SWOT and PEST Analysis of Sears

SWOT Analysis of Sears 

Strengths 

The company has a strong and extensive presence in many regions around the globe. This includes more than 3,845 stores spread across the United States, Canada and other parts of the world. Until the years 1989, Sears was regarded as the largest retailer operating in the United States before. Later on, it was surpassed by other companies, but it remains among the largest retailers in the United States market and other markets around the globe. The other strength demonstrated by this company is its unique multichannel form of integration that has always played a critical role when it comes to the creation of convenience to customers shopping from its various outlets (Tyson, 2017). As such, Sears happens to have been ranked among the top three companies in terms of having stronger multichannel integration capabilities as well as being able to attract massive web traffic. 

Sears has also been able to demonstrate its strength in being one of the leading innovative companies in retail space. The operations of this company are characterized by different aspects of integrated technologies that have made it possible and convenient for its customers to link up with different stores, transactions and other product details associated with Sears (Wilson, 2017). Moreover, there is another level of technology integration within the retail operations of Sears that allows the consumers of its products to have a physical as well as a digital shopping experience. Further, this company is strengthened by the fact that it can provide its customers with a wide range of products such as home appliances, merchandise, jewelry , books, as well as apparel to automotive and other services. In the United States, this company is among the largest providers of home services with a previous record of having been able to offer more than 13 million installations and services annually. 

Weaknesses 

One of the weaknesses that have been demonstrated by this company is the instability and fluctuations concerning its financials. Sears recorded a net loss of about $394 million by the end of the second quarter during the financial year 2016. By the end of the third quarter during the 2016 fiscal year, the revenues of this company recorded a significant decline and its long-term debt also increased in value to about $3.4 billion by the end of the third quarter of the 2016 financial year (Levisohn, 2017). The company also experiences weak sales regarding its various comparable stores. For instance, the company posted a 7% and 3% decline in its Sears and Kmart sales respectively by the end of the second quarter in the 2016 financial year. 

This nature of the decline in revenue in the sales of comparable stores of the Sears Holdings is attributable to decrease in sales of consumer electronics, footwear as well as garden and lawn tools. Another weakness for this company is its failure to develop an updated retailing model that captures different aspects in the current redialing trends. In this way, the company has found itself dealing with some poor and outdated retail practices and business strategies that were associated with the image of its old brand. For instance, there has been a significant shift from the nature of spending that used to take place in the ‘80s and ‘90s where more than 40% of the consumers were spending on apparels from physical stores to the present situation online shopping has become more popular (Mattioli, 2018). Further, its stores have been faced with the challenge of severe understaffing. Saturation of the domestic market is another notable weakness for Sears owing to the changing trends regarding the spending behaviors of Americans. 

Opportunities 

There is an opportunity for Sears Company to introduce transformation strategies for the facilitation of its growth and transformation. Sears has the chance to increase the extent of investments in its various stores by placing more emphasis on raining its recruitment to match the available workload (Wilson, 2017). Moreover, the company stands a better chance of raising its revenues and contributing towards its growth by ensuring that its staffs are appropriately and adequately trained on a regular basis. In that respect, it would be important for the company to get rid of some of its redundant stores that are continuously making loses thereby contributing towards raising its financial burden. Furthermore, Sears has the opportunity to make changes concerning the strategies that it has been using to encourage sales among its various comparable stores. This will ensure that that is a balance between the financial performances of such stores. 

Ideally, the introduction of changes in strategies used in sales gives Sears an opportunity to direct its focus towards enhancing the sales of the items that appear to be recording the lowest sales thereby affecting the revenues of the company. Extensive digital transformation within its retail operations is another opportunity that Sears has to grow its business operations and increase its revenues. In this regard, the digital transformation will involve the integration of recommendations from customer experience to the cross-channel strategies used in high-end analysis and provision of specialized products and services (Tyson, 2017). Further, Sears is capable of making increased investments by acquiring the relevant data and information from the right people to enhance the efficiency of optimization. To that extent, the digital transformation of the multichannel system is an opportunity for this company to obtain a more in-depth and broader understanding of the purchasing behaviors of consumers. In addition, this company understands the preferences of its customers regarding products and services offered by the company. 

Threats 

One of the threats faced by Sears in its business operations is the intense competition from upcoming as well as existing retails giants in the market. Some of these competitors include Macy Inc. and Target among others. For this reason, Sears Holdings has found itself struggling in regards to meeting its target in revenue growth and sustaining its development based on the various business strategies adopted. To that extent, this company has managed to record a quarterly revenue increment of -25.25% over the last couple of years, which demonstrates that it is likely to continue struggling with the threat presented by an immense competition from other players in the market (Prang, 2018). Sears Holdings also faces the threat that is low operating margins as compared to other companies in the market. The operating margin for Sears stands at -4.40% which is much lower than those of Target and Walmart at 6.64% and 5.61% respectively (Prang, 2018). Such a disparity in the operating margin for this company concerning some of its competitors constitutes a significant threat to its revenue growth. 

Besides, Sears Holdings Company is also significantly threatened by economic fluctuations. In this respect, the aspect of inequality experienced concerning the company's income is repression of domestic consumption emanating from a situation where the poor are higher consumers of specific products than the rich (Mattioli, 2018). In this way, there is an apparent suppression of the middle-class consumers in the United States market which raises the severity of the threat faced by Sears to a lever that could lead to the closing down of some its stores. The threats facing this company are attributable to its failure to make effective and extensive utilization of its strengths and opportunities by introducing growth and development strategies that are reflective of the ways of dealing with the presently existing challenges in the market. 

PEST Analysis of Sears 

Political Factors 

Political factors have a critical role to play in influencing other aspects affecting the Sears Holding towards the realization of an increase in revenues and profitability in the market environment existing in a given country. Considering the political dynamics, this company has its stores distributed across different countries in the world; its biases in operations are considerably exposed to various advantages and disadvantages that come with different types of political systems and political environments (Levisohn, 2017). The attainment of the set objectives and the achievement of the overall success by this company are mainly dependent on its ability in diversifying the systematic risk presented by different political environments existing in a wide range of countries in which its stores operate. Some of the situations that are important for analysis by Sears in a given political system or environment before making investments include political stability and its influence on the economy of a country, the risk of political outrage and military invasions, tariffs and trade regulations related to foreign business operations and pricing regulations among others. 

Other important considerations for Sears Holdings in a political system or political environment include the legal framework involved in the enforcement of contracts, measures for the protection of intellectual properties, the level of corruption and the nature of corrupt activities that are rampant in a given country as well as the legislation and regulations around minimum wage (Mattioli, 2018). Previously, this company has been involved in the financing of political campaigns owing to the permission obtained from its policies on political spending. Additionally, such campaign financing policies are meant to allow the company to support and empower political parties and candidates who are committed to championing the realization of a system of free enterprise that supports retail industry. To that extent, the operations of Sears Holdings have a likelihood of influencing the political environment in which they operate. 

Economic Factors 

Sears Holdings is in a position to be influenced by the economic factors of a country in which it runs and operates its stores by a number of economic aspects such as the rate of economic growth, inflation, the growth rate of industry stores and the consumer spending ability among others. Other important aspects of the economy that would be crucial for consideration by the Sears as its strategizes towards its growth and overall success include the economic system in operation, financial market‘s efficiencies, governmental interventions in relation to operations in the free market as well as costs of productivity and labor in the economy (Nasdaq Journal Staff , 2018). Moreover, the sustainability of the Sears Holdings as an international company has been largely dependent on interest rates, stages involved in a business cycle, the availability of skilled workforce, currency stability of the host country as well as the rate of unemployment and discretionary income. 

The business operations of Sears Holdings have always been influenced by the economic conditions at the global level. Some of these conditions include various rates of inflation, a decline in consumer spending power, failure of the global economy to achieve recovery sustainability, negative influence liquidity ratios, reduced gross margins, and reduced revenues. There is a higher likelihood of the business operations of Sears Holdings in different countries to be influenced by the adverse changes in the disposable income levels as well as the availability of credit to customers (Tyson, 2017). The operations of vendors are also often affected by different economic aspects that are predominant at the local markets and the international scenes. To that extent, economic factors are critical in determining the success of Sears Holdings and its achievements in different countries where it operates its retail stores. 

Social Factors 

Considering that Sears has been a key employer in the United States, social factors are essential for incorporation into its growth strategies. Moreover, the operations of its retail stores in various countries and societies are defined by different social aspects which are crucial for consideration by Sears Holdings in the recruitment and training of its members of staffs in these respective countries. In the previous years, this company has received recognition as having created one of the best working environments for its employees and members of staff by giving priority to the implementation of equality, fairness and other human rights requirements (Mattioli, 2018). The culture within an organization and its working environment are some of the social aspects that are often influenced by the different cultures of people living in the society around such an organization. The attitudes and shared believes of the people living and working within the society around Sears Holdings are critical. This is because they have been able to play a crucial role in influencing the manner in which the marketers in this company have performed their operations. 

In this regard, the marketers of Sears Holding Company have been using different social and cultural aspects to understand the behaviors and way of life of potential customers thereby adjusting their marketing strategies accordingly to cater for the needs and preferences. Furthermore, the business planners and strategists at Sears Holding Company are usually out to gather customer experiences and expectations in using the products to allow them to aim at meeting such expectations by introducing the necessary products and services (Prang, 2018). Many social aspects are important in evaluation and analysis by Sears in various market environments in which it operates. Such social elements include education, skills, demographics, power structure and hierarchy in the society. Others are class structure, societal interests and preferences, social convections and gender roles as well as the entrepreneurial spirit of the broader society. 

Technological Factors 

Sears has often taken advantage of technological advancements to enhance its market presence and raise its profitability in the current competitive environment. Further, this company has always engaged in trying to perform its operations such as marketing and retail through online and social networking platforms. The company has also managed to develop different community interactive websites with the capability of providing advanced feature and tools ensuring that customers can share the personal experiences and insights as well as making appropriate purchasing decisions (Nasdaq Journal Staff , 2018). The way in which the decision to embrace technology has influenced operations at Sears involves a wide range of initiatives such as technology-based leadership programs meant for professional workers. Over the last couple of years, the focus of this company has always been directed towards recruitment of the best and talented workforce with the relevant technological skills. 

Technology has also introduced online shipping concerning the products and services offered by Sears Holdings thereby raising its popularity and accessibility in different countries across the globe. Consequently, retailers have managed to increase their efforts while serving clients through their online platforms to give them the best shopping experience. The integration of technology in the business operations undertaken by Sears Holding Company also plays a considerable role towards the enhancement of its overall efficiency thereby reducing unnecessary losses (Levisohn, 2017). In this respect, operations like online financial transactions and purchase of products may be streamlined through partial or full automation. 

References 

Levisohn, B. (2017, Oct. 16). Why Sears is sinking…and Sunk? Barron’s. Retrieved from 

https://www.barrons.com/articles/why-sears-is-sinkingand-sunk-1508182243 

Mattioli, M. (2012 Feb. 24). In Retreat, Sears Set to Unload Stores . The Wall Street Journal . Retrieved from https://www.wsj.com/articles/SB10001424052970203918304577241002723672774 

Nasdaq Journal Staff. (2018 May 2015). Price to Earnings Ratio Evaluation – Sears Holdings 

Corporation (NASDAQ:SHLD) . Nasdaq Journal . Retrieved from 

http://nasdaqjournal.com/2018/05/15/price-to 

earnings-ratio-evaluation-sears-holdings-corporation-nasdaqshld/12/59/57/ 

Prang, S. (2018 April 23). Sears CEO Offers to Buy Kenmore, Other Units . The Wall Street Journal . Retrieved from https://www.wsj.com/articles/sears-ceo-calls-for-breakup-of-troubled-retaile1524490042 

Tyson, A. (2017). Sears Holdings Archives. Sears, Roebuck and Co. 

The Public Historian , 33(4), 110-113. doi:10.1525/tph.2011.33.4.110 

Wilson, K. (2017). Revenue Approximations Analysis: Sears Holdings 

Corporation (SHLD), Santander Consumer USA Holdings Inc. 

(SC). Stock News Journal , 2017 (3), 8. https://stocknewsjournal.com/