Sears might be going belly up

[PeterB]

Fascinating thread, this one, like most threads in the Observation Bar. If you happen to read Peter Drucker's Practice of Management, you will see that he credits Sears with being in many ways the first significant modern business in America, it having more or less invented things as mundane as alphabetical lists of customers. The genius behind the original Sears was that it unlocked money that people in rural areas had, but could not really spend, because they were too far from shops and depots. Sears changed the lives of rural Americans rather in the way Walmart did a century or so later (sorry, if Walmart is an unpopular subject on FL). As LizzieMaine has pointed out, Sears should have been ahead of what they call the curve in online retailing, as it had such a clear dominance of the mail order sector, but as often happens, it failed to see what was sitting right under its nose. This is not the venue for business history, but there are many such examples of great companies that innovated in spectacular ways at one time and failed to do so later.

 

[tonyb]

I view the rapid growth of Uber, Lyft, et al in a similar light.

Had the taxicab industry gotten into smartphone apps sooner there would have been little room for the "ride share" services.

Über and its ilk operate quasi-legally at best in many jurisdictions, but the authotities are reluctant to do anything about it because the public generally prefers the service to the "legacy" transportation services.

 

[LizzieMaine]

Uber is in some ways a throwback to the gypsy cabs and jitneys of the Era -- illegal, unregulated taxis that tried to undercut the established licensed cabs in many cities. They fell out of favor after too many accidents and incidents of murder/robbery/rape/kidnapping/you name it, which I suspect will be the ultimate fate of Uber as well.

 

[Fading Fast]

Living in NYC, I am right in the middle of the Uber / established taxi cabs war. Lizzie, I love and deeply respect you, but the one challenge to your premise is that the yellow cabs (the established licensed NYC cabs) are so horrible - the drivers (with some exceptions) are dangerous and surly, the cars are poorly maintained (they smell terrible, feel like they are going to fall apart and the air conditioning [city mandated] rarely works well) and the prices are very, very high - that Uber has gained public support as the window between what is fair and what the yellow cabs charge is so wide that the opening was there.

Mayor de Blasio, an outspoken, pro-active liberal, caved in his support of the yellow cabs as New Yorkers (who vote well north of 80%+ liberal), said to the mayor, be a good liberal overall, but shut the "ef" up and leave Uber alone. I rarely take cabs - they are too expensive - and use public transportation, but four / five / six times a year, a cab is the answer and I switched to Uber last year. The cars are cleaner and safer, the drivers nicer and professional and the prices are meaningfully lower. This is an example, IMHO, of a union and a government sanctioned monopoly (the yellow taxis) abusing its power and privilege and treating its customers like cr*p and, thus, giving Uber an opening.

 

[vitanola]

Living in NYC, I am right in the middle of the Uber / established taxi cabs war. Lizzie, I love and deeply respect you, but the one challenge to your premise is that the yellow cabs (the established licensed NYC cabs) are so horrible - the drivers (with some exceptions) are dangerous and surly, the cars are poorly maintained (they smell terrible, feel like they are going to fall apart and the air conditioning [city mandated] rarely works well) and the prices are very, very high - that Uber has gained public support as the window between what is fair and what the yellow cabs charge is so wide that the opening was there.

Mayor de Blasio, an outspoken, pro-active liberal, caved in his support of the yellow cabs as New Yorkers (who vote well north of 80%+ liberal), said to the mayor, be a good liberal overall, but shut the "ef" up and leave Uber alone. I rarely take cabs - they are too expensive - and use public transportation, but four / five / six times a year, a cab is the answer and I switched to Uber last year. The cars are cleaner and safer, the drivers nicer and professional and the prices are meaningfully lower. This is an example, IMHO, of a union and a government sanctioned monopoly (the yellow taxis) abusing its power and privilege and treating its customers like cr*p and, thus, giving Uber an opening.

Ah! The Mieses Institute argument for Gipsy cabs is a good one unless one remembers the utter chaos and danger of the transport market in the days before the medallion system. Of course in the century since the regulation of New York hackney carriages the owners of medallions hav become,a power unto themselves, engaging in egregious rent-seeking. There needs to be found some middle ground between the utterly unregulated and illegal operation of these "ride-sharing" services and the maintenance of the existing medallion monopoly.

 

[Fading Fast]

...There needs to be found some middle ground between the utterly unregulated and illegal operation of these "ride-sharing" services and the maintenance of the existing medallion monopoly.

100% agree

 

[tonyb]

It can be reasonably argued that Über and its ilk exploit the drivers, but there's no doubt that the medallion system taxicab industry in most major cities did, and still does.

I'm pretty well versed in this matter, having worked in various capacities in the business in Seattle for a number of years. I drove, dispatched, trained new drivers, wrote the manuals, managed commercial accounts, represented the company on the Regional Taxicab Commission, et cetera.

If there is a good way to regulate the urban ground passenger transportation industry, I have yet to see it, and I was pretty well read up on regulatory schemes around the U.S. and elsewhere.

Outright deregulation invites mayhem. Absolutely limited entry and a rigid fare structure is good for the medallion holders but bad for just about everybody else, including the drivers and the customers.

I could go on. And on. And on. I'm just glad I have no skin in the game anymore.

 

[tonyb]

And ...

I've witnessed what can happen when absolutists get free rein. I started in that business in 1974. Some number of years later I saw what had been a highly regulated local industry (fixed number of licenses, uniform meter rates, etc.) suddenly get deregulated (show you have a reasonably safe vehicle and insurance and post your rates clearly on the door) and put on as many cabs as you wish and charge whatever you want.

Deregulation was the brainchild of a city councilman who was apparently in thrall of free-market philosophers. In the taxicab industry he found his Guinea pig.

No amount of evidence to the contrary (and plenty of evidence there was) shook his faith in it all working out for the best eventually. Customers got ripped off. Drivers got into fisticuffs over fares. Too many cabs came on too quickly and drivers were working round the clock trying to scrape together a meager living. The hotel and convention and restaurant businesses were up in arms because the bandits were tarnishing the city's reputation.

Hence the creation of the Regional Taxicab Commission, which was charged with making recommendations for re-regulating the industry. This was going on 30 years ago now.

How'd they do? I wish I could say they did better. They imposed some semblance of order, but it remained that the drivers generally put in too many hours for too little money and passed way too many of those hours sitting empty, and covered too many miles without paying customers aboard.

The "ride-sharing" outfits have made that already bad situation pretty much untenable. The industry is in crisis, and many of the sharper operators have gotten out.

Maybe a balance will be struck. But history suggests that whatever happens, it won't last.

 

[BobHufford]

This is how I like to remember our local Sears store. It is now a convention center. We still have a mall version, but I only go there when they are clearing out Carhartt and whole house water filters.

 

[tonyb]

I got dibs on the door pulls with "Sears" in that cursive script. I was pleased to see them still in service when I most recently entered the Sears store on Sleater-Kinney Road.

 

[HudsonHawk]

Sears may have failed to see what they had in the order/delivery market, but they went in the toilet precisely because the market had shifted away from that in the 80s and 90s. They went heavy on retail stores because they had to in order to compete with the "get it now" stores like Walmart. It used to be in small towns if you wanted something you ordered it from Sears and it would show up in a few days or a few weeks, depending and what your ordered and where you were. Then suddenly people had the option of going to Walmart and buying a pair of socks and wearing them to Sunday meeting the very next day. And it wasn't just socks, but you could go buy shoes, bed linens, a lawnmower and a microwave oven...park for free and take them home that very day. The old "order and ship" model died. But it was only *mostly* dead, and Sears failed to be able to regroup and take advantage of it because of their size.

 

[HudsonHawk]

As for taxis vs. Uber...I concur that the reason for Uber's rise is that the standard taxi experience is simply an awful one. The driver's are incredibly dangerous and thoughtless, the cabs are disgustingly maintained, and the fees are outrageously expensive. I've gotten to where when visiting a city and I'm not going to rent a car, I hire a private limo/car service for things like to/from the airport and major destinations. You get a very well maintained luxury car with a uniformed, well-trained driver, ride to your destination in style and comfort at your convenience, and it's about the same price as hailing a cab at the curb. It's more expensive than Uber, but I've never worried that my driver is an axe murderer either.

 

[Fading Fast]

As for taxis vs. Uber...I concur that the reason for Uber's rise is that the standard taxi experience is simply an awful one. The driver's are incredibly dangerous and thoughtless, the cabs are disgustingly maintained, and the fees are outrageously expensive. I've gotten to where when visiting a city and I'm not going to rent a car, I hire a private limo/car service for things like to/from the airport and major destinations. You get a very well maintained luxury car with a uniformed, well-trained driver, ride to your destination in style and comfort at your convenience, and it's about the same price as hailing a cab at the curb. It's more expensive than Uber, but I've never worried that my driver is an axe murderer either.

I could not agree more. There is no easy mass transit to LaGuardia airport from my place in NYC. Lugging luggage, I would have to take one or two subways and then a bus which would all in cost +/- $25 and take several hours. A cab costs (tax, tolls and tip) +/- $35 and a "black car" (a very nicely maintained Lincoln, or SUV, with - as HH describes - a well dressed and mannered driver) +/- $35 - and the cab or "black car" take +/- 30 minutes. Hence, before Uber (which I used the last time - it cost me $25 bucks and was a clean car with a nice driver), even the limo service (not stretched, but as described) was no more expensive than the yellow taxis.

Cabs, limos, Uber all need to be regulated for safety and honesty (post rates, meters work, etc.) and, maybe, some additional controls - so I'm not advocating some free-markets-solve-the-world's-problem solution - but the above highlights how corrupt and broken the government granted yellow cab monopoly is in NYC (and the shame is the money all flows to the owners and politicians through legal contributions and who knows what else - the drivers are poorly paid).

 

[HudsonHawk]

I'm guessing it's this way in NYC and other cities, but here in Houston certain routine trips, such as to/from the airport/convention center/stadium/major hotels/etc are zoned and the price is fixed and posted on the cab window. So no matter the route or the time, a trip from Hotel X to the airport is $40 or whatever it is. This is to ensure visitors don't get the "scenic route". This part of it is a good thing. But it also incentivizes the drivers to get to their destination as quickly, and most likely as recklessly, as they can. Driver also hate those trips because on a per/mile or per/minute basis, the fee is lower. This is particularly where Uber or the "black car" services wins. I especially like the black car service because I like getting off the plane and seeing a guy in a suit and tie holding a sign with my name on it, ready to tote my bags for me.

 

[tonyb]

Maybe we won't live to see it, but there may well come a day when autonomous vehicles (aka self-driving cars) render taxis, limos, black cars, Uber, Lyft, etc. (as we know them) things of the past.

Driving as an occupation is, for some people, a great way to make a living. And for some it's just okay. Beats a poke in the eye with a sharp stick. But for many it's a waste of human potential. Many is the driver for hire who can't find work in his or her chosen field. This is especially true of recent arrivals to these shores, whose professional credentials issued in the old country aren't recognized here.

 

[tonyb]

It's all been going to hell ever since the advent of agriculture.

Huntin' 'n' gatherin' is where it's at.

But I'm with you. Driving has been necessary and a generally honorable way to make ends meet. But if those driving jobs were made obsolete by new technologies, it's hard to see how humanity overall would be any the worse for it.

 

[tonyb]

Dang, FF, looks like you deleted your post. And it was a good one, too.

 

[Fading Fast]

Dang, FF, looks like you deleted your post. And it was a good one, too.

Im sorry. I re-read it after I posted it and thought it might have strayed too into politics. But thank you for your comment.

 

[sheeplady]

Fascinating thread, this one, like most threads in the Observation Bar. If you happen to read Peter Drucker's Practice of Management, you will see that he credits Sears with being in many ways the first significant modern business in America, it having more or less invented things as mundane as alphabetical lists of customers. The genius behind the original Sears was that it unlocked money that people in rural areas had, but could not really spend, because they were too far from shops and depots. Sears changed the lives of rural Americans rather in the way Walmart did a century or so later (sorry, if Walmart is an unpopular subject on FL). As LizzieMaine has pointed out, Sears should have been ahead of what they call the curve in online retailing, as it had such a clear dominance of the mail order sector, but as often happens, it failed to see what was sitting right under its nose. This is not the venue for business history, but there are many such examples of great companies that innovated in spectacular ways at one time and failed to do so later.

Drucker has been right quite a few times in the arc of history. There's a reason he's required reading in most business programs.

 

[vitanola]

Im sorry. I re-read it after I posted it and thought it might have strayed too into politics. But thank you for your comment.

So sorry that I missed it. I have no doubt that it was thought provoking. It seems to me that too much comes under the rubric of "political" these days, or at least that some folks turn too many instances of mild disagreement into all-out political fights, more's the pity.