The Plan to Resscue Sears
The Plan to Rescue Sears
BACKGROUND
Edward Lampert purchased Kmart in 2003 and Sears, Roebuck& Company in 2004 when they were almost bankrupt. Sears holdings have been operating both Sears and Kmart stores since 2004. According to factSet, sears holdings had cash and short-term investments of about 2.09 billion dollars since its creation until January 2011. In mid-January 2011, a report by national retail federation stated that the sales of Kmart dropped by 4.4%, and this placed Sear Holding at a state of bankruptcy (Bustillo, 1).
In February 2011, Lou D’ Ambrosio became the chief executive of Sears Holdings. His appointment as chief executive was a result of his background in technology (Bustillo, 1). This is because he was a former executive at IBM and Avaya. Edward Lampert, chair of Sears Holdings stated that their main aim was to find a leader with experience on information and technology. To many, problems at the company had to do with poor customer services and poor retailing skills rather than technology.
PROBLEMS
The sales of electronics and clothing lines of Sears and Kmart dropped due to stiff competition from Wal-mart. Wal-mart developed a program that would allow low-income shoppers to purchase goods and pay for them on an installment basis. Sears and Kmart focused only on their immediate customers rather than their future. They did not anticipate getting more customers that would help them keep up with levels of competition (Bustillo, 2).
Sears holding announced that they would close down 100 to 120 stores due to poor sales in the holiday season. They also had a problem with rebranding their products. Neither sears nor Kmart kept their promises. Customers were unhappy since they walked in to the stores and found the same old-fashioned items in the stores. Sears shares went down by 27% closing the day at $33.38 in February 2011. Customers totally deserted sears because they felt that the shopping environment was poor ( Aristotle, 1).
BACKGROUND
Edward Lampert purchased Kmart in 2003 and Sears, Roebuck& Company in 2004 when they were almost bankrupt. Sears holdings have been operating both Sears and Kmart stores since 2004. According to factSet, sears holdings had cash and short-term investments of about 2.09 billion dollars since its creation until January 2011. In mid-January 2011, a report by national retail federation stated that the sales of Kmart dropped by 4.4%, and this placed Sear Holding at a state of bankruptcy (Bustillo, 1).
In February 2011, Lou D’ Ambrosio became the chief executive of Sears Holdings. His appointment as chief executive was a result of his background in technology (Bustillo, 1). This is because he was a former executive at IBM and Avaya. Edward Lampert, chair of Sears Holdings stated that their main aim was to find a leader with experience on information and technology. To many, problems at the company had to do with poor customer services and poor retailing skills rather than technology.
PROBLEMS
The sales of electronics and clothing lines of Sears and Kmart dropped due to stiff competition from Wal-mart. Wal-mart developed a program that would allow low-income shoppers to purchase goods and pay for them on an installment basis. Sears and Kmart focused only on their immediate customers rather than their future. They did not anticipate getting more customers that would help them keep up with levels of competition (Bustillo, 2).
Sears holding announced that they would close down 100 to 120 stores due to poor sales in the holiday season. They also had a problem with rebranding their products. Neither sears nor Kmart kept their promises. Customers were unhappy since they walked in to the stores and found the same old-fashioned items in the stores. Sears shares went down by 27% closing the day at $33.38 in February 2011. Customers totally deserted sears because they felt that the shopping environment was poor ( Aristotle, 1).