Sears, Roebuck and Company
Situational Analysis
Situational Analysis
 An assessment of the current situation in the retail industry
and Sear’s operation in general.
 Areas of assessment
– Analysis of Current Situation
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Market Situation
Competitive Situation
Marcoenvirnomental Situation
Past Product Performance
– Key Issues
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Threats
Opportunities
Strengths
Weaknesses
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.
 Sear’s total share of the market place is 3% compared to WalMart’s market share of 68%.
 Sear’s 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.
 Sear’s consumer’s have a negative perception of their shopping
experience; malls, parking lots and cramped aisles.
Analysis of Current Situation
 Competitive Situation
 Sear’s home appliances and hardware market share is strong
but will continue to take a hit as Home Depot and Lowe’s
continue to eat up market shares in the market place.
 Sear’s clothing line will continue to be flat until they can catch
up to the marketing strategies of Target and Kohl’s.
 Sear’s will continue to have pressure from higher quality stores,
such as Wal-Mart and Target and pressure from lower price
stores, such as Kohl’s.
 Sear’s 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.
Analysis of Current Sitaution
 Macroenvirnomental Situaiton
 The current state of the economy, which is stagnant,
has put pressure on Sear’s 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.
 Sear’s 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.
Analysis of Current Situation
 Past Product Performance
 While net revenue has increased in the last year for Sear’s,
sales volume has continued to decrease due to non mall-based
discount retailers competing against Sear’s.
 Profit Margin for Sear’s has increased even more than net
revenue due to the downsizing of the employee force lowering
operating costs for Sear’s.
 Sear’s 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,
Sear’s has purchased Land’s End in hopes of taking advantage
their customer base.
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 Sear’s executives
 Lack of recognition in the market place in regards to their
clothing line.
 Sear’s is behind in the industry strategy of Supply Chain
Management.
 The inventory turnover of 8x is a threat to the company’s bottom
line.
 Consumer’s negative perceptions of hassles with shopping at
malls.
Key Issues
 Opportunities
 The acquisition of Land’s End shows hopes for
increase sales volume in Sear’s clothing line.
 Trends in the growth of the home furnishing market
suggest that Sear’s brand name loyalty with
Kenmore and Craftsman can potentially increase
sales
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
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, Land’s
End, DieHard and Covington.
 Strong market share in home appliances.
 Being a “follower” in implementing an effective Supply Chain
strategy will allow Sear’s 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.