While each brick and mortar retailer has a special story in
how it is reinventing itself for the new retail environment, Sears has been a
particular interesting story. The iconic retailer can trace its roots back 120
years ago as a mail order company. Through the years it grew to become one of the
largest US retailers and it invested in financial services, real-estate and
other specialty retailers. By the 1990s, however, it seemed to have lost its
edge and has since been working to regain its competitive advantage.
Like many other brick and mortar retailers, Sears has worked
to improve its supply chain strategy to regain its edge. For example, by utilizing
its 41 distribution centers and 106 market delivery operation sites for
cross-docking, it is now able to ship products to about 99% of the country in
two days or less and has also improved its inventory management for in-store
and online. It has also launched “buy online, pickup in-store” as well as
utilized select retail stores to fulfill online or other store orders.
Its online ventures appear to have been taken from Amazon’s
book. Similar to Amazon Prime, but without a fee, Sears launched “Shop your
Way” a loyalty program with its own website that targets members. In fact,
according to its latest quarterly report, Sears noted that 65% of sales and
transactions now come from members. By taking advantage of data points, the
company plans to focus its sales and marketing strategy on its members. To
entice new members, special perks such as shop online and pay in store will be
available.
Another interesting venture is its introduction of “Fulfilled
by Sears”. Again, similar to Fulfillment by Amazon, it allows small businesses
to sale on Sears’ website and keep inventory in Sears’ facilities.
While it appears Kmart, a part of Sears Holdings, continues
to weigh on the company’s overall revenues, the company’s online activity has
proved quite success with sales increasing 20% for each quarter for 2013.
Still, Sears’ does not break out web sales so it is likely the figure still represents
a small percentage compared to overall sales.
While the rush continues to adopt an “omnichannel” strategy
and improve upon supply chains, many retailers are still reporting declines in
overall revenue. Ecommerce sales may indeed be the culprit but according to the
US Department of Commerce, online purchases accounted for only 5.8% of total US
retail sales. True, this is up from 5.1% a year earlier but perhaps there is
more to the declines in retail revenue besides the economy and ecommerce. While
supply chain certainly plays a big role in business strategy perhaps retailers are
neglecting other parts of their business strategy? Sears has definitely made
great strides in updating its supply chain and embracing ecommerce but let’s
not neglect the brick and mortar. The physical store can still make or break a
retailer.
As the holiday season approaches, competition among
retailers will heat up. What retailers do you expect to be successful or not so
successful this holiday season? Send me your thoughts at croberson@transportintelligence.com or post them here on the blog.
Information will be compiled for an upcoming briefing.
