Ok, I’m dating myself here but had to include this story for those of my generation who recall the glee that came when the postman delivered the Sears catalog in time for the holiday season. I also recall 20 years ago getting the call to come to Chicago to Sears HQ to hear executives describe to investors that all was OK despite the billions in write-offs they announced overnight in their credit card unit (note to self: when retailers are worried about hitting their sales targets, they lower the standards on their credit card underwriting which boosts sales in the short-term and you can guess what happens in the long-term).  Now, 20 years later, the Washington Post is chronicling the downfall of Sears that includes distressing quotes from experts like this: 

“The trouble at Sears “represents the loss of this long arc of retail history,” said Vicki Howard, a historian at the University of Essex in Britain, who has written a book about department stores. “It does seem quite dire. It does seem like we’re at some kind of turning point.”

For those young ones among us, here is how the article describes Sears golden years from the 30s to the 70s:

Sears became the country’s largest, most powerful retailer. Generations of shoppers outfitted their homes with its Craftsman tools and Kenmore appliances. They dragged their children there to buy back-to-school clothes and first Communion outfits. Those kids built their Christmas lists by paging through its holiday Wish Book.

For a time, Sears sold cars. It even sold houses. If shopping in America had a collective consciousness, Sears was its centerpiece. By the 1970s, 1 out of every 204 working Americans was employed by Sears. It was pumping out 315 million catalogues a year, making it America’s largest publisher.

Here’s just a few of the strategies that have been tried over the years:

• Diversification: “By the early 1990s, the portfolio of Sears had grown to include Discover, Coldwell Banker and stock brokerage firm Dean Witter Reynolds, financial services businesses that it hoped would provide more diverse revenue streams. But ultimately, they became distractions from the core retailing business.”
• New retailing formats: “Martinez began steering Sears to focus on new retailing formats that were aimed at reducing the store’s dependency on shopping malls, including Sears Hardware stores, Orchard Supply Hardware Stores and the Great Indoors. But none of those provided salvation — and in some cases, just created new competition for its existing department stores.”
• Taking on Wal-Mart?: “After Martinez retired in 2000, chief executive Alan Lacy pushed forward with the idea to wean Sears off the suburban shopping mall by creating a brand called Sears Grand, a concept that was something of a hybrid between a department store and Walmart. But at a pace of 10 to 20 Sears Grand stores a year, it was too little, too late.
• Online business (went offline on Black Friday): “Lampert also slashed costs and put more resources toward building Sears’s online shopping firepower. But even so, that is another area that the retailer has struggled to get right. A former e-commerce executive recalled that from 2006 to 2008, the Sears and Kmart websites went down for hours at a time on Black Friday and Cyber Monday — and they just expected those kinds of outages on the biggest shopping days of the year.”

I think their current owner, Eddie Lambert, admits candidly that Sears didn’t change or adjust to the “changing circumstances” in the retailing sector. In a brutally competitive industry like retailing, yesterday’s market leader can become tomorrow’s bankruptcy filer:

“Because of Sears and Kmart’s long-standing history and cultural impact, we are targeted for criticism when our results are poor,” Lampert said in a 2016 letter to shareholders. “But it is unfair to evaluate our approach through the rearview mirror without acknowledging the changing circumstances in our industry as well as our bold attempts to change the way we do business to meet this changing reality.”

As for the younger generation, I gather that if you asked students in your class if they had ever shopped at a Sears, you might get a lot of quizzical looks. The future ain’t looking so bright.

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Questions for students:

• Looking back, what do you think are the biggest errors that Sears made along the way?
• What are the lessons that business owners/entrepreneurs can take from the Sears saga?
• When you hear the brand name “Sears” what are the first thoughts that come to mind? Why?
• Do you think Sears might be a good investment opportunity? Why or why not?

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Want to learn more about how the retailing landscape has changed? Get your students talking about their online purchases using this graphic to get the conversation starting.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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