Real Reason Sears is Failing and Closing Stores

We all love to hear about incredible success stories like that of a Swiss engineer and amateur mountaineer George de Mestral. After hiking with his dog, he found on their return home were both covered in burrs from seeds they walked through. He examined the burrs under a microscope to see how they clung to animal fur and clothes.

Under the microscope, he saw a myriad of small hooks on the seed pods (burrs). He also discovered that those tiny hooks latched onto the loops in clothing. Being he was an engineer. He saw an idea to develop a new way of fastening thing together without using zippers, button or laces. He combined the French words velours (velvet) and crochet (hook) and named his new invention Velcro.

Some say that being a mountaineer, he saw the necessity for a new fastening device. Mestral is an example of the saying ‘necessity is the mother of invention’.

It was a necessity that gave rise to the invention of a shopping catalog business that eventually led to one of America’s largest retailers, a retailer that is today dying.

Richard Warren Sears, born in 1863 needed to earn money for his family after his died in 1879. Shortly thereafter, he purchased a shipment of watches from a local jeweler and then sold them at a relatively low price, but still managed to make a good profit.

In 1887, he launched the RW Sears Watch Company with a mail order catalog. Just short years later, he sold his watch company for $100,000 (about $2.7 million today).

In 1892, he had relocated to Chicago where he started another mail order catalog, featuring among other things watches and jewelry. He joined forces with Alvah C. Roebuck and in 1893, the two renamed their mail order company to Sears, Roebuck & Company, and the rest is history so to say.

For many years, the Sears, Roebuck catalog was the most popular product catalog in all of America. In the early 1900s, many general stores in towns all over the nation, especially out west, looked forward to the annual catalog.

I recall as a young boy in the 1950s and early 1960s, of seeing how excited everyone was when the new Sears catalog arrived in the mail. Seeing all of the products was like opening up a whole new world. My mom, along with moms everywhere, eagerly looked through the catalog not just to buy, but to see all of the newest fashions, appliances and more. They saw the Sears catalog as one of the main sources of their home goods news.

Every major city in the United States had a Sears store, which was comforting to many women as American became more mobile with more people relocating to other parts of the country. When shopping centers became popular, many were anchored with a Sears store.

Then stores like Walmart appeared on the scene, giving Sears some serious competition. In order to cut costs and stay competitive, Sears was the first major retailer to turn from full time employees to mostly part time employees. By doing so, they no longer had to provide costly benefits to thousands of employees, saving the company millions of dollars.

Not only did Sears face the stiff competition with Walmart, Sam’s Club, Costco, Home Depot and others, but the world of internet sales opened up and Sears found themselves trying to compete with the likes of Amazon. This is part of the reason Sears is dying today, but perhaps one of the key reasons is they fell into a trap that has spelled doom to many other successful companies.

Mark Cohen, CEO of Sears Canada at one time, commented:

“Sears became increasingly inwardly focused, as many businesses that become very successful and very large do, to their peril.”

In 2004, billionaire Edward Lambert purchased Sears. Once in control, instead of trying to build the company and make it competitive, he turned around began selling off some of Sears’ brands and real estate. In the last 8 years under Lambert’s control, Sears has gone from 2,300 stores to about 500.

This summer, our refrigerator started to die and we shopped around and ended up buying a Kenmore at the Sears store in our local mall. The sales clerk that there was no chance of that store closing since Sears owned the building free and clear. Within a few months, the local Sears is now closed, leaving only one in the metro area about 45 minutes to an hour north of where we live.

Cohen commented about the current condition, saying:

“I believe in 2005, when Lampert took over, the company could’ve been resurrected. Amazon still was in a very nascent position. Sears still had a tremendous reputation, especially in brands like Kenmore, Craftsman and Diehard. And so, there was no reason to believe the company had to, quote unquote, fail.”

Out of necessity, Richard Sears invented Sears. Out of neglect or stupidity Edward Lampert has been steadily killing Sears. The giant retailer is now nothing more than a few hundred stores with an uncertain future. For millions of Americans, Sears is more of a memory of good times. For others, it’s nothing more than abandoned and empty buildings rotting away over time, all thanks to Edward Lampert. Now you know the rest of the story.

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