Situational Analysis: Sears Roebuck & Co. Integrates Clicks & Bricks
The Sears Roebuck & Co. case provides a situational analysis of an E-business strategy covering the organizational benefits of the pre-designed implementation of an I.T. plan and includes a particular focus on the B2C side of E-commerce. Beginning in 2002, Sears was forced to come to terms with not so much the edge of a new wave of competition on their heels, but an edge that had already surpassed them. Wal-Mart’s and Target’s near simultaneous eclipsing of Sears’ image as the great-American retail icon meant a new retailing strategy had to be executed. Sears sought to meet this new wave of competition with a plan for growth of its own.
The strategy necessitated a heavy investment in e-business technology, to enable market penetration, which was combined with the purchase of the online pioneer, Lands’ End, to allow market expansion. Much of this case is about the tactics Sears utilized to implement this plan. I believe that without measuring the end results of Sears’ strategy, any analysis would be pointless. The problem then, after understanding what steps Sears’ had taken to catalyze growth, was a decision on my part as to which metrics should be used to measure the effectiveness of this plan. The metrics I have chosen come in the form of a quantitative analysis involving aggregate Internet growth in both population and retail spending, the individual retail growth (bricks and clicks) of Wal-Mart, Target, and Sears, combined with a correlation of Internet traffic and Internet sales growth of the same three retailers. To best illustrate this method, consider the following scenario.
For year 1, store Q has: 10 Internet “Hits” (X)
$50 Total Sales (Bricks and Clicks) (Y)
For year 1, the Internet has: $25 Sales (Z1)
100 Users (Z2)
The equation is: (X/Y) / (Z1/Z2)
Therefore: (10/50)/(25/100) = .8
This process is then repeated for each year and each retailer between 1995 and 2006. The retailer with the overall highest and sharpest growth will be considered to be the one with the best e-commerce implementation. The theory is that the retailer with the most successful implementation of e-business technology is the one that has the strongest Internet sales when compared to the growth of the Internet as a whole and that particular retailer’s brick and mortar growth. This correlation will be expressed in a three factor ratio of X:Y:Z where X is the retailer’s Internet sales, Y is their total retail sales, and Z is the quotient of Internet commerce dollars divided by Internet population. Obviously, Z will be constant for all three retailers. Therefore the company with the greatest derivative between X:Z over Y:Z has implemented the better e-business strategy. This form of analysis will best help in answering questions two, three, and five.
Finally, to help summarize the situational analysis of this case, the following timeline has been drawn.
Table 1. Sears Timeline