The rise of Internet retailing, big box retailers and changing consumer behavior

Question

The rise of Internet retailing, big box retailers and changing consumer behavior has had a negative effect on conventional retailers such as Sears, JC Penney and K-Mart. Wal-Mart recently purchased Jet.com to improve their online retailing strategy. Comment briefly on whether you think Sears, K-Mart and JC Penney will survive using research, facts and data to support your position. Also comment of whether Wal-Mart's purchase of Jet.com is paying off or not. Again, support your position with facts and data.

Explanation / Answer

The traditional retailers like Sears, JC Penney and K-Mart will survive in this digital era. All of them are investing a huge amount of money for their online retail strategies. They all have online presence in the form of attractive websites. All of them offer the facility of online purchases. Moreover, they are offering extra discounts including free shipping and deliveries (for a certain minimum purchase amount) for online purchases. For example Sears is offering 50% discount on Christmas trees and extra 20% off for buying online. For shoes it is offering an extra discount of 25% if purchased online. Likewise, it is offering extra discounts for other products. Similar is the case with JC Penney and K-Mart. K-Mart is even offering international online shopping with delivery to more than 100 countries. Moreover, these companies are tying up with other companies to gain expertise in digital sales. For example, Sears has recently tied up with Amazon for selling DieHard car batteries and tires on Amazon website.

All these efforts of the traditional retailers show that they are hell bent on having excellent digital retail strategies in place and compete with the leading Internet retail giants.

Wal-Mart’s recent purchase of Jet.com for enhancing its digital retail strategy is proving to be beneficial.

In its fourth quarter report (period ending January 27, 2017), Wal-Mart’s online sales had risen by 29% in USA and by 15.5% worldwide. According to Wal-Mart’s President and CEO Doug McMillon, the company had become the world’s second biggest online retailer according to sales revenue and number three with respect to traffic. Number of goods offered for online buying had increased by more than four times since the beginning of 2016. As per a recent article in Investopedia (published on October 11, 2017), Wal-Mart’s shares reached a 52-week high. There has been a year-to-date gain of 24% compared to S&P 500’s 14.1% rally during the same period.

The company acquired control of Hayneedle by purchase of Jet.com, enabling it to gain proficiency in high-end segments such as outdoor gear, shoes, furniture and others. The company is now able to compete in a big way with the digital capabilities of Amazon.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.