Document b3eGaroV99ZjeLD1gx5Gjb70

FILE NAME: Sears Roebuck (SEAR) DATE: 0000 DOC#: SEAR001 DOCUMENT DESCRIPTION: Corporate History Excerpt 618704 stores in that metropolitan area sell the j same merchandise at the same price. This office also coordinates the necessary ad- 1 vertising media to insure that each store I has the same sale on the same days. This coordinated effort enables all stores to afford to participate in the total group promotion. BUYING PROCESS Asa distributor of general merchandise, Sears acts as a buyer on the one hand and as a seller on the other. This gives the headquarters merchandising organization four main jobs to do: I. Select the mer chandise to be in Sears retail stores and catalogs; 2. Choose manufacturers to pro duce this merchandise; 3. Formulate sell ing plans, including advertising and sales promotion, for both retail and catalog operations; 4. Establish selling prices. Sears Buying Principles As late as the 1920's, Sears was exclu sively a mail-order firm. It had two ad vantages over other distributing com panies. First, mail order provided a lowcost method of getting goods into customers' hands. Second, even with buy ing methods comparable to those' used by other merchandisers. Sears buyers could obtain goods at lower cost than other j retailers. This was largely because a manu- j facturer's costs of distribution to inde- j pendent retailers were relatively high, j Hence the Sears buyer, who had merchan- ' dise shipped in substantial quantities direct to outlets, could usually obtain a cost reduction. ts The principle of Sears buying began to change in the late 1920's. Some mail order merchandise already was being sold under Sears own trade names. And with the opening of more and more retail stores, volumein theseand otherlinesgrew rapidly. With this growth. Sears buyers were able to work out exclusively different items with manufacturers to be sold under Sears brand names. Today, this policy of provid ing better products, with exclusive features and design and bearing a Sears brand name, governs the company's buying and merchandising activities. Buying a t Home and Abroad It would be difficult for Sears buyers to know about every manufacturer's capa bilities or for manufacturers to know about what Sears needs are. Hence, as a service to both buyers and manufacturers alike, regional buying offices work with head quarters buyers to learn about and de velop manufacturing possibilities in their areas. Similarly, offices in other countries keep Sears buyers informed on manufacturing and merchandise possibilities throughout the world. While imports provide some merchan dise not available a t the same price or quality in the United States, domestic suppliers account for the vast majority of Sears merchandise. Sears purchases ap proximately 90 per cent of ail its mer chandise from U.S. suppliers. Supplier Relationships The bulk of American business is still done through a manufacturer-distributordealer setup, with the manufacturer de ciding what the public will be offered through its distributors and dealers. The Sears way keeps merchandise leadership in the hands of the retailer, who is closer to the consumer than is the manufacturer. Under this system the buyer tells the factory what to make, the quantities re quired and when the goods will be needed. The factory works very closely with the buyer to engineer the product, then de termines how and when to manufacture most efficiently. Both profit from such a relationship. Many such smaller manufacturers get the benefit of technical help from Sears labo ratory experts. Others may secure assist ance with the financing of their off-season production. And Sears is able to have the same goods manufactured in several parts of the country. This substantially reduces transportation costs as well as delivery time to Sears stores. This kind of interdependence between Sears and thousands of manufacturers has been good for Sears, for the manufacturers and for the communities in which each operates. m SEARS LABORATORIES Sears laboratories in the Chicago area occupy approximately 125,000 square feet of space. In addition there are several smaller, somewhat specialized laboratories located in the United States and over seas. One such facility is located in Ft. Myers Beach. Fla. The primary function of this lab is the year-round testing of marine and lawn-care equipment, paint, motorcycles and other products which must withstand extensive exposure to sunlight, humidity or salt spray. Other laboratories are oriented toward textile testing, like the Osaka, Japan and Hong Kong laboratories, which are equip ped and staffed to assist Sears soft lines merchants in the evaluation of products manufactured and purchased in the Far East. At these laboratories, considerable effort is expended in the testing of PenmaPrest* finishes, and on textile flamma bility and fiber identification problems. Each year. Sears spends several million dollars to operate the laboratories. There are more than 200 scientists and engineers, who offer a wide variety of technical back grounds. For example, on the staff are mechanical, electrical, chemical and pro duction engineers;physicists; textile chem ists; industrial designers; home econo mists; pharmaceutica) chemistry experts; an architect; and a nuclear scientist. There is a basic format around which the laboratories are built. This format is simply taken from the basic concerns a customer has when buying a Sears product: F irst-w ill the product perform ade quately? Second-is the product aesthetically pleasing? Third-how much does it cost? The laboratories are divided into three major groupings to deal with these con cerns. The Product Engineering Labora tories work on product functions; the In dustrial Design Division concerns itself with the aesthetics of a product; and the Manufacturing Consulting Division works on producing the same or a better product a t a lower cost The Product Engineering Laboratories serve as technical consultants to Sears buyers. They primarily assist buyers by: Evaluating Sears and competitors' merchandise Assisting in specifications de velopment Providing innovative product and feature ideas Evaluating engineering prototypes and suggesting improvements Because of the variety of disciplines re quired within the product engineering function, this group is organized into live Product Laboratories: textile; chemicat and materials; electro-mechanical; automative. outdoor, and mechanical; and electronic-physics. In addition to Product Engineering, the industrial design division works with Sears buyers and manufacturers in styling mer chandise. It has the responsibility of making the product aesthetically appeal ing as well as "humanly engineered." The manufacturing consulting division helps maximize product value by assisting buyers in factory selection, factory loca tion and value analysis. Manufacturers are helped in such areas as cost-reduction programs and improved production facil ities and manufacturing methods. The customer benefits, too. The consultants' services are reflected in lower prices and / o r additional product features. In addition, specialists in this division develop patterns and work on sizing prob lems to achieve optimum fit and fabric use. Supplementing the work of the operat ing divisions are four other sections: The library serves as the reference center for the engineering staff. Its four librarians keep the library current on new tech nologies. About 5,000 books on scientific subjects are available, and more than 300 technical periodicals are subscribed to and circulated among laboratory personnel. A microfilm library also serves as an archives for the laboratories' thousands of reports. The field test group spends considerable time with consumers observing how a customer actually uses a product, so that the productengineercan verify ananalysis. The model shop operates as an auxiliary of the design division and produces three dimensional models ranging in size from a teaspoon to a 16-foot fishing boat. One of the prime ingredients of all labo ratory assignments is a concern for product safety. The extensive testing which goes on at each stage of product design or de velopment stresses safety as a first priority. To meet its product safety objective, the laboratories developed a relatively ad vanced system of gathering, analyzing and reporting safety concerns throughout the company. The fact that safety is of great concern also 5s reflected in the lab's participation in the development of product safety legis lation at the federal, state and local levels. Laboratory input has in several instances influenced federal legislation construc tively. The laws as finally passed avoided unnecessary manufacturing restrictions, while helping to insure that the customer receives a product which is as safe as present-day technology can provide. Product Development Sears total marketing is a strategy to define the wants and needs of customers and respond to them through responsible, creative product development. Under the company's total marketing concept, prod ucts are evaluated in terms of raw mate rials. form, shape, function, styling, safety, quality and serviceability. Product development at Sears is a con tinuous process-a process that begins months, sometimes even years--before the product can be offered to Sears customers. More often than not, product develop ment begins with the buyer of the line who knows the merchandise. What it can do. What it can't do. What the customer would like it to do. With these ideas in mind, the buyer calls on the laboratories to appoint a develop ment team, typically composed of a prod uct engineer, a manufacturing consultant, an industrial designer and other specialists. The team tackles the problem on a rigid time schedule. How much will the new product or feature cost? What are the production problems? Are there any new 22 technological breakthroughs that can be utilized? How will the product island up in -use? These and countless other ques tions must be investigated and answered. Not all Sears product development takes place in the laboratory. Sears encourages suppliers to start their own development programs, and the larger suppliers have the primary responsibility in this area. But in cases where the supplier is unable to support a development department, much of the work is done in Sears Labo ratories. Many new products and features have been created by Sears and its sup pliers as a result of this merchandise de velopment program. STORE CONSTRUCTION When a Sears store opens, civic digni taries and company officials traditionally are o n hand at a ribbon-cutting ceremony which officially marks the opening of the store. Actually, the dedication of a Sears store is the end of a process which started months or even years before. Long before construction crews began their task of building the store. Sears ex perts in economic analysis, real estate and store planning had been hard at work. A store comes into being only after the most painstaking study. of the company's facilities planning staff. Armed with a retail market analysis which Sears economic research department pre pares, they visit the town to itaik with local business, civic and governmental officials. They gather all available sta tistical information . . . study the com petitive market situation . . . and arrive a t an estimate of Sears potential market in the years to come. From the market analysis, they know the community's pop ulation, its population growth index and its total retail sales. Once they know Sears potential sales volume in a town, they know how big th e store should be, how much land they need for the store site, how much warehouse space must be provided, even how large a customer and employee parking lot should be. Information of this sort is available thanks to Sears experience in operating more than 850 retail stores. Finding the Town Is a community ready for a Sears store or for a better Sears store than the one now located there? That question is answered by members