Shishir Hari Rajbhandari

10333, MBA 4th Term

Shishir Hari Rajbhandari
Nepal
Case Analysis of Sears Changes Again and Again

Synopsis
The case ‘Sears Changes Again and Again’, highlights the changes Sears, the well known departmental store had
undertaken to solve problems and to reinvent itself in order to survive and prosper in the 21st century. The case
also highlights how leadership facilitates to bring about changes in the organization to improve from the current
state of being. At Sears under different leadership, various changes were made in the organizational structure,
strategic business units, product offerings and target customers. Initially, the change efforts were focused on
solving problem/improving efficiency. Later the focus was broadened to reinvent itself to survive and prosper in
the 21st Century. The case also highlights that change is a continuous process rather than a onetime event. Change
once undertaken might lead to good organizational results for a limited time frame after which the benefit ceases
as the factors in the environment change. Sears had undertaken various changes; however, the benefits of those
changes were limited for a specific period of time, after which another change initiative was required.

Issues/Focus of the case

The major issues/focus of the case mainly revolves around the various change initiative taken by Sears, in terms
of leadership, organizational structure, positioning, target market and the promotion theme to solve the
problems/improve performance and to survive and prosper in the 21st century.
The case highlights the change in leadership at Sears to improve organizational performance. Sears for the first
time appointed an outsider, Albert Martinez as the CEO to improve its degrading performance. Similarly, after
poor sales growth under Martinez’s leadership, the CFO Alan Lacy was appointed as the CEO.
The case also focuses on the changes in organizational structure made under the leadership of Martinez and Lacy.
Martinez cut down 50,000 employees, flattened the company’s huge bureaucracy and sold all financial services
business and loss making businesses to focus on its core department store business. Lacy on the other hand,
developed an on-line business to sell its hard products such as appliance and Craftsman Tools, and acquired
Land’s End, the huge on-line and catalogue clothes retailer to expand its online presence.
The case also focuses on the targeting and positioning strategies adopted by Sears under different leadership.
Martinez positioned Sears as a moderate price department store chain and targeted the “middle-American mom”
and flooded the stores with women’s apparel under the advertising theme “The Softer Side of Sears”. Lacy
positioned Sears as a store that emphasized on hard-good retail products like appliances and power tools.

Reasons for the changes

Initially changes were made at Sears because sales at its stores were falling and its acquisitions of financial
services business had not proved to be profitable. For the first time in its history, Sears’s board of directors
selected an outsider, Albert Martinez as a CEO to bring about a new strategy to allow it to compete successfully.
Martinez changed Sears’s strategy and structure to improve the company’s performance. Martinez sold off
financial services business and Sears’s catalogue because they were losing money for years and to focus on its
core department store business. Martinez positioned Sears as a moderate price departmental store chain with a
focus on the target customer of the “middle-American mom” and carried out promotion under the theme “The
Softer Side of Sears” so as to regain the lost female customers and as major buying decisions was made by
women in US. Sears’s operation was restructured by cutting 50,000 employees, flattening the bureaucracy to
reduce expenses/losses and increase effectiveness of the company. The changes undertaken by Martinez, though
successful for certain period but did not work for long. The Sear’s adult clothing didn’t catch on and customers
did not come back as a result of which he had to step down and CFO Alan, Lacy was appointed as the CEO.
Due to poor growth in the clothing business, CEO Lacy decided clothing was liability for the company so he
emphasized on Sear’s hard side- appliance, car batteries, and power tools assuming only it offered the possibility
for a turnaround. Thus, the Sears’s new store chain called The Great Indoors was expanded which sold every kind
and range of appliances and kitchens from least expensive Frigidairies to most expensive KitchenAid and Viking
products. He also developed an online business to reach to a wider customer to sell its products.

How would you analyze and evaluate the changes

Change in organizational culture by selecting an outsider as the CEO did bring about new strategy to improve the
company’s performance. The change in organizational structure of Sears by cutting 50,000 employees, flattening
the company’s huge bureaucracy and selling off strategic business units like Sears financial business were
necessary considering the losses Sears had been bearing. Reduction of employees helped cut down expenses of
the company; where as selling of financial businesses removed the burden of loss making entities.
Positioning Sears as moderate price department store chain was a good move; however, targeting only “middle
American mom” and flooding the stores with women’s apparel under the advertising theme “The Softer Side of
Sears” limited the market for Sears. Targeting only women increased the risk for Sears in case they detested the
products offered. The sales growth of Sears was seriously hampered when the styles didn’t catch on to the
customers and they didn’t come back.
The changes undertaken by Martinez were planned as the changes were deliberate and revolutionary as they were
bold attempt to quickly find new and radical ways of doing things including a new structure.
The decision of CEO, Alan Lacy to emphasize only hard-good retail products was profitable, however it limited
the scope of the business of Sears. This was a planned change and revolutionary in nature as it was drastic change
from clothing business to business of hard-goods like various kinds and range of appliance and kitchens from
least expensive frigidiaries to most expensive Kitchen Aid and Viking products.
The adoption of online business to sell its hard products such as appliances and Craftsman Tools reduced the cost
for Sears at the same time facilitated reach to wider customer segments. Similarly, acquisition of Land’s End, the
huge on-line and catalogue clothes retailer helped it expand its on-line presence. This were planned change and
evolutionary in nature as clothing business was what Sears focused on initially and online business was the being
widely adopted by its competitors during the early 2000s.

If you had to make the decision what different would you have done
If I had to make the decision, I wouldn’t have limited the focus of Sear’s stores to the “middle-American mom”.
Rather I would have targeted both male and female and customers of different age group. Within the same
departmental store I would have availed products targeted towards women, men and kids under Men’s, Women’s
and Kid’s section. Similarly, the clothes placed in the store would have been selected only after detailed analysis
of the market trends, customer’s requirement so that they appealed to the customers.
Having had low sales growth from clothing business that emphasized on Sears’s “softer-side”, I wouldn’t have
outrightly considered clothing as a liability for the company. Rather I would have analyzed where the
organization was lagging behind its competitors; Target and Wal-Mart and find ways to emulate their best
practices and redesign the strategy so as to revive Sears as a clothing store business. However, I would have also
expanded the business to selling hard-good retail products so as to diversify the risk of the business.