Written by: Yash Bansal
Earlier yesterday, Sears, Roebuck and Company filed for bankruptcy protection, closing about 142 stores around the country. They, along with Kmart, are trying to liquidate their assets in an attempt to stabilize their holdings and their deteriorating sales. Today, the Sears Holding Corporation stock dropped to their all-time low, at about 0.31 dollars per share.
Sears started its major decline in 2011, where it failed to make a transition from an essential shopping catalog to an online retailer, like its competitor Amazon. Fairly recently, Amazon reported its quarterly sales to be about $52.4 billion and their stocks raised by 4%. This seems just like average numbers, but if you compare it to other retail competitors, it shows you how Amazon is crushing the competition. Due to the large presence of the internet in much of the world, many people started to shift toward business online from shopping catalogs. Such is the case for Sears. In comparison, much of the retail business still has not moved their business online.
Over time, our technology has certainly improved. We have a computer-accessible network in which we are able to purchase and sell goods. Because of this, the market shifts toward the online shopping. To keep up with the industry, producers must be able to adapt to the new change otherwise their platform will start to become inferior. It just goes to show that you must be able to improve and meet the standards of the consumers as a seller, otherwise business will drastically decrease.
It’s a shame to see the legacy of one of the “companies that changed America” -a superbusiness- to go to bankruptcy. Luckily for them, they are not completely bankrupt. If I were them, I would try to re-invigorate the company and its way of sales before time runs out. For other retailers that have yet to move part of their business online, I would advise the same thing.
Works Cited:
Ladd, Brittain. “Is Amazon A Monopoly? Donald Trump Thinks So.” Forbes, Forbes Magazine, 30 July 2018, www.forbes.com/sites/brittainladd/2018/07/29/amazon-is-not-a-monopoly-president-trump-yet/#373833d74735.
Monica, Paul R. La. “Sears Landlords Eager for New, Better Tenants.” CNN, Cable News Network, 15 Oct. 2018, www.cnn.com/2018/10/15/business/sears-kmart-real-estate-reits/index.html.
Nathan, Bomey. “Sears Store Closing List: 142 More Sears, Kmart Locations Closing in Chapter 11 Bankruptcy.” USA Today, Gannett Satellite Information Network, 15 Oct. 2018 www.usatoday.com/story/money/2018/10/15/sears-holdings-bankruptcy-store-closures/1645971002/.
Rizzo, Lillian, and Suzanne Kapner. “Sears Files for Chapter 11 Bankruptcy.” The Wall Street Journal, Dow Jones & Company, 15 Oct. 2018, www.wsj.com/articles/sears-files-for-chapter-11-bankruptcy-1539579819.
“The Rise and Fall of Sears: A Timeline From Its Founding to Its Bankruptcy.” Fortune, fortune.com/2018/10/15/the-rise-and-fall-of-sears-a-timeline-from-its-founding-to-its-bankruptcy/.
The increase in technology has really shifted the demand for storefronts. It is easier and more covenient to order online and have the items shipped to your front door. Amazon has done a great job keeping up with the demand and knowing what comsumers want. Other stores, in this case Sears, has not been able to keep up with large companies. It will be interesting to see how this will change not only Sears, but other retail stores. Will the demand for these stores be enough to keep them in business?
ReplyDeleteIt's crazy how some of these businesses are going out of business and going bankrupt due to all the online stores like Amazon being almost a monopoly. They are the real competitors for most convenient stores across America today. People will also like shipping the product to your house, as if you never have to waste gas and your own time going to the super market just for your items to by. I have seen lately that sears has not been doing good with online sales, Sears has recently been going out of business, as I saw one a couple years ago at Brookfield mall but is not there anymore.
ReplyDeleteWhile stores such as Sears are struggling and even stores like Boston Store going out of business, it seems as if Amazon is taking over. This is true to an extent, yet at the same time, small retailers and "boutique" like shops are booming. In places such as France, their entire market is made up of smaller clothing stores and businesses rather than large ones. The only large physical stores are grocers. Otherwise, there are small companies that own cute shopfronts and supply a limited quantity to give the whole experience a countryside feel. Now in America, it is shifting similar to that. Granted online shopping is the new way to shop, but more and more people are turning to the stores that provide a more personalized feel. The new Von Maur structure is also next to small shops in Brookfield. In Oak Creek, Drexel Avenue created the same, smaller shops surrounded by apartments and parks. With the shift from places like Sears, the internet is getting most of the credit, but it also should go to the boutiques and family-run shops.
ReplyDeleteIt was really cool to see how Sears' market share decreased as Amazon's market share increased. This is also why most bookstores are going out of business because of the rise of eBooks. Surprisingly, Barnes and Noble's are still in business. This might be because of how Barnes and Nobles embraced the eBook market by creating their own eBook service and expanding to an online market unlike Sears and other companies who are suffering due to the increase of the internet.
ReplyDeleteAmazon today is a powerhouse in retail and the largest company on Earth. One way they operate is to get firms to sell on their platforms, copy their products with new brands, and sell these at lower prices to undercut the original sellers in order to drive them out of business. After that has occurred they can use their platform to price discriminate and increase profits while reducing consumer surplus. Additionally, Amazon hooks its members through Prime, a service which lowers the cost for consumers in exchange for an upfront cost. This works as Prime members spend about 2x as much per year on Amazon, driving demand.
ReplyDeleteFurthermore, there's even another step up from Prime that Amazon uses to make even more money. Their other recent more recent moneymakers is spending less on their employees by paying them more. This seems a bit odd but by paying the workers higher wages and removing non-monetary benefits such as insurance, the company is actually paying their employees less.
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