Sears, Roebuck and Co. vs. Wal-Mart Stores, Inc 1. How do the retailing strategies of Sears and Wal-Mart differ? Walmart’s strategy is more of a cost leadership strategy and Sears has more of a product differentiation strategy. This fact can be derived from their income statements , as is observed that Sears in 1997 spent 23% ( percentage of its sales) on Selling and administrative costs yet Walmart spent only 16% ( as a percentage of it’s sales ) on the same income statement line. o Sears – differentiates by Geography: • Located in shopping malls Market Segmenting: • Selling Specialties: home furnishings, hardware, auto parts • New strategy to target middle class women Financing: • Proprietary credit card – to provide flexibility of payment o Walmart – Focuses on ▪ Low price strategy ▪ Large product mix ▪ Lowering Operating expenses

2. Wal-Mart’s average return on equity for the 1997 fiscal year was 19.7% [$3,525/($18,503+17,143)/2] while Sears’ average return on equity over roughly the same period was 22.0% [$1,188/($5,862+$4,945)/2]. Don Edwards was puzzled by these numbers because of Wal-Mart’s reputation as a premierretailer and Sears’ financial difficulties not long ago. What is driving the performance of these two companies during fiscal 1997? • Both Sears and Wal-Mart appear to be performing well in 1997 but due to different reasons. Wal-Mart appears to be experiencing organic growth ( growth from within the organizations from normal operations ). Wal-Mart keeps emphasizing on offering a wide variety of products at the lowest possible cost to increase revenue and gain market share. Sears on the other hand is growing by diversifying