Case：Sears, Roebuck and Co. vs. Wal-Mart Stores, Inc.
1． How do the retailing strategies of Sears and Wal-Mart differ? How does each firm operate their business/attempt to create value? The two companies differs in retailing strategy in two ways.
1. Credit sales boost sales greatly in Sears, not in Wal-mart Since 1992 when Arthur C. Martinez was brought on board to head Sears’s retailing operations, credit sales, especially through the use of the company’s own proprietary credit card, boost the sales of the company greatly from 1993 to 1997. The new card accounts between 1993 and 1996 were increasing by roughly a 50% rate every year. Besides the company’s own credit cards, the third party credit cards such as MasterCard and Visa also played a vital role in credit sales, the third party sales as a percentage of Full-line and majority of specialty store formats was approximately 55.1% and 55.6% for fiscal years 1997 and 1996. This can also been proved in balance sheet of Sears: the credit card receivables were 20956 million and 20104 million in fiscal year 1997 and 1996 respectively. Comparatively, Wal-Mart had a receivables balance of 976 million and 845 million respectively in fiscal year 1997 and 1996.
2. Cost-effective and effective use of assets in Wal-mart
While the two companies have the similar revenues per selling square root, they do not use the same strategy when using the assets. From the Exhibit1 and Exhibit 8, we can know that retail selling area was 92.7 million square foot in Sears compared to 313.21 million in Wal-mart in fiscal year 1997. While Sears in 1997 had 3530 stores in total, Wal-mart had only 2805 stores all together. Then it it concluded that each Wal-mart store was great larger than Sears’s store which means it is more likely for Wal-mart to be cost-effective and it is more likely to have a high level use of assets. This can be backed up by assets turnover ratio analysis results of...
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