Sears
We all saw it coming. Sears was plummeting towards bankruptcy and last week it finally happened. Overladen with debt that had been leveraged way too high to service the payment. There are so many factors here from poor management, private equity games and lack of innovation. At one point, Sears was the great American store.
Very similar to Amazon, Sears changed the way American’s shopped. They began with a catalog so everyone could order what they needed (just without the internet) and have it delivered to their door. They even delivered pre-fab houses at costs that made it affordable for most people to have a roof over their head. I am 99% sure that the Craftsman Home we have in Venice, CA is an off the shelf Sears and Roebuck home. It still stands today although it is in need of some major work to make sure it will be standing in another 100 years.
I have been thinking about my shopping experiences with Sears over the decades. Sears was the anchor store at Montgomery Mall in MD where I spent my teenage years. We would always stop at Sears for records, clothes, a new dishwasher and anything else we needed. I remember when they partnered with a few designers and created pop-up stores inside the teen section. Cutting edge stuff.
For some reason, I had my father’s Sear’s credit card. There was a store near Simmons College where I went to school on the backside of a defunct building. They only carried appliances in there. My father was not very forthcoming with any help except he did pay my tuition so I went into Sears one day and bought myself a refrigerator and a few other items because it was the only card I had of his and the bill went to him.
Doing business with Sears when I was running a company in the garment center was a big score. I finally broke in with a jacket that the buyer was willing to give me an order for 1800 units to see what it would do. The jacket hit the racks and had a 25% sell-through immediately. The buyer was thrilled. She told me that she needed to get back into the jacket asap and was going to send me over an order that afternoon. We could work on the fabric allocations based on that order. Sometime in the mid-afternoon, a fax came in (yep a fax) and we could see it was coming from Sears based on the area code. The order was for just over $1m dollars on one jacket. It was huge. It completely changed the trajectory of the company. Sears had that type of buying power.
On on hand, it is sad to see Sears close their doors as I can’t imagine that it is going to do anything but that regardless of them trying to come back. They have already sold off the majority of the assets and what is left is the real estate. The brand changed American but now we are in another time, a new zeitgeist.
High-end retail stores with handheld service with highly curated merchandise continue to work. Massive brands like the Gap that have become commodities and don’t really need multiple retail stores anymore. Retail is going through a major change. People will shop in stores, as I saw plenty in Japan packed to the gills, but the question is what is going to keep them coming back and who are the creatives of this next retail movement that will make this happen? It certainly is not the leaders behind Sears.
Comments (Archived):
That’s got to hurt so bad.
As a kid growing up in Wyoming in the ’70’s, the Sears catalog was how I let my parents know what I wanted for birthdays and Christmas. I’d go through and fold back pages and circle what I wanted with a felt tip pen. (Now, my kids send me links on Slack.)With their DNA, maybe Sears could have been Amazon before Amazon.
Def Amazon before it was Amazon
Sears could have been Amazon before AmazonCould not have ever happened. Amazon became Amazon because they were able to lose a boatload of money for a long time until they became profitable (in addition of course to that vision thing and the concept). There is no way a traditional company can compete with this behavior (even if they wanted to) because they have stockholders and more importantly they have something to loose. [1]Not the best backup since it seems as if it was quicker but here is a link:https://qz.com/1196256/it-t…The other thing is by and large Sears (in the niche they were in at least) was about quality. Their tools and their appliances were good and were backed up by service (could exchange tools anytime in the future). Amazon is about selling things cheap and plenty of Chinese crap a race to the bottom. Had a service network of People that worked for Sears not third parties. They even had contractors that would do better work if the order came by way of Sears. Because they didn’t want to lose Sears as an account. So you had that as a guarantor of the work.The other thing is that companies as they age get occupied with an older and less motivated workforce whose values change over time. Family, health etc. This will also happen to many startups as they mature. It happens in all businesses. It happened to people that I competed with out of college. Older types that did the same thing who laughed at me because I didn’t know the business (and I didn’t!). I saw this and experienced it firsthand.[1] Ditto for a traditional ‘small business’ today trying to compete with an angel or VC funded startup. Different thing going on. The funded company is hard to compete with because it can and does lose money in a way that a traditional self funded company can’t. For example when I started out of college (with solely my own money) 100% of the important decision had to be right and there was simply no way to not be profitable and make mistakes. You died if that happened. This is a vastly different world than exists today. Even the workforce that you get is different. I was lucky to get blue collar types that lived in row houses (a South Philly thing) with their parents that actually showed up for work. And that took years to get a workforce that did the job. Not the type of people that by and large occupy most startups today with college degrees and for that matter degrees from really good colleges (honestly a fun atmosphere). The people that worked for me were not the type of people a founder would want to socialize with (even though they were in the same age group). Most barely graduated high school. Vastly different world.
different times.
It completely changed the trajectory of the company. Sears had that type of buying power.See with my Dad and his giftware wholesale business it was the opposite. I remember in the 70’s he turned down Sears request to buy Chanukah menorahs. He said he could easily sell to them all his inventory but then the small giftshops and larger chains of giftshops might stop getting his other ‘schlock’. So he didn’t sell anything to Sears or really any super large entity. Not that all customers were small (there were large gift chains and I remember going with him and getting bored out of my mind when he drove to Fortunoff in NY and had me come along as he did a sales call). He had a route of religious stores on the lower East Side. Those guys were brutal and used to aggravate the crap out of him and chew him down on price and he had to drag money out of them to pay their bills. (Sorry for the fork btw but it’s an emotional thing with me got him very aggravated and what I remember growing up.)My Dad sold the business to his brother and it is still operating today (with my cousin). Much of what they sell is made overseas in China and other low cost countries (even the religious goods which used to come solely from Israel when he started out).
https://www.google.com/amp/… Sears fought Jim Crow. I think it’s interesting Bezos is putting 2B into education for the poor
wow.
Fascinating article