Scott C. Kearns
Kmart and Sears: Still stuck in the middle?
Just two years after filing bankruptcy, Kmart Corporation stunned the retail industry with the acquisition of Sears in November of 2004. The acquisition of Sears for Kmart was a part of a growth strategy to help build and strengthen the once dominant giant discount retailer. Between the 1960’s and through the 1980’s Kmart was the number one leading retailer in the discount department store industry. For 30 years Kmart seemed to be doing everything right but as they were growing they were also slipping into a deep hole. Many factors played into their eventual retrenchment but supply chain management was their ...view middle of the document...
Highlight some feasible corporate and business strategies for Sears Holdings:
Although many retail experts avoid following the leader as a strategy to compete but the timing was critical for Sears Holdings to jump on board the cost leadership bandwagon. Wal-Mart the leader in the retail industry was utilizing cost leadership while simultaneously opening 300 plus stores a year. One advantage of cost leadership is it helps to broaden larger markets. With more and more Americans struggling in the mid 2000’s due to the poorer economy, discount stores became highly attractive with a strong demand. To be successful at cost leadership it has to start from the top and work its way to the final competitively low price tag that the consumer ultimately gets. Costs need to be reduced to minimum at each point of the value-chain to ensure a lowest price can be charged. Often time retailers have difficulty achieving this goal but experience and quality management can be the solution. Sears Holding can be successful in cost leadership due to their access of capital along with a low-cost distribution system. To sustain a cost leadership position Sears Holding will need to have intense supervision of their employees to ensure quality along the way. Responsibilities of individuals along with frequent reports will need to be documented and displayed to commute a tight cost control throughout the organization. I believe a mixture of strategies is key to Sears Holding’s future and differentiation which also appeals to broad masses can be beneficial to the brand.
Strategic uses of differentiation will be successful in Sears Holding turnaround strategy. One of the main areas to differentiate themselves verses other discount retailers is to focus on service. Most consumers don’t expect much more service than a “hello, welcome to Wal-Mart” while shopping at the discount realtor. So one way Sears Holding could differentiate themselves from their major competitor is to specialize in excellent customer service. Areas of service could include helpful knowledgeable staff in the departments to express self checkout lanes for consumer convenience. When a retailer has strong customer service, especially at a discount retailer, referals will spread fast through word of mouth and the brand will be easy to market. A strong reputation can be accomplished, were quality of service isn’t lost due to low costing goods which consumers will truly value.
Sears can also continue to differentiate between their competition by carry exclusive brand names like Kenmore, Die Hard, and Craftsman. These brands may cost a little more but the quality and dependability surpass others in similar markets. If Sears is the only place I can purchase a certain brand I am in the market for than I will make a special trip to the destination retailer to supply my individual needs and desires.
Can the two chains be combined or must they have separate retailing identities?