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The dynamically changing environment and considerable competition have made the work significantly more complex for the American retail chains and, including even those organizations that have been long known as the leaders of the industry, namely Sears, which is currently facing a crisis due to a noticeable loss of productivity. In order to uncover the reasons behind such a downfall of one of the retail giants, the potential root of the problem – the internal environment of the enterprise – must be reviewed firsthand. Therefore, it is necessary to conduct a comprehensive analysis of Sears, specifically its corporate culture, identifying the shortcomings in the principles of its work and proposing the ways of improving the existing situation.
Sears is an American retail chain specializing in a wide array of products. Being established in 1893, it has managed to become one of the largest and the most successful retailers in the United States, eventually expanding to Canada and Mexico (Zentes, Morchett, & Schramm-Klein, 2017). However, the recent status of the organization is not only unstable but also causes doubts about the company’s ability to survive in the long-term perspective. Since the 1990s, the retail chain has become subject to decline, closing numerous stores, selling its foreign branches, and firing thousands of employees. In turn, its productivity has decreased considerably gradually losing its market share and experiencing a drop in profitability (Zentes, et al., 2017). Not only the emergence of the new selling methods, such as online stores, and the increased competition have exacerbated the problem; the lack of consumer loyalty aggravated the situation as well (Picchi, 2017). In particular, the popularity of Sears among buyers has lowered significantly, with fewer people claiming it to be their preferred place for shopping. Naturally, such a state does not contribute to the survivability of the organization. Currently, Sears has 23.8% chance of default in the nearest future (Picchi, 2017). In other words, the company will be incapable of meeting its financial obligations and forced to leave the market.
The corporate culture of Sears is primarily based on the principles of diversity and inclusion, meaning that all the employees are presented with equal opportunities and also have an impact on the managerial practices of the company (Zentes, et al., 2017). In theory, such an approach contributes to the creation of the favorable working conditions as well as the promotion of innovations. Thus, one can expect that Sears can attract highly qualified professionals, the contribution of which will allow the organization not only to retain its position on the market but also improve it by discovering the innovative solutions to the existing problems (Phillips, Phillips, & Smith, 2016).
At the same time, motivation and incentives do not play a major role in the corporate culture of the enterprise, implying that, in most cases, the skill sets possessed by the employees become irrelevant to the top management (Zentes, et al., 2017). As a result, the personnel does not experience the need for the continuous improvement, which hinders the provision of the high-quality services to the customers as well as the overall productivity of work. Moreover, the company loses its attractiveness for ambitious workers; particularly, the outflow of the workforce may lower the operational outcomes of Sears even more (Phillips, et al., 2016).
Any retail chain has to take into account the three core factors – the change, the culture, and the customers – in order to remain profitable and competitive in the long-term perspective. However, the recent situation at Sears demonstrates the presence of considerable weaknesses in all of the mentioned areas. In case of culture, it is possible to state that Sears operates on the basis of the outdated values and principles, not paying attention to such concepts as the motivation of its workers. With such an attitude, neither the managerial nor regular personnel of the company express the need to react to changes on the market. This process can be described as the organizational ossification, meaning that Sears has become incapable of tailoring its internal processes to the conditions of the external environment (Zentes, et al., 2017). This inability to change has become the second major area of weakness for the enterprise, which is evident in its activity throughout the last years. In particular, instead of trying to respond to the emergence of the new competitors (online stores) by launching the similar services, the managers have resorted to diminishing the retail chain as a whole by closing numerous shops, possibly hoping to optimize the cost under the conditions of the increased competition (Zentes, et al., 2017). However, without changes in the principles of work, this measure has only resulted in the reduced productivity and the loss of the market share. In addition, the company was not ready for the series of financial and economic crises that occurred recently, as well as the arrival of the new competitors (Zentes, et al., 2017).
The combination of the two abovementioned factors has resulted in the emergence of the final factor that has a direct effect on the insufficient productivity of the company – the lack of the proper consumer service. With the personnel being poorly motivated and their skills not being the focus of the managerial staff’s attention, the negligence towards the customers can be considered an expected outcome (Phillips, et al., 2016). Naturally, the experience of the buyers that visit Sears is less satisfactory in comparison to the one they receive at competitors. Under such conditions, the number of the people willing to make a purchase at Sears has decreased considerably, reducing the productivity of the company and causing the further worsening of its situation.
In order for Sears to avoid default and survive the current crisis, an immediate action is necessary. Given the fact that all of the described issues of the enterprise stem from the corporate culture that is unsuitable for the current market conditions, it is possible to provide the following recommendations to the managerial team of the enterprise. First of all, the company has to review and revise its core values to become more open to changes. In this regard, the provision of autonomy to the local branches of Sears will be the most feasible solution due to the following reasons. This move will promote the flexibility as one of the newly established values of the firm while retaining the old ones (diversity and inclusion), making it easier for the personnel to accept the new corporate culture (Zentes, et al., 2017). This measure will also increase the degree of the employees’ responsibility, forcing the managerial staff to pay more attention to skills, abilities and motivation of the former. Moreover, by acting independently, every branch will be capable of adapting to the conditions of the local market (the activity of competitors, the purchase power of buyers, price dynamics, and so on) with a greater efficiency, which will provide an opportunity for increasing sales at the scale of the entire country rather than a particular region (Zentes, et al., 2017).
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Next, it is imperative that the provision of the unique and high-quality consumer experience becomes the priority of the company’s personnel. The managers of Sears have to analyze the best practices in the industry, including the examples of such retail chains as Nordstrom and Macy’s, to identify a distinguishing way of meeting the customers’ needs (Zentes, et al., 2017). Once again, the increased autonomy of Sears’ branches will provide the support necessary to execute these measures, with the regional managers being able to tailor the stores they supervise to the needs of the local consumers. In turn, the retail chain as a whole will become more diverse in its nature. Considering the fact that it has become one of the major factors of success in the contemporary business environment, such efforts are bound to attract the attention not only of the buyers but also that of the media, which is likely to present the reform in a positive light (Zentes, et al., 2017). As a result, the population’s awareness of the Sears’ new direction will increase, creating the conditions for its rebirth as a flexible, diverse, productive and competitive retail chain.
Recently, a major retail chain of the United States Sears has become subject to a considerable diminishing and on the verge of default due to the questionable management practices implemented in the course of the last years. The analysis of the different aspects of the company’s work, including its organizational culture, has demonstrated the lack of the desire and the ability to change, the low attention to the professional skills and motivation of the employees, and, as a result, the low level of customer service. Provided that these shortcomings are not addressed in the short-term perspective, Sears is likely to declare bankruptcy disappearing from the market.
In order to avoid the worst-case scenario, it was proposed to implement a complex of measures aimed at the adjustment and the improvement of the company’s internal processes. In particular, the increased autonomy of the regional branches is expected to promote the flexibility of the organization and ensure the focus on motivation and professional skills of its workers while adhering to the original principles of diversity and inclusion. Additionally, it was recommended to conduct a comprehensive analysis of the best practices of the positive consumer experience’s provision in the industry with the purpose of developing a distinctive way of satisfying the needs of the buyers in the different locations across the country. Such measures will help to attract the attention of a wide array of stakeholders and third parties, including the media, contributing to the public’s awareness of the changes in the company and consolidating the achieved success.