Sears: Downfall of a giant. Suffering from fundamental problems, Sears nears bankruptcy
Sears: Downfall of a giant. Suffering from fundamental problems, Sears nears bankruptcy
Summary
The end of Sears has been predicted by retail analysts for a longtime. Not long after Kmart and Sears merged to create the Sears Holdings Corporation in 2004, revenues began to slide and have been doing so at gathering speeds ever since 2007.
Many factors are responsible, but most fundamentally the company is not being run in a way conducive to survival, even though potential escape routes exist. Many problems can be traced back to the CEO, Eddie Lampert.
Failure at the top of the company to summon suitable solutions to longstanding problems is the most fundamental of them all. Sears remains a trading company, for now. Unless radical action is taken very soon the brand will soon cease to exist altogether.
Key Highlights
- The creation of Sears Holdings Corporation by the merger of struggling retailer Kmart with Sears (although in effect the deal was a Kmart takeover of Sears) was supposed to provide both retailers with economies of scale and integration of products to compete against Walmart and other firms.
- How the company is organized exacerbates the problem further. Shortly after Lampert took over, each business unit was organized to function as an autonomous company would do.
- Most observers of Sears have struggled to discover potential means of the company being saved from expiring ever since it was formed.
Scope
- Assesses the impact of the Kmart and Sears merger
- Looks at the role of CEO in the company
- Examines the financial situation the company is in
- Examines the current strategies in place
- Assesses the need for store investment
- Looks at potential rescue plans
Reasons to buy
- What impact did the merger have on business
- Can the company ever be turned around
- Why is investment in stores necessary
- Was selling of assets correct
- How much is the CEO to blame for a decline in fortunes
Overview 2
Catalyst 2
Summary 2
Creation of Sears Holdings Corporation has not matched predictions of success 6
Original merger deal had major failings from the beginning, exacerbating problems 6
Some analysists predicted failure; others anticipated success 7
Predictions of success were based upon sound reasoning, but proved to be wrong once reality bit 8
Eddie Lampert is failing as a CEO, thwarting any prospect of recovery 9
Management style is bad for decision making and lacks leadership 9
Lack of trust from CEO prevents suitable decision making processes from forming 10
Unwillingness among board members to remove Lampert is a big failure of leadership 11
financial situation of Sears reducing survival chances 12
Selling products on Amazon is forward thinking but scale is lacking in ambition 12
Valuable assets are not being managed correctly to benefit whole company 13
Sears has few assets remaining, deterring any potential deal to save core business 13
Investment in stores should have occurred before debt became crippling 15
Dwindling financial resources and poor strategy are hastening decline of Sears 15
Suppliers are reported to be nervous about supplying Sears 16
Perilous financial situation means large-scale investment in stores is highly unlikely 16
Despite dire circumstance, suitable turnaround plans could work 18
Sears Canada could have been saved according to former executive chairman 18
Public image of Sears needs to be restored for a turnaround to happen 19
Better use of assets is now essential to stave off bankruptcy 19
Reform of ‘Shop Your Way’ needed to convince customers change is coming 19
Conclusions 21
Riddled by problems, Sears will soon cease trading unless radical action is undertaken 21
Appendix 22
Sources 22
Further Reading 22
Ask the analyst 23
About MarketLine 23
Disclaimer 23List of Tables
Table 1: Board members of Sears Holdings Corporation, 2017 10List of Figures
Figure 1: Sears and Kmart merger 6
Figure 2: Sears Holdings Corporation revenue ($bn) 2005 to 2017 7
Figure 3: Eddie Lampert 9
Figure 4: Sears and Amazon logos merged 12
Figure 5: Craftsman to be sold at Stanley Black & Decker 13
Figure 6: Sears Holdings Corporation profit/Loss ($m) 2005 to 2017 15
Figure 7: Sears store closing down 17
Figure 8: Brandon Stranzl, former executive chairman of Sears Canada 18
Figure 9: Sears ‘Shop Your Way’ 20
Research Methodology
The research study released with title "Sears: Downfall of a giant. Suffering from fundamental problems, Sears nears bankruptcy" involved the extensive usage of both primary and secondary data sources. The research process involved the study of various factors affecting the industry, including the government policy, market environment, competitive landscape, historical data, present trends in the market, technological innovation, upcoming technologies and the technical progress in related industry, and market risks, opportunities, market barriers and challenges. The following illustrative figure shows the market research methodology applied in this report.Key Executives Interviewed
Research Programs/Design
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Market Size Estimation
Top-down and bottom-up approaches are used to validate and estimate the global/regional market size by manufacturers, regional splits, product segments and application.
To establish Research coverage of the study with most relevant & functional players HTF MI follows industry standards such as NAICS/SIC/ICB/TRCB, furthermore the sorted list of companies is validated using Product Mapping and business activities and shortlisted by industry perspective.
HTF MI select experienced analyst and associate that are specialized in the domain for conducting research. They prepare a list of companies by region that helps to understand players penetration rate in the market. This companies are further analyses in what segment or application they serve in our market. The list of product and applications are evaluated for each companies dealing in the Sears Downfall of a giant Suffering from fundamental problems. The market study is conducted on basis of more than 200 companies dealing in the market regional as well as global areas with purpose to understand company’s positioning regarding market value, volume and their market share for regional as well as global. Further to bring relevance specific to any niche market we set and apply number of criteria like Geographic Footprints, Regional Segments of Revenue, Operational Centres, etc. The next step is to finalize a team (In-House + Data Online) who then starts collecting C & D level executives and profiles, Industry experts, Opinion leaders etc from Sears Downfall of a giant Suffering from fundamental problems who then work towards appointment generation.
Primary Data Collection
The primary research is performed by taking the interviews of executives of various companies dealing in the Sears Downfall of a giant Suffering from fundamental problems as well as using the survey reports, research institute, and latest research reports. Meanwhile, analyst team keeps preparing set of questionnaires and relevant list of appointee or target primary respondents; the target audience are then tapped and segregated with various mediums and channels that are feasible for making connection that includes email communication, telephonic, skype, LinkedIn Group & In Mail, Community Forums, Open Survey, SurveyMonkey etc.
Secondary Sources
The secondary resources considered in the Sears Downfall of a giant Suffering from fundamental problems study includes company annual reports, press releases, published articles of organizations and associations, and the survey taken through different mediums such as online website and forums, survey monkey, LinkedIn, etc. In addition, the valuable strategic information obtained from industry association, paid database, and investor presentations are also good tool for information to make appropriate iterative validation are used to modify market models and cross-verify primary research and insights.
Market Breakdown and Data Triangulation
To make market engineering data complete; extensive primary research is conducted to gather information and validate the critical numbers derived to be used for calculations of market statistics; market size estimations; forecasting; breakdown; and data triangulation. Both top-down and bottom-up approaches were applied, along with several data triangulation methods, to perform market estimation and market forecasting for the overall market segments and sub-segments listed in this report. Furthermore qualitative and further quantitative analysis is also done for all the numbers arrived at in the market estimation process to list relevant information in the final deliverable report "Sears: Downfall of a giant. Suffering from fundamental problems, Sears nears bankruptcy" .
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Key Information from Primary Sources
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| Format | Properties | |
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| 1-User Access | The report is sent in PDF format. The report will be emailed to you. | This is a single user access license, allowing one specific user to access the report. |
| Site User | The study would be provided in PDF format. The report will be emailed to you. | This is a site license, allowing 1-10 employees within your organisation to access the report. |
| Enterprise User | The format of deliverable would be PDF and Excel. | This is an enterprise or corporate license, allowing all employees within your organisation irrespective of geographic location to access the report. |
