Sears: Once a Retail Giant, Now Taking Its Final Breaths

By Kitty Testa

I came across a headline in Bloomberg the other day that made me wince: Sears Transformed America. It Deserves to Die with Dignity.

Ouch. I hadn’t felt such a pang since the elegant script of Marshall Field’s signature logo was stripped from its stores and placed with the simplistic logo of Macy’s. What? Die with dignity? No more Wish Book?

The department store, which emerged in the mid-19^th century, was at its peak one hundred years later. The big department stores anchored the suburban shopping malls that were popping up all over America. Their catalogs featuring hundreds of pages of marketing copy would arrive three times a year: spring/summer, fall/winter, and Christmas. No piece of reading material in the house was more coveted than the Christmas catalog. I recall carefully perusing the thin pages that soon became tattered from the constant pull of little fingers. I wanted this baby doll, that giant Raggedy Ann, and absolutely needed those red and white footy pajamas. The catalogs peddled desire over which any child could linger for hours.

I’m sure that Sears Holdings Corp. would like everyone to know that Sears is still around, and you can find their merchandise online as well as in their remaining stores. But Sears is sputtering. It lost $748 million in the third quarter of 2016. The company is laden with real estate leases in languishing suburban malls, where foot traffic has slowed and sales are slumping. The retail operation is bleeding cash, and selling off its iconic brands like Kenmore and Craftsman. Online it is competing with everyone from Amazon to Macy’s to eBay.

This is the company that 130 years ago flourished by bringing consumer goods to the farthest flung corners of rural America. It took advantage of the new railroads and postal delivery to bring the best the cities had to offer far into the countryside. For decades, the “cheapest supply house on earth” sold everything from wax candles for the Christmas tree to buggies, guns and ready-to-assemble houses. In 1906 Sears opened a three million square foot mail order plant in Chicago from which it shipped mass-produced clothing, stoves, toys, drugs and cookware marketed in its famous catalog. Sears developed not only the mail order market, but the internal processes to efficiently track and fulfill orders.

But it wasn’t yet a department store, and as chain stores proliferated and consumers embraced the automobile, Sears turned its eye to city shoppers.

Sears opened its first department store in Chicago in 1925, and building on that success, grew to over 400 stores in eight years. At the beginning of World War II, Sears had more than 600 stores. Its brick and mortar retail sales had since become secondary to its mail order business.

After World War II the great expanse into the suburbs began. Consumer demand, pent up during war shortages, unleashed itself upon retailers, and Sears gained a foothold in the new landscape of three bedroom houses and station wagons filled with five kids. While direct mail order ebbed, the iconic Sears catalog remained an important marketing tool for Sears.

Sears had been a pioneer in the auto insurance industry and had founded Allstate Insurance. It built the world’s tallest building in Chicago in the early 1970’s, the Sears Tower—or the “serious tower,” as many children called it. Sears was a titan in American business.

What happened?

Wal-Mart. Target. K-Mart (with which it merged in 2005). Discount department stores lured shoppers away from the likes of Sears, and its direct competitors, such as Macy’s. Stores like Circuit City and Best Buy capitalized on electronics and appliances. Competitors emerged everywhere.

And Amazon. If there is any company that has revolutionized American shopping to the same degree as Sears, it is Amazon. Just as Sears developed the mail order model, improving its efficiency and profitability, Amazon has redefined modern logistics in its distribution center model. And as Sears did almost one hundred years ago, Amazon is branching out from cyber space into brick and mortar locations with new technologies that will redefine how we shop. And as Sears delivered product to the countryside, Amazon delivers groceries to the inner city “food deserts.”

The economy that allowed Sears to be a dominant player is gone. The market has changed. What lures us in by advertising copy is checked against online customer reviews. We can easily compare prices and models to find the best value. A retailer with burdensome overhead can’t compete with more nimble and economical competitors. And this is good for us as consumers.

Sears is a shell of its former self. The great department store is wedded to a struggling discount store. It sold its great tower to Willis Group Holdings in 2009. I was in an Uber on Saturday night and glanced out the window and saw its sign: Willis Tower.  Ouch.