Sears are filing for bankruptcy today in news that has shocked the US retail industry. The 132 year old retailer is the last in a string of brick-and-mortar retailers that have folded in these past months, following the likes of Toys “R” Us, Radioshack and Sports Authority.
Analysts has identified that Sears have been struggling for some time. However, was tough digital competition the reason for Sear’s downfall, or are they responsible for their own demise?
Sears, who were once billed as the ‘store that changed America’, are perhaps one of most high profile of all the brick-and-mortar retailers who have been forced to file for bankruptcy this year. Many of these retailers have been struggling in terms of their digital performance, losing out to market leaders and digital giants such as Amazon and Walmart.
In order to gain a better understanding of the competitive market, we looked into Adthena US retail data over the past year, and in the run up to Sears’ bankruptcy filing. We identified four trends that have contributed at least in part to Sears’ declining fortunes:
1. Amazon and Walmart dominated online clickshare throughout the past year
Share of Paid Clicks, Text Ads, US Retail (Oct ‘17 – Oct ‘18)
- In the past year, the two biggest players in US retail search, Amazon and Walmart, command 44.67% of the whole market clickshare.
- During the same period Sears won just 0.7% of clicks from US shoppers.
- Other department store retailers such as Kohls and Macy’s held between 3-4% of the clicks from US shoppers.
Verdict: US online retail is a market dominated by Amazon and Walmart, who command almost half the market, with other competitors competing for a share of the remaining clickshare. However, even in comparison to their direct department store rivals, Sears have been performing poorly when it comes to winning shoppers digital clicks.
2. Pushed out of the market by digital players
- Adthena’s competitor analysis reveals that Amazon and Overstock were Sears’ two biggest competitors in online search (measured by search term coverage and frequency of ad appearances).
- Amazon had a much more enduring presence on Sears’ search terms. On the search terms that Sears were advertising on, Amazon had a 169% impression share (meaning shoppers were more likely to find Amazon when making searches on terms Sears were advertising on).
- Pure play retailers overstock.com and zappos.com each had over 60% visibility of Sears’ search terms.
- A head to head comparison, which reveals search term overlap, shows that Amazon had a near complete presence on Sears’ search terms.
Verdict: The head-to-head market data indicates that Amazon were operating an aggressive search strategy, with coverage across almost the entirety of Sear’s search terms, and 169% impression share over the retailer. Other pure play competitors, overstock.com and zappos.com were also competitive fiercely with Sears for shoppers’ impressions.
3. Failure to adopt Google Shopping ad units
Share of Paid Clicks, Google Shopping, US Retail (June ‘18 – Oct ‘18)
- Between June to October ‘18, Sears were responsible for just 1.27% of US retail ad spend on Google Shopping Ads.
- In contrast, market leaders Walmart drove 8.19% of market ad spend in the same period.
- Wayfair, who reported record breaking Q2 revenues, invested heavily in Google Shopping ads in the same period, driving 7.51% of US retail ad spend.
Verdict: Adthena’s Google Shopping Report revealed that Google Shopping ads now drive 85.3% of clicks in US retail. Despite this, Sears had negligible presence across Google Shopping ads and no opportunity to win significant market clickshare.
4. Vulnerability to market volatility
Home Furniture, Share of Paid Clicks, Text Ads, US Retail (Sep ‘18 – Oct ‘18)
- With such a small overall share of US shopper’s clicks, Sears were especially vulnerable to market volatility.
- In the home furniture category, competitors are subject to spikes in activity from the likes of Wayfair and Overstock (observable in the above graph).
- In the past few weeks, we have begun to see Sears drop out of the search results, with their overall market clickshare in Home Furniture now sitting at <2% in the category.
Even just a cursory look at the industry data reveals that Sears have been struggling for digital visibility and market clickshare, while up against tough digital competition. With the market leaders, Amazon and Walmart winning up to half the available market share, and pure play competitors such as Wayfair and Overstock also investing heavily in digital, Sears seem to have been pushed to the fringes.
Alone poor digital performance is likely not be the sole reason for of Sears’ troubles, the failure to innovate, to adopt new ad units, and to capture a share of digital shoppers will have contributed to their demise.