1. How do the retailing strategies of Sears and Walmart differ? Company Background-Sears • Founded in 1891, operated solely as a catalog business • In 1924, expanded into retail stores in shopping mall ▫ Sold a variety of merchandise including apparel, cosmetics, jewelry, electronic, household appliances…. • Early 1980s, faced with declining market share ▫ Target audience of middle class female shoppers ▫ Slogan ”Come see the softer side of Sears” Company Background-Walmart • Founded in 1962, opened the first Walmart in Bentonvile, Arkansas • In the next 3 decades, grew into a retailing powerhouse • Claimed the title of world’s largest retailer • Slogan “Always low prices” Sears Stores Full Line Stores, Auto Stores Home Stores Sears Proprietary Credit Card Retail Financial services, real estate Credit Middle class female shopper “Come see the softer side of Sears” (41,296-26769)/41296 = 35% 41,296/38,700 = 1.1 26,769/5,044 = 5.3 Walmart Wal-Mart’s namesake discount stores Sam’s Club membership warehouse Wal-Mart Supercentre Works with Chase Manhattan Bank to issue mastercard with Walmart logo Retail
Credit Card Company Operation
Target Audience Slogan Gross margin’ 97 Asset turnover’ 97 Inventory turnover’ 97
Low cost shopper “Always low prices” (119,299-93,438)/119,299 = 22% 119,299/45325 = 2.6 93,438/16,497 = 5.7
Therefore the strategy adopted by Sears is focused differentiation strategy as they targeted on a particular group of audience and achieved higher gross margin, less effective in using its asset. Walmart adopted cost leadership strategy as it can be seen in high asset turnover which signify effective uses of asset to generate sales. Because of cost leadership, they are unable to price their product much higher than their cost, hence result a low gross margin.