Sears appears to be in its death throes. The company filed for protection to reorganize under Chapter 11 of the bankruptcy laws, but it seems unlikely that it will come out okay on the other side of it. From a high of 3,500 store locations and 355,000 employees in 2004 to 687 stores today, they will continue to operate through the 2018 holiday season … but after that?
It’s too bad. Founded in 1893 by Richard Sears and Alvah Roebuck, the 125-year-old company was a precursor to Amazon: the first big retailer to sell everything to everybody. At one time or another, Sears sold not just clothing and tools but also tombstones, houses, financial services, and just about everything else you can think of. Their catalogue reached rural America with a full assortment. As recently as 2007, Sears stock was selling for over $120 a share. Now it’s less than $1.00.
What went wrong?
Well, a lot. But the root of the problem is that the company’s leadership is not equipped to lead a retail company. For the last decade, the chairman and CEO has been a hedge fund manager and financial engineer. Eddie Lambert slowly dismantled the company, selling off its most valuable assets to companies he himself had a personal stake in. Then Sears had to borrow more funding to continue operations. Borrow money from … guess who? The same Mr. Lambert. He and his partners have used Sears as a personal ATM and have picked the bones clean. He’ll walk away as a billionaire while tens of thousands lose their jobs.
The consequences of not having a retail strategy
The company did not develop a robust omnichannel strategy to combine its brick-and-mortar legacy store footprint with an e-commerce presence. There has not been a clear and coherent merchandise assortment philosophy. That “everything to everybody” became nothing to nobody. Instead of focusing on what the customer wants and how to present and deliver it to them, management focused on financial shell games to enrich themselves personally and appear successful in the short term.
It’s sad. Sears has been an iconic part of American life for generations. Much of what we know as the retail industry was created by Sears. Its catalogue was the stuff of dreams for many people.