October 19, 2018

The Sears Obituary (And Why It Shouldn’t Have Come to This)

R.I.P. SearsSears, the legacy retail giant best known for its iconic catalog, has effectively passed away, having filed for Chapter 11 bankruptcy protection after a prolonged battle to stay relevant. The company was 132.

The Early Years
Born R.W. Sears Watch Company (for founder Richard Warren Sears) in 1886, Sears soon grew into a mail-order general merchandise retailer. By 1893, Sears and his partner, Alvah C. Roebuck, were already outperforming traditional general stores with their innovative business model.

Through the largesse of the U.S. Postal Service’s Rural Free Delivery (RFD), Sears was able to cheaply and effectively target its customer base. Its rapidly expanding catalog not only pioneered the field of direct-mail advertising, but also prefigured ecommerce. As the Los Angeles Times noted, “Sears figured out shopping from home long before Amazon’s Jeff Bezos even was born.”

The tragedy is that, had Sears displayed the same level of innovation in the 21st century as it did in the 19th — had the company embraced new technology to bridge the online and offline experience the way so many other brands, including some legacy brands, are doing today  — it might well have out-Amazoned Amazon. Because Sears already had what Amazon is only just now trying to establish: a vast network of physical, brick-and-mortar retail outlets. An equally robust digital reach could have given Sears unmatched multichannel marketing muscle.

Fat and Happy
If that sounds like hyperbole, it’s important to remember that for much of the 20th century Sears dominated American retail. In 1973 the company moved its headquarters to the newly completed Sears Tower in Chicago. At 110 stories, it was at that time the world’s tallest building — a fitting symbol of the company’s standing and the shadow it cast across America’s cultural landscape.

Going back even further, early Sears catalogs “subverted the racial hierarchy of Jim Crow,” the Washington Post reported, by allowing African-Americans in the rural South to purchase by mail and “avoid the blatant racism that they faced at small country stores.” As Lewis Gersh, Founder and CEO of PebblePost, inventor of Programmatic Direct Mail®, noted, “That was a big one. Sears truly was Americana.”

Sears’ progressive policies also made it a destination workplace during its heyday. Employees had profit sharing and stock options in the ’60s and ’70s, and tens of thousands of retirees from that era continue to draw pensions.

The Gradual Decline
Perhaps emboldened by its success in offering all things to all people, Sears failed to recognize and adapt to an increasingly specialized, vertical retail landscape. Competitors began co-opting components of the Sears business model and refining them to beat the granddaddy of retail at its own game. Walmart, having reinvented the low-price general merchandiser, overtook Sears as America’s top retailer in 1989. Lowe’s supplanted Sears atop the appliance market in 2013, and Best Buy has usurped a large share of electronics sales.

The first truly alarming sign of the company’s declining health was its 1993 decision to discontinue the Sears general merchandise catalog, a symptom of its failing vision. A 2004 merger with Kmart led to unhealthy bloating and a worsening case of financial sclerosis.

The Misdiagnosis
For all its problems, however, Sears’ demise was not inevitable. The growth of online retail sales is often cited as a key factor in the company’s decline — ignoring the fact that ecommerce accounts for less than 13% of retail sales.

In fact, Amazon — king of online retail — has been positively Sears-like in the trajectory of its growth. It went from a vertical market (books) to general retail by reaching consumers in their homes. In recent years it has augmented its online offerings with physical retail outlets. It has even pursued the idea of producing a physical holiday catalog, not unlike the “Wish Book” that Sears first produced back in 1933.

In reality, evidence suggests that the true deathblow at Sears was predatory hedge funds and a sharp drop in real estate holdings that left it paying rent on properties it once owned. Had it focused instead on integrating online data with physical retail, it might well have achieved immortality. Other iconic brands, including Heineken and Converse, have remained vital and relevant by combining physical innovation and digital agility. And with Programmatic Direct Mail®, we at PebblePost have demonstrated that 20th century marketing methods can be adapted for the new millennium, with spectacular results across channels.

The Legacy
Sears is survived by Craftsman, its iconic line of tools acquired by Stanley Black & Decker in 2017, and appliance manufacturer Whirlpool, which ended its century-long relationship with Sears seven months after the Craftsman deal.

Calling hours during bankruptcy proceedings are 10:00 a.m. to 9:00 p.m. at a smattering of dreary malls.

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