Sears’ Economic Woes No Surprise to GWU Professor

Print Friendly

Gardner-Webb’s Don Caudill Examines Reasons for Collapse

BOILING SPRINGS, N.C. – The national retailer most widely known as Sears recently announced store closings across the United States, with its Shelby, N.C. location set to close by early spring.  The store, within close proximity to Gardner-Webb University, has been a staple of the retail community for over 60 years.

Dr. Don Caudill serves as professor of marketing for the GWU Godbold School of Business.  He believes several factors have contributed to Sears Holding Corporation’s economic woes.

“While the reasons for the demise of Sears may be copious, complicated and uncertain, one of the most significant factors was a failure in market strategy,” said Caudill.  “Sears’ marketing difficulties included huge catastrophes in customer service from online operations and brand management to pricing, segmentation, and positioning.”

Dr. Don Caudill

Caudill believes Sears lost it most profitable target market—the middle class.  “Sears has been unable to attract new customers even though the iconic retailer sells some powerful brands like Kenmore, Die-Hard, and Craftsman,” he shared.  “This may be because Sears did not invest enough in upgrading their stores. Instead of positioning themselves to serve several distinct market segments well, it seems Sears tried to be all things to all people, which is a recipe for disaster.”

According to international news agency Reuters, sales at Sears Holdings Corporation have continued to fall since 2005, even after billionaire hedge fund manager Edward Lampert merged it with Kmart in an $11 billion agreement.

Sears Holdings Corporations recently reported declines in comparable-store sales at its Kmart and U.S. namesake chain over the important holiday season.  Sears’ locations in the U.S., where stores had been open for one year, were down 9.2 percent in the nine weeks ending Jan. 6 and down 5.7 percent at Kmart.  Sears expects to post a loss of between $11.85 and $12.88 per share for the fiscal year ending Feb. 1. That includes a loss of $2.35 to $3.39 per share for the holiday quarter.

The retailer has closed about 300 U.S. stores since 2010, tightly managing inventory, selling real estate and shedding assets at home and in Canada as it tries to engineer a turnaround. The company has about 2,000 Sears and Kmart locations in the United States.  The Shelby location is expected to close in April, ending a 62-year relationship with the local area.

As bleak as the outlook is, can Sears save itself before it’s too late?  Caudill believes anything is possible.  “They do have leverage in the strength of its brands and valuable real estate holdings,” he offered. “To rise from its current condition, Sears would have to reposition and rebrand itself, and then implement a clear, meaningful integrated marketing strategy.  Other retailers have been on the brink of bankruptcy and have miraculously turned things around.  It is possible.”

For more information on the Godbold School of Business contact Natetsa Lawrence at 704.406.2260.

Located in Boiling Springs, N.C., Gardner-Webb University offers a comprehensive academic experience that introduces students to the diverse world of ideas and to the people who think them, preparing them for professional success and for productive citizenship.