SEARS, ROEBUCK AND COMPANY

TURNAROUND
April 16, 2011
 DIVERSITY
CONSULTING
 Member 1

 Member 2

 Member 3

 Member 4
 EXECUTIVE SUMMARY
 Background and Objective
 Business Performance Measurement
 KPIs : As-Is/Planned using Traffic Lights
 Booze Balls
 Stake Holder Analysis Matrix
 Voice of Customer
 Root Cause Analysis
 Fish Bone Diagram
 Risk Analysis
 Benefits-Risk Matrix
 Future Projection
 Layout analysis –Past , Present, Future projection
 CAPEX-OPEX Allocation and Cost Savings
 Fostering Innovation
 Project Plan
 Gantt Chart
BACKGROUND
BACKGROUND
 Founded in 1886
 1925 opened its first retail store

 Sales $1 billion in 1945

 $17 billion in 1980

 $41 billion in 1985

 Diversification began in 1931

 Allstate Insurance Company in 1931

 Purchased Homart Development in 1959

 1980 provided one-stop shopping strategy – Stock

brokerage and Real estate brokerage
 In 1984, co-founded Prodigy, an on-line communication
services firm
 In 1985, launched credit card
SO WHAT WENT
WRONG?!?
 Lack of peripheral vision
 Stagnant growth and increased
competition
 Troubled credit card business
 Lack of internal communication
 Lack of direction
 Employee – lack of loyalty and knowledge
 Suffered from the diversification
 Attention diverted from core operations
FINANCIAL
PERFORMANCE
BUSINESS PERFORMANCE
MEASUREMENT
 KPI’s : AS-IS EVALUATION (1996)
Criteria KPI AS-IS
Financial Performance
Performance indicators/metrics being
Quality 73.00% developed for defect management
Cost of Handling Goods 65.39% High percentage in Handling Goods
Some stores is not so profitable and
Revenue per retail store (3371 stores) 0.03% pull down the average
Transfer from other segments to focus
Profitable Segment-sales/services 88.67% on retails
High percentage spend on advertising
Return on Advertising Spend 21.17% but no significant return
Customer Capture
Customer Satisfaction 74.00% Rank 121st in the US
Sears was able to identify their core
Profitable Setment - Women 54.61% customers – women in their 30’s
Store Efficiency
Layout is not smooth enough and also
Store Environment 69.23% the Indicates is not clear
Lack of knowledge and communication
Suited Staff 70.50% skill with customers
Unsatisfy with poor wage and working
Empolyee Satisfaction 70.00% condition
Customer Satisfaction Helpfulness, Compentency, Merchandise selection, Price, and Availability
AREAS OF CONCERN: INVENTORY MANAGEMENT, MARKETING ROI , QUALITY METRICS, REVENUE PER STORE ,
CUSTOMER , EMPLOYEE SATISFACTION
Traffic
Future
Lights
Performance indicators/metrics established and
practised organization wide
Figure out where we can save the spending - Inventory
and Suppliers
Figure out the not profit stores and relocate it. Also
increase the profit for each stores.
The profit from retails will be increased
Analysis the advertising stragies which can increase the
profit - Marketing
Base on the survey resule to increase the performance
Find out more about the desire of this customer
setment
Rearrange the store layout
Build up training programs to increase the performance
Set up reward prgrams and upgrade working
environment to increase the performance
 STAKEHOLDER ANALYSIS -BOOZ –
BALLS

Store Financial Marketing

Evaluation Criteria Suppliers Employees
manager manager manager
Simplicity

Customer orientation

Internal Communication

Inventory management

Customer services

Brand Loyalty

Price Competence

Revenue growth

Customer development

 
Level of Support Required
 Stakeholders Analysis Matrix
 Evaluation-revamp Strong Barrier Barrier Slight Barrier Neutral Slight Support Support Strongly Support

Suppliers            

Store employees            

Store manager            

Supply-chain
           
manager

Financial manager            

Operation manager            

Marketing manager            

Stockholders            

FOCUS : SUPPLIERS , EMPLOYEES , MIDDLE-MANAGEMENT

 ROOT CAUSE ANALYSIS : FISH BONE
DIAGRAM

CRITICAL PATH : EFFICIENT INVENTORY MANAGEMENT WHILE REMODELLING STORE LAYOUT AND BRAND IMAGE – TAKING
EMPLOYEES AS YOUR MAJOR SUPPORT FACTORS
RISK ANALYSIS
-BENEFIT-RISK MATRIX

Internal
Internal
Sales
Sales Communicat
Communicat
Personn ion
Layout
Personn ion System
System
Layout el
el
Rearrangem
Rearrangem Training
Training
Set-Up -ent
-ent Inventory
Inventory
Set-Up
Show
Show Managem
Managem
RoomS
RoomS Customer -ent
-ent
Customer
Satisfactio
Satisfactio
n
n Program
Program
Employee
Employee
Store
Store Loyalty
Loyalty
Location
Location Programs
Programs
Advertising
Advertising
 COMPARISON: PAST AND
CURRENT STORES

Past Sears Store (1960) Current Sears Store(2011)

SEARS LAYOUT : 1960
SEARS LAYOUT : 2011
FUTURE PROJECTION AND
RECOMMENDATIONS
 VOICE OF CUSTOMER
Quality of Goods
Store Operating Customer Service
•Too Many Recalls!
time/conditions •No direct helpline to
•Low-quality goods (a-la
•Thanksgiving / most stores
Wal-Mart)
Holiday hours not •Too much waiting time
•Size/style diversification
in line with other for parts/services/repair
is low
stores •Online system unstable
•Past season stocks
•Christmas goods •Service personnel's are
•“Sold expired goods!”
not early enough overbooked, overworked
[Pampers baby wipes]
•Stores are •Untrained Sales
•No spare parts of
rundown associates
appliances sold
•Undesirable •VERY long bills/ receipts
•Service offerings unclear
locations (!!!!)
•Small floor/shelf space

Best Practices not adhered to

No Customer Focus
No employee enablement
 HOW TO KEEP THE BOSS HAPPY?!

A 5% improvement in employee attitudes will result in a 1.3% increase in customer

satisfaction resulting in a 0.5% improvement in revenue growth!
 Cost Reduction
100%
90% 10%↓

80%
Advertising/Marketing
70% Utilities
60% Salary/Wage
10%↓
50% Inventory
40% Employee Training
30% Floorplan
Store Location
20%
10%↓ Maintenance Capex
10%
30%↓
0%
Total OPEX CAPEX Cost Saving

Operational Efficiency and Cost Saving possibilities in

Advertising (10%) , Inventory Management (10%) , Store locations (10%)
 BEST PRACTICES IN
INDUSTRY
FLOOR SPACE EFFECIENCY , EMPLOYEE TRAINING
- IKEA

 COST MANAGEMENT, SUPPLIER DISTRIBUTION

CHANNELS –WALMART

 MARKETING , IMAGE MANAGEMENT , ECOMMERCE

- TARGET

 SUBJECT MATTER EXPERTISE - THE HOME DEPOT

 INVENTORY MANAGEMENT - COSTCO

 FOCUS AREAS

ECOMMERCE
BETTER UTILITIES

UTILITIES EMPLOYEE TRAINING

MAINTENANCE CAPEX

CUSTOMER SEGMENT: THE MIDDLE CLASS

FAMILY!
A 360 DEGREE SERVICE OFFERING!
 BUSINESS PLAN

STANDARDIZE REVAMP
ACCOUNTING SYSTEM BENEFITS/PAYROLL
SHARE REDEFINE
ERP HUMAN CAPITAL
Project Planning
VISION/MISSION Project Innovation
POSITIONING Process Stabilization
IMPLEMENTATION INTEGRATION Rollout
NEW METRICS STRATEGY
4KPIMONTHS
FOR GROWTH4 MONTHS
CAPEX 18 MONTHS
MARKETING/STRATE PARTNER 10 MONTHS
GY ENABLEMENT
SHAREHOLDERS PLANS
MAINTENANCE EMPLOYEE
ORG HUMAN CAPITAL
CAPEX TRAINING FOR
RESTRUCTURE COLLABORATION
E-COMMERCE AUTOMATION
AUTOMATION/TE
STORE-LAYOUT CUSTOMER PERKS
CH PLANNING
CHANGES FOR LOYALITY

BEST PRACTICES FOLLOWED

CUSTOMER FOCUS
AUTOMATION AND TECHNOLOGY INTEGRATION
PERCEPTION MANAGEMENT
REVAMP REPUTATION
 IMPLEMENTATION
ANALYSIS
IM IM
P P
L L
E E
M M
E E
N PROCESS N
T
T STABILIZATI ROLLOUT
ON <---Low IMPACT High
<---Low IMPACT High

PROCESS
PROJECT
IM INNOVATIO IM
PLANNING
P N P
L L
E E
M M
E E
N N
T T

<---Low IMPACT High <---Low IMPACT High

CHALLENGING IMPLEMENTATION : PROCESS STABILIZATION, ROLLOUT

EASE OF IMPLEMENTATION : PROCESS INNOVATION, PROJECT PLANNING
 Gantt Chart 2011
Number Task Start End Duration 2011
April May June July August September October November December
1 PROJECT PLANNING STAGE 4/16/2011 8/18/2011 87
2 SHARE VISION/MISSION 4/16/2011 5/20/2011 25
3 NEW METRICS 4/16/2011 6/23/2011 48
4 KPI FOR SHAREHOLDERS 6/24/2011 7/14/2011 14
5 ORG RESTRUCTURE 7/15/2011 8/18/2011 25
6 Milestone 8/19/2011 8/19/2011 ★
7 PROCESS INNOVATION STAGE 8/20/2011 12/20/2011 83
8 REDEFINE POSITIONING STRATEGY 8/20/2011 9/12/2011 15
9 GROWTH CAPEX PLANS 9/13/2011 10/18/2011 25
10 HUMAN CAPITAL COLLABORATION 10/19/2011 11/8/2011 15
11 AUTOMATION/TECH PLANNING 11/9/2011 12/20/2011 28
12 Milestone 12/21/2011 12/21/2011 ★
13 PROCESS STABILIZATION STAGE 12/22/2011 6/20/2013 379
14 STANDARDIZE ACCOUNTING SYS 12/22/2011 3/2/2012 50
15 ERP IMPLEMENTATION 3/24/2012 6/18/2012 60
16 MARKETING/STRATEGY 12/22/2011 4/13/2012 80
17 MAINTENANCE CAPEX 6/19/2012 9/26/2012 70
18 E-COMMERCE 9/27/2012 1/8/2013 70
19 STORE-LAYOUT CHANGES 9/27/2012 6/20/2013 184
20 Milestone 6/21/2013 6/21/2013
21 ROLLOUT STAGE 6/22/2013 4/17/2014 205
22 REVAMP BENEFITS/PAYROLL 6/22/2013 8/26/2013 45
23 HUMAN CAPITAL INTEGRATION 8/1/2013 9/12/2013 30
24 PARTNER ENABLEMENT 7/1/2013 9/3/2013 45
25 EMPLOYEE TRAINING FOR AUTOMATION 8/27/2013 12/20/2013 80
26 CUSTOMER PERKS FOR LOYALITY 12/1/2013 4/17/2014 95
27 Milestone 4/18/2014 4/18/2014
28 Monthly Meeting - Department Manager 4/16/2011 4/16/2011 ● ● ● ● ● ● ● ● ●
29 Quarterly Meeting - CEO 4/16/2011 4/16/2011 ◆ ◆ ◆
 Gantt Chart 2012
Number Task Start End Duration 2012
January February March April May June July August September October November December
1 PROJECT PLANNING STAGE 4/16/2011 8/18/2011 87
2 SHARE VISION/MISSION 4/16/2011 5/20/2011 25
3 NEW METRICS 4/16/2011 6/23/2011 48
4 KPI FOR SHAREHOLDERS 6/24/2011 7/14/2011 14
5 ORG RESTRUCTURE 7/15/2011 8/18/2011 25
6 Milestone 8/19/2011 8/19/2011
7 PROCESS INNOVATION STAGE 8/20/2011 12/20/2011 83
8 REDEFINE POSITIONING STRATEGY 8/20/2011 9/12/2011 15
9 GROWTH CAPEX PLANS 9/13/2011 10/18/2011 25
10 HUMAN CAPITAL COLLABORATION 10/19/2011 11/8/2011 15
11 AUTOMATION/TECH PLANNING 11/9/2011 12/20/2011 28
12 Milestone 12/21/2011 12/21/2011
13 PROCESS STABILIZATION STAGE 12/22/2011 6/20/2013 379
14 STANDARDIZE ACCOUNTING SYS 12/22/2011 3/2/2012 50
15 ERP IMPLEMENTATION 3/24/2012 6/18/2012 60
16 MARKETING/STRATEGY 12/22/2011 4/13/2012 80
17 MAINTENANCE CAPEX 6/19/2012 9/26/2012 70
18 E-COMMERCE 9/27/2012 1/8/2013 70
19 STORE-LAYOUT CHANGES 9/27/2012 6/20/2013 184
20 Milestone 6/21/2013 6/21/2013
21 ROLLOUT STAGE 6/22/2013 4/17/2014 205
22 REVAMP BENEFITS/PAYROLL 6/22/2013 8/26/2013 45
23 HUMAN CAPITAL INTEGRATION 8/1/2013 9/12/2013 30
24 PARTNER ENABLEMENT 7/1/2013 9/3/2013 45
25 EMPLOYEE TRAINING FOR AUTOMATION 8/27/2013 12/20/2013 80
26 CUSTOMER PERKS FOR LOYALITY 12/1/2013 4/17/2014 95
27 Milestone 4/18/2014 4/18/2014
28 Monthly Meeting - Department Manager 4/16/2011 4/16/2011 ● ● ● ● ● ● ● ● ● ● ● ●
29 Quarterly Meeting - CEO 4/16/2011 4/16/2011 ◆ ◆ ◆ ◆
 Gantt Chart 2013
Number Task Start End Duration 2013
January February March April May June July August September October November December
1 PROJECT PLANNING STAGE 4/16/2011 8/18/2011 87
2 SHARE VISION/MISSION 4/16/2011 5/20/2011 25
3 NEW METRICS 4/16/2011 6/23/2011 48
4 KPI FOR SHAREHOLDERS 6/24/2011 7/14/2011 14
5 ORG RESTRUCTURE 7/15/2011 8/18/2011 25
6 Milestone 8/19/2011 8/19/2011
7 PROCESS INNOVATION STAGE 8/20/2011 12/20/2011 83
8 REDEFINE POSITIONING STRATEGY 8/20/2011 9/12/2011 15
9 GROWTH CAPEX PLANS 9/13/2011 10/18/2011 25
10 HUMAN CAPITAL COLLABORATION 10/19/2011 11/8/2011 15
11 AUTOMATION/TECH PLANNING 11/9/2011 12/20/2011 28
12 Milestone 12/21/2011 12/21/2011
13 PROCESS STABILIZATION STAGE 12/22/2011 6/20/2013 379
14 STANDARDIZE ACCOUNTING SYS 12/22/2011 3/2/2012 50
15 ERP IMPLEMENTATION 3/24/2012 6/18/2012 60
16 MARKETING/STRATEGY 12/22/2011 4/13/2012 80
17 MAINTENANCE CAPEX 6/19/2012 9/26/2012 70
18 E-COMMERCE 9/27/2012 1/8/2013 70
19 STORE-LAYOUT CHANGES 9/27/2012 6/20/2013 184
20 Milestone 6/21/2013 6/21/2013 ★
21 ROLLOUT STAGE 6/22/2013 4/17/2014 205
22 REVAMP BENEFITS/PAYROLL 6/22/2013 8/26/2013 45
23 HUMAN CAPITAL INTEGRATION 8/1/2013 9/12/2013 30
24 PARTNER ENABLEMENT 7/1/2013 9/3/2013 45
25 EMPLOYEE TRAINING FOR AUTOMATION 8/27/2013 12/20/2013 80
26 CUSTOMER PERKS FOR LOYALITY 12/1/2013 4/17/2014 95
27 Milestone 4/18/2014 4/18/2014
28 Monthly Meeting - Department Manager 4/16/2011 4/16/2011 ● ● ● ● ● ● ● ● ● ● ● ●
29 Quarterly Meeting - CEO 4/16/2011 4/16/2011 ◆ ◆ ◆ ◆
 Gantt Chart 2014
Number Task Start End Duration 2014
January February March April
1 PROJECT PLANNING STAGE 4/16/2011 8/18/2011 87
2 SHARE VISION/MISSION 4/16/2011 5/20/2011 25
3 NEW METRICS 4/16/2011 6/23/2011 48
4 KPI FOR SHAREHOLDERS 6/24/2011 7/14/2011 14
5 ORG RESTRUCTURE 7/15/2011 8/18/2011 25
6 Milestone 8/19/2011 8/19/2011
7 PROCESS INNOVATION STAGE 8/20/2011 12/20/2011 83
8 REDEFINE POSITIONING STRATEGY 8/20/2011 9/12/2011 15
9 GROWTH CAPEX PLANS 9/13/2011 10/18/2011 25
10 HUMAN CAPITAL COLLABORATION 10/19/2011 11/8/2011 15
11 AUTOMATION/TECH PLANNING 11/9/2011 12/20/2011 28
12 Milestone 12/21/2011 12/21/2011
13 PROCESS STABILIZATION STAGE 12/22/2011 6/20/2013 379
14 STANDARDIZE ACCOUNTING SYS 12/22/2011 3/2/2012 50
15 ERP IMPLEMENTATION 3/24/2012 6/18/2012 60
16 MARKETING/STRATEGY 12/22/2011 4/13/2012 80
17 MAINTENANCE CAPEX 6/19/2012 9/26/2012 70
18 E-COMMERCE 9/27/2012 1/8/2013 70
19 STORE-LAYOUT CHANGES 9/27/2012 6/20/2013 184
20 Milestone 6/21/2013 6/21/2013
21 ROLLOUT STAGE 6/22/2013 4/17/2014 205
22 REVAMP BENEFITS/PAYROLL 6/22/2013 8/26/2013 45
23 HUMAN CAPITAL INTEGRATION 8/1/2013 9/12/2013 30
24 PARTNER ENABLEMENT 7/1/2013 9/3/2013 45
25 EMPLOYEE TRAINING FOR AUTOMATION 8/27/2013 12/20/2013 80
26 CUSTOMER PERKS FOR LOYALITY 12/1/2013 4/17/2014 95
27 Milestone 4/18/2014 4/18/2014 ★
28 Monthly Meeting - Department Manager 4/16/2011 4/16/2011 ● ● ● ●
29 Quarterly Meeting - CEO 4/16/2011 4/16/2011 ◆ ◆
SEARS LAYOUT : 2011
 Future Sears Store Layout (Projection)

CHANGE LAYOUT LIKE IKEA’S MODELLING – EASY DISPLAY OF SERVICE

OFFERING!
 HOW TO FOSTER INNOVATION?

EMPLOYEE
Contests: Innovator of the month [Operational
efficiency/revenue generation/image management]
Customer selected quality sales personnel
CUSTOMER
Reward cards , Membership perks
Operational reformation feedbacks
Random –Surprise “feel good” rewards: 100 th foot step entering etc

POTENTIALS “YUPPY-D.I.N.K” “THE COOL GUY” “THE DIVA”

Giveaways – partnership with upcoming websites/blogs/concerts
Online service offerings with realistically generous rewards
Questions?