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How Complacency Towards Technology Killed Sears Canada
Sears Canada is a sobering reminder of how complacency can destroy any business, no matter the size industry or how much it is entrenched in our culture
This past fall Sears Canada was on the front page of every newspaper as the retail giant closed its doors for good. To most people, Sears was considered a Canadian institution that was a regular part of our lives like hockey or maple syrup. Every kid for decades saw the deliver of the Sear's Christmas Catalog as the un-official start of the holiday season. So why did it fail? As a retailer with loyal customers and an established supply chain, the bankruptcy of Sears Canada is a sobering reminder of how complacency can destroy any business, no matter the size, industry or how much it is entrenched in our culture.
Sears Canada, in its early years, was an innovative retailer who used the power of paper catalogs to sell a wide range of products to customers scattered around Canada. Sears Canada was convenient and accessible to all customers in cities and remote communities alike. So how did a business who lead the pack decline into bankruptcy in a decade? There are many factors, but the key one is that Sears Canada became complacent and stopped evolving. Ten years ago retailers didn’t think people would ever purchase clothing online because people need to try on a dress. Now it is estimated that 51 percent of all purchases are made online, and Amazon is worth more than all major retailers combined. People will purchase everything from mattress to groceries - and yes, clothing - online in 2017. Sears Canada’s sales were $2.6 billion in 2016, down from $6.7 billion in 2001. Sears Canada failed to look to the future and didn’t embrace technology until it was too late. As Sears Canada began to realize they weren't keeping up with its competitors because of the rise of online shopping, they had already lost that loyal customer base that had formed over decades. It's the nature of the world - adapt or die and unfortunately for Sears Canada adaptation came too little too late.
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” Charles Darwin
Home Depot Embraces TechnologyWhen talking starts around the water cooler about Online leaders, Amazon is always the benchmark used in the comparables. Let’s be more conservative though and pick a comparable that has real online adoption challenges lumber and building supply store.
Retail giants like Home Depot are embracing technology by offering their customer an approach and offering that is both online and in-store to all their customers. Home Depot has invested 1.8 billion dollars in technology to remain competitive in the industry - indeed, more investment than Sears remaining net worth.
Home Depot faced challenges, as much of its products were considered e-commerce unfriendly such as large appliances and lumber. When faced with this problem, rather than continuing with the status quo of the past, Home Depot worked to find a solution that embraced technology to serve their customers better. Home Depot heavily invested in providing their customer with online ordering which included those problematic items like lumbers. Home Depot’s solution for large items was simple - when a customer orders lumber online, they pick it up at the closest brick and mortar location.
Home Depot continues to refine its customers experience through mobile app technology and augmented reality. Home Depot continued its transformation by investing in technology to manage its supply chain and reduce overhead cost. Having initially used a decentralized logistic management model, they have quickly centralized all logistics into its corporate headquarters to reduce redundancies. Finally, then they invested in inventory management software which manages the inventory and replenishment for all 2,000 stores concurrently.
So, was the 1.8 billion dollars in technology worth the investment? The numbers indicate a resounding yes. While other retailers face declining sales, Home Depot sales reached an all-time high raising by over 7 percent in a single quarter, and online sales increased by 25%. The in-store pickup solution was a quick success as 42% of online sales are picked up in their brick and mortar locations. Since Home Depot’s initial investment in technology, they are now considered one of the most innovative companies of 2017.
Home Depot continues to invest in new technologies as they look to the future. They just published their 2020 strategic plan that has the following priorities.
- Drive greater convenience and speed for customers
- Harmonize the online and instore customer experience
- Expand product assortment through technology adoption with vendors
- Deliver a single integrated approach for trade customers in store and on site
- Offer fast and efficient delivery of product for Non-Top 40 Markets
Solutions for Independent Lumber and Building Businesses
I just couldn't end this article on such a dire note, because I know most of our readers likely don’t have the 1.8 Billion dollars so easily spend on technology engagement. What are independent lumber and building businesses to do to against such a competitor?
It’s a lot like showing up to a gunfight with a knife in your hand - because all you have is a knife. This isn’t going to end well….
Here at OrderEase, we create solutions to empower independent retail businesses, to have the same advantages from technology as corporate entities with deeper pockets. The internet revolution has changed the face of retail - but it also will level the playing field between large and small. Contact us today to learn more about how we can level the playing field.