E-business transformation at the crossroads: Sears' dilemma
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Teaching case
E-business transformation at the crossroads: Sears’ dilemma C Ranganathan, Analini Shetty, Gayathri Muthukumaran University of Illinois at Chicago, Chicago, IL, USA Correspondence: C Ranganathan, University of Illinois at Chicago, Chicago, IL, USA. E-mail: [email protected]
Abstract This teaching case discusses the challenges facing Sears, Reobeck and Co., a leading retailer in United States, in its efforts to transform itself into an effective brick-and-click organization. In face of intense competition from other retailers and online e-tailers, Sears has continually expanded its online efforts in e-business transformation. This case traces the key e-business initiatives taken by Sears and highlights significant managerial challenges that were encountered during the formulation and execution of an effective ebusiness transformation strategy. The case presents the issues faced by a new CIO who had taken over the technology and e-business affairs at Sears at the end of 2002. Journal of Information Technology (2004) 19, 117–129. doi:10.1057/palgrave.jit.2000009 Published online 27 July 2004 Keywords: e-business transformation; e-business strategy; online business; Sears; retailing industry; e-commerce capabilities
Introduction t was December 2002, and Garry Kelly, the newly appointed CIO of Sears, Roebuck & Company, looked out of his office window and contemplated the issues he needed to discuss in the management committee meeting the following day.1 Garry had arrived at Sears only a few weeks ago when the company was at a critical juncture. Sears’ net income in 2001 had fallen to $735 million on a revenue level of $41.1 billion. These figures reflected only half of the profits it had recorded 2 years earlier, on a similar level of sales. Sears also faced intense competition from rival retailers across the nation, new dot-com etailers as well as from the specialty stores that had been eroding the profit base for the last couple of years. Investors, stakeholders, and employees were anxiously looking for signs of turnaround at the giant in the US retailing industry. Garry was brought in after the former CIO Jerry Miller suddenly moved out of the company, just days after Sears had announced its acquisition of Lands’ End, a premier Internet and catalog clothier company. The company had appointed an interim CIO and Garry came as a replacement from the shoe retailer Payless ShoeSource. Garry as well as the senior management at Sears clearly understood the impact of Internet on the retailing industry and had no second thoughts about their quest to exploit the Web for boosting the company’s profitability. Although Sears had made significant investments in its online e-business initiatives, it was facing significant challenges
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in realizing the returns on these investments. A couple of issues were at the forefront of Garry’s attention. These issues and challenges needed to be resolved to pave the way for future
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