Sears Holding Corp Essay

3371 words - 13 pages

Sears Holding Corp.

     Kmart and Sears have been part of the retail industry of America for the last two centuries, and as of November, 2004, they will be continuing due to their merger as Sears Holding Corp. This paper will first look at the history of the two companies to see how they started and what each company set out to achieve. This section will also include why the two companies failed. Secondly, a SWOT analysis will be performed on the new company, Sears Holding Corp, to try to identify where it stands in the present. Finally, a hypothesis of how the new company is likely to be accepted by consumers and whether it is likely to succeed will be discussed.

Kmart History
     S.S. Kresge Co., the predecessor of Kmart, was founded in 1889 by Sebastian J Kresge, in Detroit Michigan. The small store, which sold everything for five and ten cents, was an instant success. By 1912 S.S. Kresge Co. had expanded to 85 stores with annual sales of more than $10 million. The 1920’s saw a larger increase in merchandise variety and prices, Kresge’s first steps to becoming a discount store. This final leap to a discount store was made in the 1950’s, when the company realized that they needed to make some changes in order to remain competitive. In 1962 S.S. Kresge Co. opened their first Kmart discount department store in a suburb of Detroit. During that same year seventeen other Kmart stores opened. Realizing that discount stores were the wave of the future S.S. Kresge changed its name to Kmart in 1977. In 1987 Kmart sold its remaining Kresge stores (kmartcorp.com).

     During the years of 1984 to 1992 Kmart bought several businesses, including Builders Square in 1984, the Sports Authority in 1990, a 90-percent stake in OfficeMax in 1991, and Borders bookstores in 1992. However, in 1995 with a close brush with bankruptcy, Kmart sold those businesses in which they had just invested and refocused its efforts back on the discount stores. During that same year Kmart began converting its traditional stores to a new high frequency format designed to improve the customer shopping experience. A new name, Big Kmart, was assigned to these stores (in April 1997) (kmartcorp.com).

     However, all the changes Kmart made throughout its long history to remain current with ideas of the times, were not enough to help Kmart maintain its competitive edge. Kmart also made a few mistakes during the 1990’s. A significantly damaging error was the failure to incorporate computer systems into its supply chain. In an effort to compete with its main competitor, Wal-Mart, it reduced all of its prices, while at the same time tried to become upscale by selling lines of Martha Stewart, Kathy Ireland and Jaclyn Smith. Consequently, Kmart failed to create a coherent brand image (wikipedia.org). In 2001 Kmart recorded its second loss for the quarter. From this point on Kmart’s stock price continued to decrease and its losses continued to rise. In January 2002 Kmart filed...

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