17:02 Swot Analysis Of Sears Swot Analysis Of Sears By Strengths The company Sears belongs to the parent company, Sears Holdings Corporation who is also the parent company of Kmart Holding Corporation and Roebuck and Co. The company was founded in 1886, making it one of the oldest retail companies to exist. The locations Sears operates are in the United States as well as parts of Canada and Mexico. As stated in the 10-K form by sec. gov: “Full-line Stores—894 broad line stores, of which 842 are full-line stores located across all 50 states and Puerto Rico.
These stores are primarily mall-based locations averaging 133,000 square feet”. Along with having a large amount of stores, Sears also have numerous subsidiaries and brandnames. “Full-line stores offer a wide array of products and service offerings across many merchandise categories, including home appliances, consumer electronics, tools, sporting goods, outdoor living, lawn and garden equipment, certain automotive services and products, such as tires and batteries, home fashion products, as well as apparel, footwear, jewelry and accessories for the whole family.
Our product offerings include our proprietary Kenmore, Craftsman, Die Hard, Covington, Apostrophe, and Canyon River Blues brand merchandise. In addition, at January 29, 2011, we operated 52 Sears”. If a customer has some issues with any appliances they purchased, Sears offers services online and in stores. “We also provide repair parts with supporting instructions for ‘do-it-yourself customers through our PartsDirect. com website. Smaller items for repair can be brought into Sears Parts & Repair Centers located throughout the United States or into many Sears’s fullline, hometown and hardware stores”.
The company provides protection for purchased appliances as well as home installation and repairs. “This business also offers protection agreements, product installation services and Kenmore and Carrier brand residential heating and cooling systems. Home Services also includes home improvement services (primarily siding, windows, cabinet refacing, kitchen remodeling, roofing, carpet and upholstery cleaning, air duct cleaning, and garage door installation and repair) provided through Sears Home Improvement Services”. Weaknesses
Due to low sales and profit in 1993, Sears terminated their famous catalogs. The company has since continued to decline in sales over the years. In fact, according to the Fortune. com article by Phil Wahba, Eddie Lampert’s Incredible Shrinking Sears Empire: “Sears has been burning through cash hurt by net losses of $7. 1 billion in its last four full fiscal years. Last year, Sears sold off big assets like the Lands’ End clothing brand and shares held by Sears in Sears Canada, transactions that followed earlier sales of its Sears Hometown & Outlet stores, all to raise $2. billion and pad its cushion. And despite that, Sears had $250 million in cash at the start of the new fiscal year (vs $1 billion a year earlier), along with $800 million in credit”. In an effort to gain money, Sears has sold off some of their stores as an attempt to make profit. “In fact, Sears is still trying to extract whatever money it can from its assets. It now expects to spin off up to 300 of its stores into a separate real estate investment trust by June; a move it projects would raise $2 billion.
It has also been subleasing space at some stores, saying the Sears of the future will need less space in stores”. The health of the company is heavily influenced by the economic condition across the globe. According to the 10-K form: “Our business has been and will continue to be affected by worldwide economic conditions; a failure of the economy to sustain its recovery, a renewed decline in consumer-spending levels and other conditions, including inflation, could lead to reduced revenues and gross margins, and negatively impact our liquidity.
These economic conditions adversely affect the disposable income levels of, and the credit available to, our customers, which could lead to reduced demand for our merchandise. Also affected are our vendors, upon which we depend to provide us with financing on our purchases of inventory and services”. Opportunities Despite the huge loss Sears is facing, the company still manages to hold on to what is left of their consumer loyalty. One method is the program Shop Your Way in which a customer finds their favorite brand in the SYWEverywhere. com website and purchase items to gain points that can be redeem through Shop Your Way, Sears, and K-mart stores. As mentioned in the 10-K form: ‘We launched our Shop Your Way Rewards program late in 2009 and continued to grow membership and capabilities in 2010. The Shop Your Way Rewards program is intended to transition Sears Holdings from serving customers to building relationships with members. We believe that Shop Your Way Rewards will allow us to learn more about our individual customers and therefore position us to better meet their needs”.
The online Sears Marketplace has over 17 million items for sale with international shipping along with an expansion of brand names. The site also offers a wide variety of categories, such as appliances, electronics, cookware, clothing, and toys. Records from the BMO Capital Markets have shown that Sears Canada has gain a profit of $505 million in sales last year due to Sears Canada’s online store. Sears Marketplace and Shop Your Way are some ways Sears has enhanced digitally to communicate better with consumers to research about consumers’ likes and dislikes.
In addition, Sears has strived to expand their e-commerce sales, particularly in social media. “A variety of different experiences are currently available on the web and on mobile phones that allow customers to take advantage of social tools including liking, sharing, rating and reviewing products. We intend to build on our early learnings to make social shopping more central to our overall experiences”. Threats Since Sears’s sales are heavily influence by the global economy, the company can also be affected by seasonal events.
The 10-K form explains: “Our business is seasonal, with a high proportion of revenues, operating income and operating cash flows being generated during the fourth quarter of our year, which includes the holiday season. As a result, our fourth quarter operating results significantly impact our annual operating results. Our fourth quarter operating results may fluctuate significantly, based on many factors, including holiday spending patterns and weather conditions”. The problem Sears has been facing for years is the company’s inability to return to what it originally was financially in the beginning.
Our sales and results of operations have fluctuated in the past, and we expect them to continue to future. A variety of other factors affect our sales and financial performance, including: actions by our competitors, including opening of new stores in our existing markets or changes to the way these competitors go to market online, seasonal fluctuations due to weather conditions, changes in our merchandise strategy and mix, changes in population and other demographics, and timing of our promotional events”. Sears has shown difficulty keeping up with their ever growing competition due to low sales.
As the 10-K form states: “Walmart, Target Kohl’s, JC Penney, Macy’s, Home Depot, Lowe’s and Best Buy are some of the national retailers with which we compete. Home Depot and Lowe’s are major competitors in relation to our home appliance business, which accounted for approximately 16% of our 2010 and 15% of our 2009 and 2008 reported revenues”. Despite its growing sales online, Sears is still far behind in comparison to other online retailers like Amazon. com. The shutting down of multiple Sears store has left a negative impact on hundreds of employees who are now facing unemployment.
To make matters worse, Sears has also received negative reviews both online and in stores from consumers for their services and merchandise. A reason for Sears performing badly in sales could have something to do with its failure to update their business model since the early 2000’s. Customers are less likely stop at a store with outdated products, especially overpriced outdated products. Because of this, Sears has opened a gateway for their competitors. Companies like Walmart, Target, and Home Depot/Lowe’s offer similar products and services similar to Sears, but at a more affordable price and with better quality.