When we look at companies in the past who have failed because they weren’t able to keep up with changing times, a few come to mind: The Source, BlackBerry, Toys “R” Us. Now, there’s another name to add to that list – Sears.
Sears was once a retail giant rivaling the likes of Wal-Mart, Target, and many others. It is now ready to begin liquidating and will shut down its operations in Canada. Ultimately, the company was unable to devise any coherent or sensible strategy that would allow it to compete in a competitive market – this is what brought upon its demise. The company was unable to shift and pivot with changes in customer demands. They did not invest in their stores or attempt to compete on the e-commerce front. Amazon and other companies were able to take advantage of such things and implemented strategies that worked well.
In terms of their strategy, when the company was operating successfully, their main priority was to repurchase shares in the billions of dollars while its brick-and-mortar stores required more investment. In fact, their CEO Edward Lampert wrote “Unless we believe we will receive an adequate return on investment, we will not spend money on capital expenditures to build new stores or upgrade our existing base simply because our competitors do. If share repurchases or acquisitions appear to be more productive, then we will allocate capital to those options appropriately.” By refusing to look at what their consumers were demanding at the time, the management team implemented an inappropriate strategy that was misguided and foolhardy. In Rita McGrath’s “The End of Competitive Advantage”, she writes about how companies must “ramp up, exploit, reconfigure” in the sense that their strategies must be ever-changing and adaptive. In the case of Sears, they failed to utilize this strategy completely.
Growing up, I’ve watched many companies that have had to shut down because they weren’t able to “pivot”, as Prof. Kopke says. One that comes to my mind is Blockbuster Video – The movie rental behemoth. It was a wildly successful company that fulfilled its customers desires well. However, with the improvement of technology and the rise of competitors such as Netflix, Blockbuster Video was unable to keep up. Their limited strategy did not take all factors affecting the business climate into account and thus, were unable to survive during changing times. Therefore, in the cases of Sears, Blockbuster Video, and so forth, in order to sustain a successful business, it is imperative to have an ever-improving strategy.
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Article: www.cbc.ca/news/business/sears-closures-impact-small-communities-1.4353011