Recomendados
Más contenido relacionado
La actualidad más candente
La actualidad más candente (20)
Similar a Sears External Analysis - Competitive Strategy
Similar a Sears External Analysis - Competitive Strategy (20)
Último
Último (20)
Sears External Analysis - Competitive Strategy
- 1. Sears Holdings Co External Analysis 2018 Valencia Francois
- 2. Contents Strategic Analysis •Organization, Strategic Issues •Market, External Environment •Customers, Competitors •Internal Analysis •Analysis Conclusion Strategic Solutions •Value Proposition •Recommendations Conclusion
- 3. Organization and Strategic Issues Business Segment: Retail Attempting to compete in non- similar markets Geography: United States Bloated portfolio HQ: Illinois Failure to capture younger demographic
- 4. Market/Sub market Analysis Sears Earnings: $3.2B 2nd quarter, 2018 Market share: 5.1% Growth trend 2015 – 2017 in $ billions 2017 2016 2015 $16.7 $22.1 $25.1 Retail – Department Store Market Size: $155.3B
- 5. Key Success Factors • Store fronts • Real estate a core asset • Web platform • Strong digital presence is a must • Shop Your Way Rewards • Gateway to leveraging consumer data
- 6. PEST Analysis Economic Environment U.S GDP: $20.412 trillion Employment rate: 60.3% Political Environment Corporate tax bracket lowered to 20% Consumer Protections rollbacks Social Environment Value orientation Holiday shopping impacts 4th quarter Technological Environment Amazon patents VR mirror Introduction of AI chatbots External drivers provide clear opportunities for Sears
- 7. Target Persona: Lisa 22 years old Part time office assistant Full time Rutgers student Lives at home Avant Garde personality Buyer group: 80 – 90M Buying power: $200B
- 8. SWOT Analysis: Macy’s Strengths - Strong branding - High retail market share Weaknesses - High employee turnover - High dependence on holiday sales Opportunities - Improvement to customer service - Offer personalized shopping Threats - Import costs - Third party reliance - Macy’s is a strong brand overall - Service improvements may make them unbeatable
- 9. Internal Analysis 2015 2016 2017 Sales $ (billions) $8 $5 $3 Net Loss $1.1B $2.2B $383M KPIs to improve: • Inventory • Distribution • Customer Service
- 10. SWOT Analysis: Sears Strengths - Brand heritage - Proprietary clothing brands Weaknesses -decentralized focus -Tense upper management environment Opportunities - Augmented Reality - Chatbots Threats - shortage of key personnel - Online sales channels - Sears must address its weaknesses to compete - Invest into new growth opportunities
- 11. Analysis conclusion Bloated brand portfolio • Too many businesses • Attempting to expand into all sectors Attempting to compete in non-similar markets • CEO Lampert is out of touch with Sears • Desperation to capture sales from anywhere Failure to capture younger demographic • Collecting but not leveraging Shop Your Way • Using omnichannel to target the wrong buyers
- 12. Social Programs: Heroes at Home Quality: Durable, reasonably priced clothing Design: Diverse inventory with unique patterns Value Proposition Alternatives
- 13. Value Proposition Builder • Millennial female Market • Stylish women’s clothing with unique design combinations Offerings • Lower average cost per item purchased Benefits • $30 (avg cost at Macy’s: $70 – avg Sears $40) Value Experience • Comfortable, quality products at reasonable price Differentiation • Proprietary brands such as Roebuck & Co Proof Sears is the #1 source for uniquely styled, affordable fashion
- 14. Bloated portfolio Current portfolio: • A&E Home Services • Sears Grand • Sears optical • Sears Travel • 3 additional brands
- 15. Bloated portfolio Recommendations: • Remove brands not aligned with Sears • Invest into infrastructure • Nurture promising aspects of the portfolio
- 16. Attempting to compete in non- similar markets • Shifting away from the core brand • Confusion with unrelated categories • CEO’s lack of understanding
- 17. Attempting to compete in non-similar markets Recommendations: • Stick to core competencies • Eliminate comparisons to non- similar brands • Leverage omnichannel networks
- 18. Failure to capture younger demographic • Weak R&D • They have the right tools, wrong people • Lack of connection to the right consumer • Marketing efforts are misplaced
- 19. Failure to capture younger demographic Recommendations: • Use marketing that will appeal to millennials • Shift to experiential store efforts • Invest in stronger R&D
- 20. Conclusion________ Bloated portfolio • “Too many hands in the pot” Attempting to compete in non-similar markets • Shift to tech sector • Mis-steps by CEO Lampert Failure to capture younger demographic • Marketing to the wrong consumer category • Divest non-essential brands • Refrain from ambiguous investments • Refocus data gathering to target millennials
- 21. Appendix • Business Insider • Market analysis: IBISWorld, CSI Market • PEST Analysis: Statista, Countryeconomy.com, Trading Economics, Vistage, Washington Post, Smartaction, Mintel, The Verge • Millenial Buyers: Forbes, Buxton Co • Inventory issues: Business Insider • Financials: Sears Financial report 2017, Second Quarter 2018 Results, Forbes, Sears Financial Report 2015 • Sears Home improvement sale • Expansions outside core business: Forbes • Exclusive product lines: PR Newswire
Notas del editor
- The company has been around for over 100 years as Sears, Roebuck and Co. In recent years they also acquired Kmart, and own a host of other subsidiaries. Though Sears has an online component that serves the global market, the company serves the US demographic. Strategic issues: According to our textbook, companies must draw a line between the number of different businesses they choose to operate in. An issue Sears has is that it simply has “too many hands in the pot”. The business sells everything from travel services to clothes and shoes. As we’ve learned over the semester, a portfolio that is too large almost always leads to an eventual decline. Per Business insider, CEO Lambert is trying to reposition Sears as a tech company. The brand essence is retail – attempting to compete in the tech sector would not be a smart move. The CEO is also trying to push an “integrated retail” model (online and in store) but hasn’t made any efforts to target the demographic that shops online.
- According to CSI market, despite revenue losses, Sears has managed to gain a market share of 5.1% at the end of Q2, 2018
- Store fronts - One of Sears’ core assets is their real estate. Thus, having the store fronts out of which to sell merchandise is important Web platform – Having a strong digital presence is a must, especially in Sears’ case. One of the key reasons Sears fails to capture the younger demographic is due to its lack of omnichannel marketing The Shop Your Way rewards program is Sears’ gateway to leveraging consumer data for improved marketing programs. The program allows users to collect points on purchases that they can redeem at partner organizations, such as hotels and gas stations. The nature of the rewards encourages members to buy, which would, if used, give Sears the opportunity to track usage habits in order to market to the consumer better
- Economic environment – As spending power and employment rates rise, so too does the consumer’s desire to shop. This is a good sign for Sears Political environment – The previous tax rate for corporations was 35%. The lowered rate signals relief for corporations like Sears Rollbacks to consumer proveracity of purchases, especially big ticket items. This can hurt sales in the brand’s appliance category Social environment – According to Mintel, adults are becoming increasingly driven by value orientation. The mindset that quality products should also be cheap is forcing department stores to be more promotionally driven than they have in the past tections can lead to widespread fear about the Most people who shop at brick and mortar tend to wait until the November/December period (Black Friday and December holidays) to do the largest amount of shopping, usually for gifts. Thus, many retailers rely on sales during this period to boost their yearly revenue Technological environment – innovations in technology such as Amazon’s VR mirror can be an avenue for Sears to explore in gaining the millennial buyer AI chatbots have shown increased usage popularity amongst younger buyers, especially millennials who show a preference for text messages or social media Despite some uncertainties in the external environment, outside factors show that there are several opportunities for Sears to gain market share
- Because she’s a PT employee, she lives with her parents to help offset costs. Avant garde – she’s usually the first one in her friend group to try creating a “left of center” outfit style. She surprises herself when she ends up buying clothes from a brand she might not have considered before Lisa belongs to the millennial buyer group, which comprises 30% of the population (80 – 90M) The collective buying power of this group is 200 billion
- Strengths - Macy’s has a strong presence because of staples like the Thanksgiving parade that airs yearly on TV. Owning the prestige brand Bloomingdales increases their market share.. Weaknesses - Their financial report mentions that there are troubles with turnover rates. Macy’s banks on sales over the holidays a little too much. To stay competitive, they’d have to improve their tech and draw in customers year-round with personalization Threats – rising costs on imports can negatively impact Macy’s due to their heavy reliance on third party merchandise sold in store Overall, Macy’s is still a strong brand due to the aforementioned prominence in yearly events like the Thanksgiving parade. If the brand was to make improvements in the areas they are currently weak in before competitors seize the opportunities, it may be nearly impossible to beat them
- Over the last three years, Sears has been operating at an increasing loss. In 2017, they were able to temporarily stop the decline through sales of assets; the income tax break also helped. KPIs to improve – Sears has struggled to keep steady inventory in stores due to issues in the distribution network (ex, vendors requiring up front payments to release goods, reducing shipments, or threatening to cancel their contracts). Customer service ratings are also very low for the brand
- Strengths: Despite recent failings, sears has a rich heritage. It was responsible for a lot of standards we see in the retail-department store sector. Sears has a unique advantage over its competitors in that it has exclusive brands and clothing deals (it owns the Roebuck & Co clothing line) Weaknesses: The strength of heritage also ends up being a weakness in a way, because the brand has used its strength to invest into too many unrelated market categories. This weakness is linked to troubles in the upper management of Sears, where executives have a very low morale & meetings are known to lead to shouting matches if the CEO is challenged by other executives Opportunities: AR & chatbots – As mentioned in the technological analysis, innovations in AR technology can be helpful to sears. Having access to mirrors in store that shoppers can use to try on clothes with the touch of a button touches on convenience needs of consumers. Chatbots can be used to directly target the millennial audience Threats: Because of all the uncertainties surrounding Sears, the company may find itself struggling to capture and retain key personnel needed to run the business. This is already evidenced by employee commentary which spoke of low morale apparent at the store level due to increased pressure on employees to press consumers for as much data as the company can get With its current struggles to define itself in the online sector, competitors that have a strong online or omnichannel presence pose threats to the company’s long term success
- Brand portfolio: As mentioned in earlier slides, Sears simply has too many businesses it is unwilling to let go of. While some brands are iconic, they really need to look at their efforts to expand into nearly every sector (over the years they’ve been responsible for Allstate insurance and the Discovery credit card, for example – two things which some say may have marked the start of the current demise). They even have a hand in the home improvement business, though they are now seeking court approval to sell it Competing in non-similar markets: Many articles cite decision making by Sears’ current CEO, Eddie Lampert, to be a huge reason why the company hasn’t been able to rise up out of their latest slump. He doesn’t even go to the IL headquarters and instead holds meetings via a TV screen from his Florida mansion. Trying to reposition Sears as a tech company is an example of how out of touch he seems to be with the brand. His behavior also signals the idea that Sears is desperate to find somewhere they can get sales, even at the expense of diluting the brand. Capturing the younger demographic: The CEO’s gaffes continue with the Shop Your Way and omnichannel efforts. These would be great ways to capture new consumers, but the problem is that the brand is failing to use them to target the buyers they need.
- Sears heroes at home: program designed to help veterans; ex they went to the home of a mother and son and renovated it to make it handicapped accessible. Knowing Sears is doing its part to help local communities would warm Lisa up to shopping the brand Quality: I, as a part of the target audience, purchased a $60 coat from sears two years ago that still looks brand new, is comfortable and keeps me warm, in comparison to a $100 coat purchased from Macy’s around the same time that I still feel cold in Design: This appeals to the target because of the desire to think outside the box
- Apart from retail, Sears operates in several other sectors that do not have as great of a connection to the brand name. For example, they also have their hand in travel, optical, the “grand” version of sears retail which also has a pharmacy in it, and several other unrelated brands
- Sears should divest the brands that do not align. They are ultimately a weight on the company’s core sector: retail. The funds they receive can be reinvested into the retail infrastructure, which is ailing due to the issues with inventory and a general lack of providing necessities like working lights in some stores. They can also focus on nurturing more promising aspects of their portfolio like the Kenmore brand (which they have instead decided to try selling off – a move that could prove problematic due to its strong market share in the appliance sector)
- As mentioned earlier in the presentation, there are some who mention that the shift away from Sears as a retailer jump started the current decline well before Lampert stepped in as CEO. The original attempts to get into sectors like real estate(property selling) and financials opened the gates for competitors like Macy’s, who is now their largest competitor (and one of the few old retailers that have survived the windfall of new technologies) to gain market share. This brand confusion allowed Sears to slip away from being a staple associated with American culture to becoming an almost non-existent background player. Their lack of clout shows in my first presentation, where more than half of the class had not even heard of Sears. Although the departure from the core brand has been a long time issue, it’s been exacerbated by Lampert’s behaviors, which indicate a lack of familiarity with the core business.
- Sears needs to focus on the aspects of its brand that has made it successful in the past. While keeping current is important, especially for old brands, they can still work core competencies such as their history of innovation into new marketing efforts CEO Eddie Lampert is hyper focused on the tech company idea, comparing Sears to Apple and Microsoft and even going as far as to say the brand is a “350,000 person startup”. This sort of commentary confuses the brand image, which is especially problematic for an iconic brand like Sears that has been around for hundreds of years. The only viable solution to the technological aspect of Sears’ current strategy is to leverage omnichannel networks. The brand should focus on ways to get tech to drive people to stores, rather than trying to reposition itself entirely in a way that is not true to the brand essence
- Sears, long known for being innovative, definitely has some great competencies tied to its brand. However, weak R & D means that their strengths are wasted on targeting people who don’t care to hear their message. Furthermore, it’s very apparent in their efforts to pin data collection on the backs of their in store salesforce that they are not placing money into it at the corporate level. Their marketing efforts are being woefully misplaced, a core factor causing their current issues.
- Incorporating a more technological aspect may help to convert the millennial buyer. The success of experiential stores like Nike in NYC show that buyer preference is shifting towards their experience with a brand. A great experience can help create top of mind awareness when the target audience is ready to make a purchase in the category. Because some of their marketing efforts fell short of their mark despite being good ideas, it suggests that the brand isn’t investing much into R & D efforts. A strong research team will help to cover missteps in attempts to connect to consumers
- What Sears needs to do right now is to get rid of their non-essential brands. This includes ambiguous investments not related to retail/department stores like Lampert’s attempt to get Sears to enter the tech sector. Shop Your Way rewards, which is an important asset for the brand, is being misused. The same holds true for their omnichannel efforts, which are a step in the right direction but again fall short because they’re targeting uninterested parties