Growth & Retail

Before Amazon, there was a paperback version – the Sears catalog. Starting in 1893, Sears was America’s top retailer for nearly eight decades. At its peak, three out of four Americans shopped at Sears yearly, and its sales made up one percent of the country’s total economic output. But now, Sears is struggling to stay afloat. What went wrong?

Born in 1893 as the brainchild of Richard W. Sears, Sears began as a mail-order catalog offering consumers across America access to an extensive array of goods, from clothing to household appliances, all at the convenience of their fingertips. Sears quickly ascended to the summit of American retail, enjoying unparalleled patronage.

But beneath the surface of success, there was a hidden problem: people were too comfortable and resistant to change. A seminal 1978 top-secret executive report encapsulated Sears’ myopic outlook, proclaiming:

“We are not a fashion store. We are not a store for the whimsical, nor the affluent. We are not a discounter... We are not a store that anticipates... And we must all look on what we are and pronounce it good! And seek to extend it. And not to be swayed from it by the attraction of other markets, no matter how enticing they might be.”

Meanwhile, on the horizon, a new contender was emerging. In 1962, Sam Walton inaugurated the first Walmart store in Rogers, Arkansas, laying the groundwork for a retail powerhouse that would redefine the industry’s parameters. Countering Sears’ conservatism, Walmart embraced innovation and expansion, pioneering concepts such as the Supercenter and revolutionizing retail with computerized point-of-sale systems.

Instead of using traditional cash registers, which mainly handle cash transactions and require manual entry of prices, the computerized POS system allowed Walmart to automate inventory management, receipt generation, and incomparable sales data.

The boom of the digital age ushered in the dawn of online shopping. In 1994, Amazon emerged as a humble online bookstore, poised to disrupt traditional brick-and-mortar paradigms. With its relentless expansion into diverse sectors and pioneering initiatives like free shipping, Amazon swiftly ascended to preeminence. By 2017, Amazon had become the dominant force in retail, surpassing even the mighty Walmart in market capitalization.

As the retail landscape underwent seismic shifts, with the rise of discounters like Walmart and the advent of e-commerce giants like Amazon, Sears remained wedded to its traditional model, lagging on innovation and failing to anticipate changing market dynamics. Despite trying to diversify itself by acquiring Coldwell Banker, Dean Witter, Allstate, and Discover in a bid to safeguard its future, these strategic maneuvers failed to stave off the encroaching threat.

Sears’ decline was exacerbated by a confluence of financial challenges, including mounting debt, declining sales, and shrinking margins. To remain solvent, Sears began selling its most recognizable brands like Craftsman, Kenmore, and DieHard batteries. Unfortunately, the engine that is its operational cash flow had been diluted too much.

Sears found itself teetering on the brink of insolvency, culminating in filing for Chapter 11 bankruptcy in 2022.

Today, as the vestiges of Sears dwindle to a mere handful of stores, the saga of its demise serves as a sobering testament to the need to adapt and innovate in an ever-evolving marketplace. The rise and fall of Sears stand as a cautionary reminder to always be a company “that anticipates.”