sears business essay

sears business essay

The Evolution of Sears: A Comprehensive Analysis of its Business Strategies and Impact on the Retail Industry

1. Introduction

Sears implemented different business strategies over time. At one stage, it started as a catalog company and gradually expanded until 1989 principally through conventional stores. Since it entered the retailing industry at first, its biggest department was and is the hard goods department including home appliances. Demand for hard goods is more sensitive so fluctuations in demand are greater, which also means that only large department stores can have seasonal or sizeable discounts. With the intention of breaking big records after continuing success in the hard goods retailing industry, it acquired the best apparel specialty chain company, but then it could not benefit from the ownership of the apparel specialty department and instead experienced financial difficulties due to its weak performance in apparel.

This study measures the relative impact of a single firm on the entire American retail industry. In so doing, it chronicles the role of Sears, Roebuck & Company (hereafter referred to as Sears) in the evolution of certain attributes of retailing, demonstrating the extent to which its historical operations and policies far transcended the boundaries of the corporation itself. Sears’ influence appears on many different levels. It extended to consumer credit policy, to the level and distribution of wages in the entire workforce, to broader aspects of public policy, and finally to the very fabric of retailing as we know it.

2. Historical Overview of Sears

However, the original component that held everything together was the United States Post Office, which guaranteed delivery service for all, irrespective of how remote from developed areas consumers may have been. Goods could easily be ordered from the catalog and reach the customers’ hands with minimum trouble. The United States Patent Office had also sanctioned Sears’ business activities in 1887 when it registered the Sears, Roebuck, and Company trademark. Sears was thus able to implement what is in industrial logistics, a precise time demand strategy which was a prelude to just-in-time inventory. It required little clerk involvement and linked consumer demand with the mass production of goods. This was especially important since the consumer lacked variety in quality goods at the retail level. The quality of the merchandise was unquestionable, however, especially the company’s watch line. Sears’ suppliers of watches regulated the amount of money the company experienced which could theoretically lead the Watch Monopoly to maximize the economic activities of society.

Sears was founded by Richard Warren Sears in 1886. He originally sold only watches by mail but quickly expanded the business to include jewelry and other consumer goods. Alvah C. Roebuck, a watchmaker, joined Sears in 1886 to handle the growing watch business and the company became known as Sears, the Watch Company. In 1893, the company became Sears, Roebuck, and Company. However, Roebuck left the company in 1895 due to a low sales volume of the product he manufactured. Roebuck was replaced by Julius Rosenwald, the company’s first major chapter and, more importantly, someone who complemented Sears’ skills. Rosenwald was a dry goods dealer who held a one-quarter interest in a small Chicago wholesaler of men’s clothing and furnishings. Sears leaving the customers’ end of retailing to Rosenwald allowed him to concentrate on building the infrastructure of the company. Because of Rosenwald’s efforts, the first Sears catalog (entitled The Book of Bargains) was printed, promoting the company’s line of watches and jewelry, plus accessories such as fancy goods, eyeglasses, silverware, and other new products. With its first catalog, the company provided an introduction to low-income consumer mass merchandising. It also had no competition. The company had quickly promoted its products based upon the nation’s increasing industrialization, transportation expansion due to the railroad, and a rising standard of living.

3. Business Strategies and Innovations

In section A, the strategies of Sears, its focus on service and its attention to establishing a balanced merchandise product line, a distinctive physical store designed to inform and guide the consumer through the store, a unique pricing strategy, advertising content and innovation, utilization of advertising agencies, and the formulation of its private label product offerings are discussed. This is followed, in section B, by a discussion of franchising as a means to expand and operate a national chain. The importance of timing, planning and Sears’ approach to the retailers and the customers, customer profiles in characteristics and needs, and, more importantly, the impact of the retail store operation on the distribution and sale of directly viewed consumer durable and technical goods are discussed in section C. Last, in section D, an examination of retail sales growth and sales promotion techniques are presented. This includes a discussion of retail store sale goals, product offerings for a sales promotion, display emphasis, advertisement techniques, media used, timing, and evaluation of sales promotions. The views presented in this section represent those of a retail department store which operates in urban markets competing against a variety of general retail department stores.

Since the company’s inception, Sears has grown, diversified, and changed to adapt to a dynamic competitive economic environment. It has also impacted the structures and strategies of the retail industry. The primary purpose of this section is to present a comprehensive, cohesive, and complete framework of business strategies and innovations of Sears and its competitors. This paper concentrates on three major retail industries – general retail department stores, mass merchandising, and mail order – to do that. Although the study covers the business strategies of several firm types in the retail industry, the analysis is not merely a juxtaposition of firm characteristics. Rather, it presents the strategies of Sears and its competitors analytically to advance and test a retail institution evolution.

4. Challenges and Decline

Management’s decision-making had been delayed and resources had been divided to accommodate a wider business base. A lack of clear focus had created business opportunities in the superstore retailing, mail-order, drug store, and financial service segments. At the director level, these opportunities were considered more compatible with the long-term goals of the company than Samplification. The long-term vision of the company was not able to be translated well and communicated into the performance that could satisfy investors’ hunger for the short term and produce positive consequences in the long term that would motivate the employees of the company. Sears has lost its market power coming from its product assortment and customer focus to companies that could do it better. The Sears business and corporate strategies had to be changed to help it face the new challenges.

Sears of late has not been able to execute its strategies well enough to regain its former leadership position in the retail industry. It has gone through a decade of internal conflicts with several management changes, which had dramatically affected its effectiveness in managing the company. In addition, the weaker link of the two major business segments – apparel – costs lower operating profit and held back the performance of the entire company. The company’s resources were spent unwisely and the return on investment was declining. In the past two years, regional department stores and retail discount chains – strategic groups competing with Sears – were marginally affected by the industry consolidation trend when they decided to compete head-on with Sears in their area of expertise.

5. Impact on the Retail Industry

The retailer that first started its development with a focus on people with limited financial resources and evolved to become a distributor of goods to those with higher income has made its mark in the history of the United States by changing retailing. Even today, they are going through a rough patch, but their role in the retail market is irreplaceable. The appearance of large capitalist enterprises in Brazil, practically from the start of the process of industrialization, occurred due to the absence of competitiveness from local industry, favoring the arrival of these organizations. Identified by some scholars as department stores, large self-service stores, and supermarkets, they revolutionized the market with mass sales. Hard-hitting competitors of small neighborhood and urban centers that were heavily localized. The discussion presented will be based on research conducted from founding to the 21st century, focusing on the business strategies adopted by one of these organizations – the Sears company – and its significance for the development of retail in the United States and also in the diffusion of business and retail culture among developing countries, thus guiding decision makers.