Shit it I knew they were done when they combined with K Mart. Sears had a wonderful run hundreds of years. They were the Amazon of their day.
Sears just couldn't understand the internet. They could have bought Amazon back in the 90's if they were smart. So many wrong decisions made over the last two decades. Moving to Hoffman Estates [ they were already declining when they made that move btw ] is not what broke them, it didn't help, but it was lack of vision. To many old retail suits not envisioning and seeing the future.
https://www.chicagobusiness.com/html-page/820491
October 11, 2018 06:00 AM |
Sears' biggest mistake
Sears' sad fate isn't so much a story of operational missteps as one of missed opportunity. In short, the retailer chose to imitate Walmart when it should have tried to pre-empt Amazon.
Back in the 1990s, Sears and other middle-market department stores were losing market share to Walmart, Target and other big-box retailers. Predictably, Sears responded by launching its own big-box chains. Remember Sears Grand and Sears Great Indoors? They came and went with barely a ripple, unable to compete with rivals that invented the big-box concept.
Could Sears have beaten Bezos to the biggest retailing opportunity in 50 years? With the right timing, foresight and fortitude, I think so.
Consider the lay of the land 25 years ago. Bezos was an unknown upstart with little capital and credibility. Sears was a 110-year-old industry powerhouse with $35 billion in annual revenue. It had strong brands—Sears, Kenmore, Craftsman, DieHard—along with highly developed capabilities in marketing, merchandising and supply chain operations. Its stores generated powerful cash flows, and investors welcomed its stock and bond offerings. Ironically, Sears also could claim to have been the Amazon of the 20th century, when it reached customers via catalog and delivered goods through a network of warehouses, railroads and wagons.
Yes, launching a full-fledged online retailing operation would have raised eyebrows in 1995. "Disruption" and "creative destruction" weren't the talismanic buzzwords they've become, and companies weren't yet exhorted to cannibalize their business before somebody else did. Sears would have encountered resistance on Wall Street and within its own ranks. Yet if Sears had faced and overcome such obstacles, the payoff would have justified the effort many times over.
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As with so many corporate downfalls, the saddest part of Sears' story isn't what went wrong, but what might have been.
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The death of Sears
The once-mighty retailer was the original industry disruptor, perfecting the mail-order catalog and expanding in America's suburbs. But in the end, it was a victim of another retail revolution.
BY STEVEN R. STRAHLER
Oct. 15, 2018
Sears Holdings, the successor to Sears Roebuck, which revolutionized retailing at the turn of the 20th century and grew mighty as America suburbanized, is on its deathbed after a lengthy illness, filing for Chapter 11 bankruptcy protection today. The 125-year-old company has been bleeding billions of dollars in cash for years.
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It's the latest and most prominent casualty in an old-line family of department stores instrumental in the rise of the shopping mall and, later, in their mutual decline. As its health failed, Sears' presence in its hometown of Chicago dwindled to a single store, which closed in April 2018.
Sears had been confined to intensive care for years, kept on life support with hundreds of millions of dollars in loan transfusions from Edward Lampert, its controlling owner and CEO, and his hedge fund, ESL Investments. He stepped down as CEO with today's filing. In early October, the company added a restructuring expert to its board, even as $134 million in borrowings was about to come due—news that was shortly followed, ominously, by word that the company had hired a boutique corporate advisory firm to craft a bankruptcy filing that seemed imminent. It was a far cry from the healthier days, when Sears resided in a namesake Loop skyscraper whose status as the world's tallest building reflected the company's retail hegemony.
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Lampert was a Goldman Sachs alum lacking retail experience when he and ESL acquired Sears in 2005, using Kmart, seized in bankruptcy, to engineer a merger. He decided to pull the plug after promised synergies never materialized, and mounting debt and chronic underinvestment in stores led to losses this decade that topped $10 billion.
Surgeons had prolonged Sears' life by amputating thousands of locations and selling or sacrificing rights to familiar brands like Craftsman, Kenmore and DieHard. The post-merger number of locations dwindled from 2,350 full-line stores to 842, as of September. But the hemorrhaging could not be stanched. Shoppers turned to Walmart and other giant discounters, to big-box appliance and electronics stores like Best Buy, and to home-improvement chains like Home Depot and Lowe's.
By 1991, just before Sears left its tower, Walmart had displaced it as the nation's biggest retailer.
Then came Amazon, whose disruption of 21st-century retailing has been compared to the upheaval Sears itself wrought when it perfected the mail-order catalog. Sears started building stores in the 1920s and shrewdly expanded in America's suburbs after World War II.
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In the
2012 Crain's interview, Martinez said of Lampert, "I believe that he believed at the time (of the merger) that he had the God-given talent to create a brand-new retail operating model, but he never articulated how his model was going to be any different." Martinez predicted,
"Sears is past the tipping point. He's going to preside over a slow liquidation of the company."
Lampert did deliver on one count. At Sears' 2010 annual meeting, he said, "Five years from now, I believe this company, to some people, will be unrecognizable to what it was 30 years ago."