Directions:
Response Comments – After posting your initial response to the question, begin making comments to your peers. A minimum of two comments made on two different days must be posted in the discussion for a passing grade.
Wendi Minzler (Student 1)
Using as an example a company that has gone out of business or is in failure, what do you feel was their largest mistake?
For this week’s discussion I chose Sears & Roebuck Company. The company was founded in 1893 and has serviced primarily the middle-class consumers. Sears used to dominate the US retail landscape providing brands consumers know and still love (n.d., 2021). Some of those brands include: Whirlpool, Craftsman tools, and Schwinn bicycles. Sears sales used to account for 1% of the entire US economy and two-thirds of Americans shopped there in any given quarter (n.d., 2021). The following are a few key reasons why Sears did not succeed:
· They were a common anchor store at shopping malls which are no longer popular. Sears failed to switch their business away from the mall-based model.
· Sears’ greatest failure was the lack of innovation in accumulating customer data. They continued to rely on the catalogue instead of accumulating customer data even though the catalogue had not been profitable for years. They lost their advertising edge and no longer kept up with consumer trends.
· Unclear vision when it merged with discounter Kmart. The store attempted to compete with specialty stores such as GAP and J.W. Crew but had problems because shopping at Sears was “unremarkable”. Sears previously had a “unique balance between quality and price” (n.d., 2021).
· Lack of investment in refreshing store locations due to cost cutting strategies drove customers and suppliers away. Sears only spent $0.91 per square foot to upgrade stores, while competitors J.C. Penney spent $4.13 and Kohl’s paid $8.12.
I believe the greatest failure of the store is described as escalation: holding onto too long to a strategy that was once successful and not innovating (Vermeulen et al., 2017). If the store would have collected the customer data more efficiently, then they would have kept up on consumer trends. However, without that data they were not aware what clients wanted so there was no vision forward.
Might the company have been successful if they had done a better job implementing their strategies or was their primary strategy flawed?
Sears had some great product lines which are still very popular today. If they would have utilized innovation better, then they might have survived longer. But it still would be difficult to manage the current e-commerce competition with Amazon. So many brick and mortar retail stores are being driven out of business due to the delayed pivot to on-line sales and the combination of the drop in sales due to the COVID-19 pandemic. However, I believe Sears could have limited the product selection and differentiated the products better and the company would have fared better financially. Walmart has proven that large stores can compete with Amazon. However, Walmart is also not located in mall-based locations.
References:
n.d. (Oct 5, 2021). The Downfall of Sears: 5 Key Reasons Why the Retail Giant Went Under. Castusglobal.com. Retrieved on July 25, 2022.
Vermeulen, F. & Sivanathan, N. (2017, November/December). Stop doubling down on your failing strategy: How to spot (and escape) one before it’s too late. Harvard Business Review, 95 (6), 110-118.
Iprita Bhattarai (Student 2)
Hello Class,
A company that is in failure is Kmart. “Kmart, the $37 billion, 40-year of a mass marketing company that has roots going back over 100 years, files the single-largest bankruptcy protection in the history of business” (Pohmer, 2022). One of the biggest reasons they failed is due to a lack of strategy. They were at one point buying stores throughout the states without a proper strategy to deal with them properly. Its competitors, Walmart and Target, seemed to have the real focus and were becoming more and more successful, Kmart on the other hand, had lost its real focus.
With a vision of a low carrier store, they stopped paying attention to their quality. A perfect example of this is their Martha Stewart collection. When they first introduced this collection in their stores, their sales were soaring, however, they abruptly canceled this collection due to its high cost, hence costing them a great choice for their customers.
In addition, Kmart only seemed to focus on the suburban market, completely ignoring the rural market. “While Walmart tapped into rural America as well, Kmart focused solely on the suburbs and refused to get off the well-worn path” (Hatcher, 2019), costing them to lose a huge chunk of customers.
The last thread I believe was falling behind on the digital and technology game. With Walmart coming up with technologies such as scan and go, and making the online experience easier for their customers, Kmart continued to follow the traditional shopping method and rejected to make any new changes to customer online experience.
A short answer is YES, they would have surely succeeded if they had a good strategy in play. Their adamant shopping style, refusal to carry high-quality products, and refusing to move forward with technology, and most importantly, their merger with Sears, are a few of many other reasons why they are a failure today.
References:
Hatcher, J. (2019, November 27). Walmart v Kmart: What led to Kmart’s failure? Alabrava. Retrieved July 26, 2022, from https://alabrava.net/walmart-v-kmart-what-led-to-kmarts-failure/
Pohmer, S. (2022, April 11). The demise of an icon: Lessons to be learned. Greenhouse Product News. Retrieved July 26, 2022, from https://gpnmag.com/article/demise-icon-lessons-be-learned/
