Marketing Theory Pt. 5

Marketing Theory Pt. 5

Question 4: Sears acquired Lands’ End, a well known brand name label, in an effort to improve sales. How best should Sears proceed with this merger?

A financial perspective on net income:

In 2002, Sears purchased Lands’ End for US $1.9B. Between 1996 and 2000, Lands’ End had a healthy but inconsistent net income. During that same period, Sears also posted healthy net incomes.

Table 2. Sears and Land’s End net incomes.

Net Income 1996 1997 1998 1999 2000
Lands’ End $30.5M $51M $64M $31.2M $38M
Sears $1.27B $1.19B $1.0B $1.5B $1.3B

A marketing perspective:

Immediately after this merger, Sears went into a financial tail spin. From my observation of  both the Sears and Land’s End brands, there seems to be no reason for a brand conflict. Integration should have been mutually beneficial as Sears had an established bricks and mortar operation while Lands’ End has a pioneer of e-tailing. Sears seemed to have performed a proper implementation of brand integration. In a 2003 press interview, Sears CEO Alan Tracy commented on the challenge of integrating the wants of two separate target markets.[1] He stated that Sears had a multicultural draw while Land’s End attracted a more “northern” audience – probably meaning Anglo-Saxon.

An E-business perspective:

With increased Business Intelligence (BI), Sears should have the capacity to better understand the new market place through data mining. By leveraging Lands’ End’s technology and customer base with their own, over all efficiency should be increased. The biggest challenge will be in Enterprise Resource Planning (ERP). How should Sears proceed with the integration of two distinct units, keeping each brand intact, while taking advantage of such things and human resources efficiency, supply chain management, and the further development of BI.

[1] http://multichannelmerchant.com/news/marketing_live_shoporg_lands/

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