Importance Customer Service for Sears Holdings Company

Sears Holdings Company was once at the forefront of the retail industry due to their revolutionary and innovative marketing of using a printed catalog to promote their merchandise. This style of marketing was a huge breakthrough for the company back in the late 1800s and was what attracted most of their customers. Their groundbreaking marketing is what has allowed Sears to be a historic and reputable company throughout their 125 years of business. Although the company still has their niche of loyal customers, which are mostly those who in some way experienced the revolution of the catalog, the company has had trouble appealing and recruiting new customers.

Therefore, Sears has not been acknowledged in present day news for their continued prosperity and success. The company is no longer a common household name and is instead being recognized as just another store with multiple foreclosures as they recently filed for bankruptcy. On October of 2018, Sears used a Chapter 11 filing in Federal Bankruptcy Court. As a result, the company is planning to close more than 140 stores in hopes of avoiding complete liquidation and maybe even a revival of the store. Of the three stores left in the El Paso/New Mexico area, the store located in the Sunland Park Mall began its liquidation at the end of November. Therefore, it would then be ideal to salvage the only store left in El Paso at the Cielo Vista Mall.

As an employee of one of the chain stores of Sears, saving the only store left in El Paso is important to me. The retail industry has changed drastically, and many people believe that Sears can’t keep up. With the advancement of technology, it has also brought along a series of changes for consumers. The shift from in store shopping has now shifted to online as technology has made the process easier, less frustrating and less time consuming. Providing a customer with exceptional service at the store is then critical in order for Sears to retain their current customers as well as try to recruit new ones. Customer service is essential for any business to succeed and continue being prosperous in the long run. Therefore, it is my suspected reason as to why Sears is no longer a common household name and what should be the stores main focus. I have observed first hand just how important providing exceptional service is to the customer.

Poor service causes customers to complain to managers and leave the store frustrated and annoyed, again turning them to online shopping or even a different store. As a result, I see customer service as an umbrella and underneath lies it thing that cause problems with it such as a lack of motivation, training, and employees. However, this main problem could be improved by providing newly hired employees with proper training, raising the minimum wage, or hiring more employees throughout the store. A well thought out and executed recovery plan could be essential to prevent the store from the inevitable foreclosure and saving countless of jobs.

The cause of the foreclosures of stores is based on whether Sears deems the store to be unprofitable. However, there are many factors that could affect why a store is not succeeding in sales. As I mentioned above, I hypothesize that the main cause for the downfall of Sears could be customer service. The employees are lacking proper training and even motivation, which results in receiving poor service. As a result, the customer’s expectations are not met which leads to frustration and dismissal of the store.

In this report, I will discuss how a change in this problem could cause a retention of customers and sales, which can then allow for the stakeholders to withhold the foreclosure of the store. In turn, stakeholders can then profit from the store that is now successful. The current employees can also diminish their fear of losing their job, jobs are continued to be available for future applicants, and consumers can then continue to purchase their products at Sears.

Since my hypothesis of the foreclosure of Sears’s dealt with the concept of customer service, I limited my research to articles and websites that helped me understand or answer the questions that are listed below. I then analyzed the articles and websites to see how they applied or could be applied to Sears. Lastly, I implemented the articles in my research to propose how they could help my Sears store from closing down. Resulting in the saving of foreclosure, continuation of countless of jobs and allowing customers to continue purchasing products.

Main Research Questions

• How does customer service affect the success of a business?

• In what ways can a store’s customer service be improved?

• Can improving customer service prevent bankruptcy and foreclosure?

• Can raising the minimum wage improve customer service?

• Is more training necessary to improve customer service?

The questions above made it easier for me to adopt a methodology of both qualitative and quantitative. I first began the project by doing qualitative research on the problem. When researching for the qualitative data, my main topics included customer service, minimum wage, and training. I began by research by searching the concepts of foreclosures and bankruptcy and what entails a company to file one. In contrast, I also researched what many believe are the key aspects that allow a business to become and continue being successful and prosperous. This allowed me to get a better understanding of the problem at hand.

I then did more specific research and used Google Scholar to find academic journals that related the effects of exceptional customer service and meeting customer expectations. I also researched the history of the minimum wage as well as the effect it has on employees and businesses. The last qualitative variable I researched was the purpose of enhanced training and hiring more employees. I then related all the information I gathered and decided whether or not they had an effect on my main concept of customer service.

Next, I conducted quantitative research for my secondary data. I utilized well-known and trustworthy websites to find specific information and data on the Sears Holdings Company and its chain stores. This allowed me to use qualitative data such as how much revenue has been lost or gained by the company. It also gave me important sales and traffic data, which allowed me to compare percentages throughout the years. I then conducted observational research and called the Sears store in El Paso who recently began their liquidation and asked to speak to their manager. This gave me further information on their opinion and recommendations on the company’s bankruptcy and foreclosure. I also visited both store locations and noted any observation that seemed important to my project. Lastly, I analyzed all the data I researched and wrote up how it can be implemented with my solution to prevent the foreclosure of the Sears store located at Cielo Vista.

A limitation I encountered when researching was that there is no single factor that contributes to why a business is not prosperous or succeeding. There are many situations that may occur that causes a company to foreclose and file for bankruptcy. However, I still focused on the concept of customer service. Another limitation that affect my methodology was the amount of quantitative data that was accessible. Therefore, most of the research utilized was qualitative and dealt with customer service, the minimum wage, and employee training.

The Sears Holdings Company and certain of its affiliates voluntary filed petitions for relief under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York in October of 2018. However, this file did not come as a surprise as many people saw the company’s bankruptcy as a “when” rather than as a “why”. Since before the turn of the 21st century, Sears has been losing out to other retailers like Walmart and Home Depot as they offered lower prices and sold a range of items. By 1993, Sears had stopped it revolutionary marketing of the catalog business, shut more than 100 stores, and cut 50,000 jobs. Sears tried to prevent their ultimate downfall by spending $6 billion buying back their own shares to help raise its stock price. However, their stock plummeted from $143 to less than $1 a share just before their bankruptcy filing.

The company also cut spending on advertising and failed to keep up with the modernization of its stores. This resulted in the stores to become empty and eventually rundown, which lead to a decline in sales and debt began to pile up. As a result, Sears sold many of its assets in order to continue function. Sears sold its Craftsman tool brand to Stanley Black & Decker for $900 million and also signed a deal to sell Kenmore appliances on Amazon.com Inc. However, none of these plans were sufficient enough to save the company from filing for bankruptcy. The Sears Holding Company has only continued their process of shutting down stores and cutting jobs till this day.

However, their file for bankruptcy has been deemed necessary by the company in order to establish a sustainable capital structure as well as continue to operate and earn profit for the long run. “The Chapter 11 process will give Holdings the flexibility to strengthen its balance sheet, enabling the Company to accelerate its strategic transformation, continue right sizing its operating model, and return to profitability”. The company has also proposed a reorganization plan and filed a series of motions with the Court to seek support during their restructuring process and ensure an easy transition into bankruptcy. Their proposed plan will be backed by $650 million in financing as the Sears Holding Company received a $300 million loan from Cyrus Capital Partners LP and also won a court approval for $350 million in critical bankruptcy financing. 

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