BUSINESS PROBLEM-SOLVING CASE

CAN TECHNOLOGY SAVE SEARS-CASE STUDY.

Sears has also been Sears, Roebuck used to be the largest retailer i the United States, with sales representing I to 2 percent of the U.S. gross national product for almost 40 years after World War II. Since then, Sears has steadily lost ground to discounters such as Walmartand Target and to competitively priced specialty retailers such as Home Depot and Lowe's. Even the mergerwith Kmart in 2005 to create Sears Holding Company failed to stop the downward spiral in sales many of which are run down and in u and market share. pay cash Despite these improvements, Sears has lagged irn merchandising trends, and remodeling its 2429 stores, locations. It is still struggling to find a viable busi keeping pace with current ndesirable ness strategy that will pull it out of its rut. The Sears Over the years, Sears had invested heavily in information technology. At one time, it spent more on information technology and networking than all other noncomputer firms in the United States except the Boeing Corporation. The company was noted for its extensive customer databases of 60 continued to use technology strateg company revive flagging sales: online shopping, mobile apps and an Amazon.com-like marketplace with other vendors for 18 million products, along with heavy in- store promotions. So far, these efforts have not paid million past and present Sears credit card holders, off, and sales have declined since the 2005 merger with Kmart. The company posted a loss of nearly S1.4 billion for 2013. Total losses between early 2011 and November 2014 amounted to almost $7 billion. which it used to target groups such as tool buyers, appliance buyers, and gardening enthusiasts with special promotions. For example, Sears would mail customers who purchased a washer and dryer an offer for a maintenance contract and follow up with annual contract renewal forms. These efforts did not translate into competitive advantage because Sears's cost structure was one of the highest in its industry. Sears continued to pin its hopes on technology aiming for even more intensive use of technology and mining of customer data. The expectation was that deeper knowledge of customer preferences and buying patterns would make promotions, merchan- dising, and selling much more effective. Customers would flock to Sears stores because they would be carrying exactly what customers want. In 1993, under the leadership of Arthur Martinez, Sears embarked on a $4 billion five-year store renovation program to make stores more efficient, attractive, and convenient by bringing all transac- A customer loyalty program called Shop Your Way Rewards promised customers generous free deals tions closer to the sales floor and centralizing every store's general offices, cashiers, customer services, for repeat purchases if they agreed to share their and credit functions. New point-of-sale (POS) ter personal shopping data with the company. Sears minals allowed sales staff to issue new credit cards, would not disclose how many customers signed up accept charge card payments, issue gift certificates, for Shop Your Way Rewards, but loyalty-marketing nd report account information to card holders. firm Colloquy estimated around 50 million people The POS devices provided information such as the are members. status of orders and availability of products, allowing associates to order out-of-stock goods directly from the sales floor. Some stores installed ATM machines to give customers cash advances against their Sears credit cards. Sears also moved its suppliers to an electronic ordering system. By linking its computer- ized ordering system directly to that of each supplier, Sears hoped to eliminate paper throughout the order process and expedite the flow of goods into its stores. The data Sears is collecting are changing how its sales floors are arranged and how promotions are designed to attract shoppers. For example, work wear has been moved closer to where tools are sold. After data analysis showed that many jewelry customers were men who bought tools, the company created a special Valentine's Day offer for Shop Your Way Rewards members that offered $100 credit for $400 spent on jewelry Sears was among the first major retailers to change the way it sold based on shifting consumer habits. For example, in 2001, Sears began testing a service that lets shoppers buy online and pick up their goods Sears wanted to personalize marketing campaigns coupons, and offers down to the individual cus- tomer, but its legacy systems were incapable of sup- porting that level of activity. To use complex analytic

Case Study Questions

3-13 Analyze Sears, using the competitive forces an value chain models. What are sears strengths, what are it's weaknesses.

3-14 What was the problem facing Sears? What management organization, and technology factors contributed to this problem

3-15 What solution did Sears select? What was the role of technology in this solution.

3-16 How effective was the solution Sears selected?

Explain your answer

3.17. Describe impact of internet on each of the 5 competitive forces

3.18 What are the main factors that mediate the relationship between IT and organization that managers need to take into account when developing new info system.give a business example of how each factor business