Once the biggest retail company in America, Sears was a behemoth in the world of commerce. On April 17th, 2007, Sears stock reached $193, representing the stock’s all time high. Today, Sears trades at 3 cents per share. Sears was once an innovative and prevailing company: what happened?
Sears Origins: Sears Catalog
The history of Sears began in 1893, when Richard W. Sears and business partner Alvah Roebuck first founded Sears, Roebuck and Co. The company’s success, much like modern day Amazon, revolutionized the way consumers could access products. Throughout the early 1900s, geographical dispersion and the lack of convenient high speed transportation meant that access to retail shopping was unavailable. These factors gave consumers little choice. Sears changed all that. Sears, Roebuck and Co., or simply, Sears, began as a mail-order company sending out catalogs to consumers. The catalog, being a physical book, was over 500 pages by 1895, and included everything an American could need. After a product was chosen and subsequent payment was made, Sears would send orders straight to their location, providing a much more convenient way of shopping for rural Americans. Riding off the availability of the US postal system and developments such as The Rural Free Delivery Act and parcel post, Sears was able to ship to anyone and anywhere within the US. The Sears catalog was a major success, paving the way for a promising future.
Sears Origins: Brick and Mortar Stores
Moving into the 1920s, due to the shifting demographics of rural to urban areas, Sears started opening physical stores. Foreseeing the importance of location, Robert Woods, announced president in 1928, opened stores in the suburbs in contrast to the stiff competition and expensive real estate of city centers. Locations with fast growing populations and large parking lots were also prioritized to accommodate the new automotive world. Another key to Sears’ in-store success relied on its affordable high quality products. Working very closely with suppliers, in some instances, financing them and even owning their stock, Sears created a supply chain that was huge, cheap, and profitable. In-store sales would pass catalog sales by 1931. Growth continued after WWII as Robert Wood took advantage of pent-up consumer demand and the booming economy to open more stores. This was in contrast to other retailers, such as Montgomery Ward, who believed the economy would enter a recession. Decisions that successfully predicted trends in consumer spending landed Sears as the largest retailer throughout the 1970s and mid 80s.
Though still being the biggest retailer, the slow demise of this retail king began soon after sales hit all time highs in the 70s. While low-end consumers left for Walmart or Target, high end specialty stores took the upper portion of the market. Sears was stuck in the middle. They were unable to compete with the everyday low prices of Walmart and Target while at the same time were not able to replicate the fashion or specialty that The Gap or Home Depot could offer. After the 1990s, poor leadership led to bad investments and questionable decisions. Missteps such as canceling the famous Sears catalog took away critical information about consumer trends, while also leaving Sears in a poor spot for online business. When K-Mart bought Sears to create Sears Holding Corp as we know it today, the combination clouded customers’ image of a once high quality and inexpensive Sears. Sears also sold off their most valuable assets such as Lands End, Craftsman tools, and their most valuable real estate. When Eddie Lampert took over as CEO of Sears in 2013, Lampert used extra cash to buy back Sears shares instead of reinvesting into the company. In 2017, competitors of Sears, such as Kohl’s and Best Buy, spent $8.12 and $15.36 per square foot on renovations of their stores, respectively. Sears only spent $0.91. Today, Sears is practically worthless, destroyed by ill fated decisions surrounding its assets and future.
Once a prevailing and innovative company, competition, lacking leadership, and shifting consumer demographics broke the retail giant. Though, in a few years there may not be any Sears stores left, Sears leaves behind a legacy within American history and lessons for millions to come.