Sears might be going belly up

[GoetzManor]

The Kmart down the street from where I grew up just recently closed its doors. It had been in bad shape for years, seeming dingy even then to my eight or nine year old self. The area wasn't the best, so I can't help but think that contributed to its overall appearance.

However, despite Sears' reported $7 billion loss over the previous four years, the anchor store at my local mall seems to be thriving. Obviously not generating the numbers it has in the past, but it always seems busy.

 

[MisterCairo]

Oddly, K-Mart disappeared in Canada when it was sold off to Zellers, a Canadian discount chain part of the Hudson's Bay Company. Zellers in turn is being bought out by Target which is entering Canada in much the same way Walmart did (which was by buying out Woolworth's).

Going, going, gone.....

Aaaaaand Target went belly up in Canada about a year after spending billions to come in. Total failure to adjust to our market, which, and I'm hoping you're all sitting down, wanted in Canadian Target stores what we'd see in American Targets.

 

[PrettySquareGal]

Sears exists in name only, just like many other long-standing institutions.

 

[Bruce Wayne]

http://www.thestreet.com/story/1347...brink-of-collapse.html?puc=yahoo&cm_ven=YAHOO

 

[Stearmen]

Sadly I was just at Sears today. Talk about a ghost town, hardly any one in the store, other then employees! I did make one big mistake, I miss read my 50% coupon, I thought it ended last Sunday, instead it was the day before. I could have bought a nice 300 peace tool set for less then $200! Oh well, with things going the way they are, they may have a 75% sale.

 

[LizzieMaine]

I haven't been to any mall, let alone Sears, in many years. Sears was doomed the day it dropped its "Catalog Sales Store" system, which gave it a Main Street outlet in every small city in the USA -- this made the company a part of the fabric of American life in a way that the mall-store model never did and never could. Since then it's been just another mall store with no particular character or personality or purpose.

 

[Fading Fast]

It's brutally hard for any business to be successful decade after decade and even harder for a mega-successful store - like Sears - to maintain itself at a mega-successful level for years, especially in a business such as retail which has no real barriers to entry and companies can gain scale to compete against it over time. Oil companies have massive oil fields, require massive capital commitments, have their own or contracts with a large network of distributors - it isn't easy to be a start up and grow into a major oil company, but in retail you can.

And as a mega store, like Sears, you can have legacy investments in stores in downtowns that (for decades) were dying, while your younger competitors opened up in the suburbs without any of the legacy drag. I don't know why Sears dropped its "Catalogue Sales Store" system, but there must have been a compelling (although, not necessarily long-term smart) reason at the time. And, now, the internet is blasting apart even much stronger rivals like Walmart and Target.

The history of retail stores is littered with big success followed by big failure. Makes me sad as Sears was a go-to store growing up (the few times dad opened his wallet a year) - and I keep hoping they will hit on some way to come back - but in truth, if they do, it will only be the name and not the store I knew anyway.

 

[tonyb]

I fear that bricks-and-mortar retailers sometimes lose sight of what they have to offer that online sellers don't. (That's at least equally true of newspapers, but that's another story.)
Often people don't know what they want until they are shown it.

People like to handle the merchandise. People like to look at stuff, even the stuff they have no intention of purchasing.

Me, I'm not much of a shopper. I go into a store knowing what I came for. But I know numerous others who like nothing more than to go shopping. I doubt that noodling around online provides anything approaching the same experience.

 

[Benzadmiral]

Sears was one of the big department stores in downtown NO when I was a kid, a 4- or 5-story building in the central business district which at Christmas would sport an enormous Santa Claus some 2-3 stories tall above the main entrance. It sold everything, it seemed to me then: model kits (though the Woolworth's stores outshone them on variety), pipes and pipe tobacco, watches and watch repair, clothes, records and record players, and loads more. It closed up that store in the Eighties, I think. Today it's a hotel (like so many buildings in NO's downtown). The company had the effrontery to put up a plaque implying, without actually stating, that the building had been a hotel for 80 years. Panda feathers; I know Sears was there before the hotel was.

Now we have only a couple of Sears stores in malls. I'd always heard that part of the reason for Sears's accelerated demise was its purchase of K-Mart, itself once a go-to store for nearly everything in the automotive line. As K-Mart sank, the story went, it pulled its parent company down too. Apparently, as many of you have pointed out, the rot came from within and started a good while before that purchase.

 

[LizzieMaine]

The thing about Sears is that it had no retail stores at all until the mid-twenties -- it established its entire reputation as a national company as a mail-order operation, and maintained that reputation for forty years before branching out into retail. And even after that, it was a catalog company first and foremost before it was a retail-store company.

Sears had unmatched power as a mail-order company -- it dominated its rivals in that field, and was a definitive part of small-town and rural life by the power of that mail order operation. As a department store, it never really developed that level of importance -- it never did anything in retail outstandingly better than anyone else, and its reputation for quality hard goods was a legacy of its mail-order operation, not something dependent on retail. There was really no reason for Sears department stores to exist beyond the company's desire to branch into a new field. When they dropped the mail order business entirely in the '90s, "Sears and Roebuck" as an institution really ceased to exist. The surviving mall stores are simply the last dying vestige of an organism that's really been dead for twenty years.

Sears should have scrapped all its retail operations as soon as the Internet became viable, and gone the route of Amazon. If they had done so in the mid-90s, with their money and brand recognition and buying power, nobody would have ever heard of that egotistical prat Bezos.

 

[Fading Fast]

The thing about Sears is that it had no retail stores at all until the mid-twenties -- it established its entire reputation as a national company as a mail-order operation, and maintained that reputation for forty years before branching out into retail. And even after that, it was a catalog company first and foremost before it was a retail-store company.

Sears had unmatched power as a mail-order company -- it dominated its rivals in that field, and was a definitive part of small-town and rural life by the power of that mail order operation. As a department store, it never really developed that level of importance -- it never did anything in retail outstandingly better than anyone else, and its reputation for quality hard goods was a legacy of its mail-order operation, not something dependent on retail. There was really no reason for Sears department stores to exist beyond the company's desire to branch into a new field. When they dropped the mail order business entirely in the '90s, "Sears and Roebuck" as an institution really ceased to exist. The surviving mall stores are simply the last dying vestige of an organism that's really been dead for twenty years.

Sears should have scrapped all its retail operations as soon as the Internet became viable, and gone the route of Amazon. If they had done so in the mid-90s, with their money and brand recognition and buying power, nobody would have ever heard of that egotistical prat Bezos.

Great point. I've always thought (nothing that 100 million people also haven't thought) that the catalogue retail companies were the Internet companies of their day, just without the Internet. And as someone who doesn't like to shop or go to stores, I was a big catalogue buyer before the Internet and now am a 80+percent of the stupid things I buy Internet shopper today. So, as you said, you would think Sears could have segued perfectly into Internet sales. But to be fair, many catalogue companies haven't done that great - the Internet was a "disruptor -" or whatever ten-dollar-word some twenty year old, over-educated, smarty pants calls it - that, sometimes, works best when a company approaches it with no legacy thinking.

 

[sheeplady]

I can remember as a kid going through the Sears catalog. Then we'd go and pick it up from the little pickup area at the local mall. We rarely shopped in the store when I was little (although I had my baby portraits done there, which I obviously don't remember).

My husband and I have done appliance shopping at Sears but also got our TV there, which was an order. A bit disconcerting to do the Sears pickup thing after 20 years of NOT having done it. (Obviously a different location).

Sears was the original "site/ship to store." Sad they didn’t recognize what they had.

 

[tonyb]

Online retailing is indeed the modern take on catalog retailing. Malcolm Gladwell wrote a piece on this very phenomenon ("Clicks and Mortar," it was titled) something like 15 years ago.

The website is the easy part. But to make it work you gotta have distribution centers and airfreight and trucking companies and roads and ..: , just as you needed passable rural roads for the catalog sales of a century ago.

 

[LizzieMaine]

Sears' network of distribution centers clearly prefigured this. As collectors of old Sears catalogs know, there were multiple editions intended for specific parts of the country, and all goods ordered for each zone were shipped from a regional warehouse to cut down on shipping time and reduce costs. This also allowed Sears to customize its offerings for specific parts of the country -- there were more farm goods offered in catalogs sent to the rural midwest than to the urban Northeast, and more winter goods in catalogs for Northern zones than in catalogs sent to the South. Sears created an extremely sophisticated, efficient and effective system around pencil and paper and postage stamps.

And the amazing thing is that all of this was fully in place and operational by the turn of the twentieth century -- more than 90 years before Amazon claimed to "reinvent shopping." Talk about reinventing the wheel...

 

[Fading Fast]

Agree with all of Lizzie's comments. But do have to say, Amazon has taken shipping speed to a crazy level. In NYC, we have ordered in the morning and had things come that night (via UPS) and, while that is rare, having the stuff show up in one or two days is quite common. Also, stuff will show up on Sunday (which I've never seen before). And in all cases, we have not paid up for special shipping, but we are "members" of Amazon Prime (free fast shipping on everything all year for, I think, $100 - one of the best deals in the world if you buy, like we do, most of our basic stuff from them - they are so much cheaper than NYC stores). Clearly, as Tony B implied, this is the key to success and Amazon is doing its darndest to stay ahead of the competition and not become the next Sears.

 

[tonyb]

My fear for UPS and FedEx and all the others in the shipping business is that Amazon et al will create their own logistics operations.

I avoid buying from Amazon, but I must give credit where it is due. Amazon's customer service is extraordinary.

As a complete aside ... A long time ago I had a college work-study job in the building that is now Amazon's corporate headquarters.

 

[tonyb]

Oh, and the "main" Sears store in Seattle, something like eight or nine floors of retail space, was very much the busy place when I first moved there, in 1968, and remained so for a goodly number of years after that. That structure is now the Starbucks corporate headquarters.

 

[sheeplady]

I avoid buying from Amazon, but I must give credit where it is due. Amazon's customer service is extraordinary.

As a complete aside ... A long time ago I had a college work-study job in the building that is now Amazon's corporate headquarters.

You're the 6th person I know from and/or living in Seattle that avoids buying from Amazon. I have no idea what to make of it.

 

[tonyb]

I suspect that Jeff Bezos's public persona might have something to do with it.

 

[LizzieMaine]

Bingo. I'm 3000 miles away from Seattle, but I want as little to do with Bezos as I possibly can. He treats his workers like dirt, and I have no respect for him at all.