SHLD Geometrically unsound Sears

Recently Jim Cramer has been promoting Sears, claiming that Sears is wonderful. But Sears has a very deep problem, and no amount of share buy-backs can mask that. The problem is that Sears sucks.

There isn't a compelling reason to shop at Sears instead of somewhere else. Target (TGT) and Wal*mart (WMT) have roughly 90% of the merchandise that a typical Sears would carry, and they sell it for less. Specialty soft goods retailers like Linen N' Things, and Bed Bath and Beyond (BBBY) have the other 50%. While various discounters (TJX) and home improvement stores (HD) have the remaining 50% covered.

Monitor Groups's Bruce Chew has a really excellent article on the Geometry of Competition. The basic concept is that of a competitive frontier. At each price point, there is someone who offers the most quality at that price. This optimal line defines the "competitive frontier". Within its chosen price range, Sears is not the frontier. Someone else dominates Sears in every product line and at every price point.