a serene environment in the state of Illinois, accessible to all shoppers and travelers gives it ample opportunity to expose her retail services to a large number of buyers from across the globe. In this paper, I will look at the Sears Holding corporations into details and compare her operations with that of her competitors in the region and beyond. I will also address the various factors which have hindered or augmented her operations to make it one of the leading retailers in the region and beyond. Challenges and opportunities for Sears Corporation Opportunities The Sears Company has various opportunities that have promoted their operations across the globe. Sears specialization in appliances is of high quality as compared to those provided by a number of similar companies. Quality is one of the factors driving the operations of the company whereby high quality appliances are stocked at the company premises. The services provided by the company are demanded all over the world due to their durability. Compared to the other appliances provided by the other related companies, many customers prefer doing their shopping at Sears. According to the reports by the company management in 2012, the company receives up to 14 million calls annually for installation purposes. Most customers prefer Sears’s products due to their reliability, durability and quality (National Retail Federation). The company indicates and commends their installation teams for fast response and reliability in serving their customers. This has helped to encourage more customers across the board to shop from the company. As (Shore) notes good customer service is the key to winning and even owning a lot of customers. The Sears management has just realized the importance of this fact and has re- embarked in making sure that their customers received the best from them. As a result, they have attracted and even owned several customers who direly yearn for their products. It is noteworthy to mention here that the American and Canadian markets are continuously shrinking as many companies set in to compete for various services within and without the nations’ borders. Driven by these facts, the Sears Corporation has embarked on looking for virgin opportunities overseas. This calls for stocking of materials and services that can be consumed by the global markets as well as locally. The company has learned the secrets of business applied by other successful multinational companies across the globe and has begun identifying various market opportunities from the whole world. Sears’s management has predicted that the company will use the returns that will be generated from such expansions at various levels. The large and idle world market is an additional opportunity to the company. Specifically, the Sears administration has identified the African and Asian market as these are among the fastest growing markets in the world given their rapidly expanding populations. According to (David) observations, the success of any business enterprise is pegged on how much she can reach a given number of customers, and this is determined by the numbers of people available in a given regions coupled by the competing companies in the region. The company will be making a tremendous step toward building her success in terms of economic gains around the globe (Jones). Moreover, the corporation has as well ventured into researching on the viability of other business opportunities within their localities in order to compete effectively with the other companies in the region. To this extent, the company has begun expanding her real estate operations and automotive franchises across the region. This is a move aimed at diversifying their production services and attracts a wide array of customers from within as well as from abroad. Sears real estate business is one of the largest corporate real estate organizations across the globe. The corporation is as well aiming at expanding their real state business to attract various customers across the globe. As Howard records, real estate business is currently a developing business opportunity especially in the developing nations. Real estate business also has a lasting investment opportunity to various business partners. Philippe and Rachel note that the real estate investments can help businesses in safely keeping their assets in a highly productive and competitive environment. The viability of the business and the companys aims to expand her businesses in the developing nations coincide a great deal and is projected to provide an adequate supply of income to help boost their business regiment. The real estate investment value continues to appreciate with time rather than depreciating as in other business operations. Moreover, the dangers and uncertainties associated with real estate business are fewer compared to other business sectors. Considering these facts The Washington Post reports that Sears shall have built a stable capital base to enable her expand her businesses across the globe and compete effectively alongside her competitors. Inn addition, the situation of the company in serene locations suitable for massive investment and business operations gives her just the ample advantage any business will need. There is enough space for the expansion of her business activities and the customer base in the region is quite big. This offers a large customer base just at home making her expansion quite easy. The stable and rich market in the region has been a factor to boast about by the company. This has enabled her to generate more income to be used in expanding and diversifying her operations. Challenges As any other company anywhere in the world, Sears Corporation has as well faced a lot of challenges on her operations as well as in her management. The expansion of the company’s operations presents a great challenge to her management. The global market is diverse and none uniform as compared to the local markets where the company has been operating her businesses over time. As the market expands, so does the range of cultural and location inhibitors. Operating businesses for multiethnic populations becomes a great challenge. The increase in cultural diversity is a major hindrance to the operations of most multinational companies, Sears inclusive. The recent aspects of global migration and intercultural mixes presents significant challenges in diversifying the operations of the company in respect to her competitors in various parts of the region offering the same services to almost the same range of customers. Meeting the demands of these varying degrees of customers with a wide range of preferences is a tussle that the company tries to wean out on a daily routine without some significant results. The wide array of customers visiting the company holdings for shopping purposes as well presents another challenge in her operations. Most of the frequent customers common with the company products are a low class people who pay their items in cash. This is, therefore, dependent on the time duration which determines the purchase time. Most of these customers depend entirely on their meager salaries and the monthly checks form the governments that they use for shopping. As Clausen notes, most of the companies which rely on such kind of customers experience surges during the first and third weeks of the month when most of the people have the cash. This is a fact with Sears’s holdings. Much of her profits are, therefore, made during this time, and the rest of the twp weeks are dependent on luck resulting to low turnover per month. As a result, the company has been making numerous losses in the near past threatening her ability to survive the stiff competition from her competitors such as Wal-Mart whose profits have been improving over time. In the recent past, Kmart, a constituent of the Sears Company has presented many loopholes. the mart has been unable to meet the needs of her customers as far as the management of the company holdings is concerned. The results on poor returns are as shown in the graph below; However, the company has laid down various effective strategies aimed at coming up with more reliable measures to be used in curbing the adverse effects facing her growth. The diversification of various shopping opportunities and items within the company’s premises has just presented a new face of customers visiting the holding over the last few years. The company has diversified her services I order to accommodate a wide range of customers for effective gains in order to compete fairly in the highly competitive market. The company has for instance brought in the groceries within her holdings to help in harnessing on the customers ability to purchase various things within the same premises at ago. Since the establishment of the groceries section in the Sears premises in 2009, the company has realized positive returns from the same with an increase in the number of customers who visit their ventures to conduct their shopping needs. Increased satisfaction of the customer needs since then has encouraged more of them into the premises for active shopping compared to the previous years. David records that most customers have the trend of doing all their shopping at a central place in order to avoid losses and inconveniences of traveling and variations in prices from one mall to another. This helps them manage their time effectively. As This Week in Consumer Electronics reports, this is a very significant move in the development of the company and a footstep to making an effective come back to the realms of success. Effective competition according to Shore is pegged on the ability to provide what the competitors cannot provide or just improving the range, and quality of the services provided. Diversifying the range of services provided to the customers has helped the company in making a reasonable step in satisfying the needs of her customers (Howard). The plans have succeeded in pushing the profit margins of the company forward as shown in the increasing number of customers of varying age- groups with different shopping abilities visiting the company premises to do their shopping. Analysis of the results is as described in the pie charts below In order to attract the low income earners into the same premises, the company has invented new strategies to help her deal with this factor. There have been shopping vouchers given to frequent and voluminous shoppers at the company premises. This is based on the monetary worth of the shopping for each customer. Points are earned every time a customer does his or her shopping here, and these points are later on converted into vouchers that customers can use in doing their shopping from any branch anywhere. This game has since attracted many customers who do their shopping from Sears and Kmart in order to win and accumulate as much as they can. As a result, the turnover in terms of monthly earnings has since increased following the inventions. Besides these efforts, the company has as well offered free shopping waivers to hr customers on some items in order to try and promote such items in the market. These strategies have helped the management in conducting researches on various products and inventing new marketing strategies on the same. Over the last few years, Sears has been making tremendous loses probably posed by poor management strategies as Dana records. Improper management has been a major hindrance to the company’s success since the departure of Mr. Lampert as the CEO. However, Mr. Lampert announced in early January 2014 that he will be making a major comeback into the company’s management later this year after the sitting CEO announced he would be stepping down in February this year. It is believed that Lampert who has seen the success so the company in the recent past after buying Kmart from bankruptcy will continue to steer it ahead and make tremendous changes in her operations across the region. The most affected of all Sears’s holdings is the Kmart wing which has been undergoing acute periods of poor management. The following diagram shows the analysis on the effectiveness in management of the Sears holdings in Canada and USA over the last three years measured in terms of equity turn over; As a result, the company’s conditions are described by Dana as pathetically owing to lack of maintenance over a long period. Clausen asserts that every large company, the size of Kmart is supposed to be spending up to 3% of hr capital expenditure on maintenance in order to ensure proper coordination of all company affairs and ensure effective and conducive conditions of operations. Contrary to this assertion, Kmart spends only 1% of her capital expenditure on maintenance due to her poor performance in terms of returns (Dana). This has greatly reduced their ability to attract more customers as the operations conditions are very poorly maintained. The New York Business times reports a customer recommending that the company premises ought to have been kept cleaner than she found it then. She describes the situation as clothes abandoned over the shelves, floor appearing not to have been cleaned for long by the time of visiting and pieces of groceries lying all over the place. The customer then concludes by saying that she has not been doing g her shopping there for a while of late owing to the poor conditions of maintenance. Proper premises maintenance is among the very dire aspects that good management practices have to keenly observe. Most customers are attracted by the first impression they see when they visit the company premises. The physical appearances of the company holdings are, therefore, of great importance to the prospective customers. Poor sales have been the result of this poor maintenance for some time. Most customers have retreated from doing their groceries from these premises due to poor hygienic conditions, and their clothe shelves have been abandoned over time. To this concern, Dana states; Sears most recently reported another disappointing quarter, with EBITDA losses hitting new highs and cash flow declining even more, as the company continues to lose share in its core retail operations. There was nothing positive to pull out of the report, with even apparel turning negative again, and JCP giving up fewer shares than past quarters. Sears seems to be operating extremely poorly, with very strong results from its most direct competitors Home Depot (HD) and Lowes (LOW), while Sears reported negative comps and larger losses (Dana). According to Dana reports, Sears’s management is laying down strategies to revive the situation by doing major renovations. In the recent past, the company has been on the run trying t o strike deals with the regions celebrities for purposes of marketing successes. For instance, the company signed a cloths branding deal with Nicky Minaj to be used in marketing. It is expected that such important moves will help steer her up the profit margin by reviving her customer base. Since the beginning of the new strategies the profit margin is seen to be increasing significantly as shown in the graph below; A sharp rise was realized in the year 2012 after sharp fall in the previous year. The new marketing strategies coupled with proper records management are reported to have resulted into the sharp increase in 2012 as opposed to the other years. Conclusion In conclusion, I would like to restate here that Sears Company is among the highest rated companies operating her businesses across Canada and the United States. The company, dealing in a wide variety of products has been experiencing a lot of challenges concerning her management an maintenance over a few number of years since its inception. However, various strategies are being laid down by the management to help reverse the current state. Various marketing strategies have been put forward to helping in steering the company forward and making her more competitive in the world market than before. The come back of the former CEO Mr. Lampert is among the most remarkable achievements the company is expected to record later this year. It is expected that his sincere contributions to the success of the company owing to his good track records in seeing upon the success of Sears will revamp her status over time. Works Cited Clausen, T. H.,. "“Examining the Schumpeter hypothesis in the context of closed and open innovation: survey evidence from Norway and Sweden." International Journal of Entrepreneurship and Small Business 12 (2011): 32- 54. Dana, Mattioli,. "Sears Holding Corporation- Addressing Serious Problems Heading Into 2014." The Wall Street Journal- Business (2014). David, Gertner,. "International Marketing Management (IMM) Course Slides and Notes." The American Graduate School of International Management (2001): 27- 31. Howard, martin. "How six key developments are shaping the business world." Tracking global trends (2012): 12- 29. Jones, Sandra, M.,. ""Sears Holdings Posts $170 Million Loss in 1st Quarter"." Chicago Tribune (2011). National Retail Federation. "List of the top 100 US Retailers as of July 2011." (2011). Philippe, Aghion, and Griffith, Rachel. Competition and Growth. London: MIT Press, 2005. Shore, D. A.,. "Communicating in Times of Uncertainty: The Need for Trust." Journal of Health Communication 8 (2003): 13- 14. The Washington Post. "Risky Side of Sears: Retailer Is Recast as a Hedge Fund, as Sales and Stores Decline, Chairman Focuses on Investment"." (2007). This Week in Consumer Electronics. ""Whirlpool Bears First Fruits Of Maytag Merger At Home Depot"." This Week in Consumer Electronics (2006). Read More