Submitted by Morgan Smith as part of our
With the economy still in a state of recession recovery, people
are not just keeping and fixing up their current homes in lieu of
spending money on something new, but they are also following suit
with other high-dollar items like appliances and large household
tools. And, even though many such items can typically be replaced
and purchased new at a discount from a number of big box retailers,
with the right parts and expert advice, even those consumers who
aren't considered "handy" are saving a bundle by opting to fix and
keep using rather than trashing and starting over.
In this article, I will discuss how large retailers such as
should be starting to move their sales techniques more into the
21st century, and in so doing, may once again offer value to both
their customers and to their investors.
Most consumers are aware that while big box retailers may be
able to compete on price, they are typically not very adept at
specialization of their products. In many cases, those who are
seeking an average variety with so-so employee knowledge regarding
products' features and benefits will likely have no complaints.
Yet, when seeking particular specifics on an item - especially when
it comes to locating parts for already-owned products that are in
need of repair - today's savvy consumers are turning to retailers
with much wider selections in specific product niches.
Although Sears has been in business for over 120 years, this
company is known for rolling with the changes a bit more slowly
than some of its competition - which has nearly knocked this
retailer out of commission more than once over time. Once "the"
place to go - especially for items like appliances and power tools
- Sears has had to do some major re-vamping in order to keep
Sears currently holds a
of just under $7 billion and annual revenue of slightly above $40.5
billion, although its year-on-year quarterly revenue growth as of
the third quarter 2012 is in the red at -6.60% - and this is not
good news for investors. The company offers no dividend to its
are a paltry -26.08. Over the past year, share price has bounced
all over the board, from the high $20′s to over $85.
Unfortunately for Sears, the majority of analysts have rated the
company's shares either as a Hold or Underperform - and I have to
agree that unless this once tough giant turns itself around
quickly, it will lose not just customers, but investors as well.
With a share price that is expected to drop to one-fourth of its
current value over the next 12 months, I'd definitely steer
Unlike Sears, big box retailer Wal-Mart has been opening up more
conveniences for its customers and has in turn been much better
able to reward its investors as well. This mammoth retailer has a
market cap in excess of $253 billion - and the company is
continuing to grow, recently announcing that it will open 100
stores over the next three years in China, adding approximately
18,000 new jobs.
Wal-Mart has actually done a pretty good job in operating its
stores in various formats - including those of Walmart U.S.,
Walmart International, and Sam's Club. In addition, the company has
expanded its selection of online items - even going so far as to
offer its "site to store" pick up alternative where customers can
order products online that may or may not be available in-store,
and then pick up the item - typically within just a few days - at
the Wal-Mart store of their choosing.
From an investment standpoint, Wal-Mart continues to offer its
investors a solid dividend of just over $2.10 and its share price
is expected over the next 12 months to increase by over 6%. And, as
the holiday season approaches, positive expectations for shoppers
will likely move Wal-Mart's share price higher in the short-term as
While many of the large retailers like Sears and Wal-Mart offer
a fairly wide selection in the area of appliances and power
equipment, they tend to fall short when it comes to both the parts
that may be needed - as well as the expertise - when repairs and
assistance with other types of glitches may be needed.
Today, companies like RepairClinic are filling the gap in a fast
growing niche of fix-it-yourselfers. RepairClinic, founded in 1999,
has the most advanced, simple-to-navigate free repair help system
in the appliance and outdoor power equipment industries. This
online parts store and repair resource offers over one million
parts for more than 150 different brands and models of appliances,
HVAC equipment, vacuum cleaners, water heaters, and outdoor power
equipment, while also providing free repair resources such as
videos and live support via phone or Internet chat for its
customers. This convenience can save customers both time and money
by keeping their current equipment longer and without the hassle of
waiting and paying for costly in-home service calls.
The Bottom Line
If the old mantra that "the customer is always right" holds
true, then companies like Sears and Wal-Mart are finally starting
to cater more to the needs of their customers in terms of product
variety and convenience - and this would certainly be a good thing
for their investors as well.
While Sears has a long way to go, other big retailers like
Wal-Mart are finally starting to "get it" in terms of providing
even more convenience and services for their customers - although
the everyday low price is still where Wal-Mart seems to excel.
A number of
are rating the shares of Wal-Mart as either a Buy or Strong Buy,
and I certainly agree. Wal-Mart's share price is expected to rise
by a little over 6% over the next year, and in the meantime
investors can continue receiving a good solid dividend yield that's
just over 2% while they wait.