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 email@example.com or post them here on the blog. Information will be compiled for an upcoming briefing.