Sears, is an American chain of department stores founded in 1892 by Richard Warren Sears and Alvah Curtis Roebuck and reincorporated in 1906 by Richard Sears and Julius Rosenwald. What began as a mail ordering catalog company migrated to opening retail locations in 1925, the first in Chicago. In 2005, the company was bought by the management of the American big box discount chain Kmart, which upon completion of the merger, formed Sears Holdings. Through the 1980s, Sears was the largest retailer in the United States. In 2018, it was the 31st-largest.
Sears Files for Bankruptcy
After several years of declining sales, Sears’s parent company filed for Chapter 11 bankruptcy on October 15, 2018. It announced on January 16, 2019, that it had won its bankruptcy auction, and that a reduced number of 425 stores would remain open, including 223 Sears stores. Sears was based in the Sears Tower in Chicago from 1973 until 1995, and is currently headquartered in Hoffman Estates, Illinois. Sears announced in 2021 that it would be selling its Hoffman Estates headquarters complex
Too Much Diversification and Lack of Focus
In the 1980s, the company began to diversify into non-retail entities such as buying Dean Witter and Coldwell Banker in 1981. These were detrimental to its bottom line. In 1984, it launched Prodigy as a joint venture with IBM, and introduced the Discover credit card in 1985. However, these actions have been said to have distracted management’s attention from the core retail business and allowed competing retailers to gain significant ground, culminating with Walmart surpassing Sears as the largest retailer in the United States in 1990.
High Cost of Catalog Distribution
Sears later acquired hardware chain Orchard Supply Hardware in 1996 and started home improvement store The Great Indoors in 1997. The cost of distributing the once highly influential general merchandise catalog became prohibitive; sales and profits had declined. The company discontinued the catalog in 1993. It dismissed 50,000 workers who had filled the orders.
Sears Holdings continued to produce specialty catalogs and reintroduced a smaller version of the Holiday Wish Book in 2007. In 2003, Sears sold its U.S. retail credit card operation to Citibank.The remaining card operations for Sears Canada were sold to JPMorgan Chase in August 2005. In 2003, Sears opened a new concept store called Sears Grand. Sears Grand stores carried everything that a regular Sears carries, and more. A 2021 article in Forbes stated that most Sears Grand stores were shuttered by 2010.
Failed Merger with KMART
On November 17, 2004, Kmart Holdings Corporation announced it would acquire Sears, Roebuck, and Co. for $11 billion after Kmart completed its recovery from bankruptcy. As a part of the acquisition, Kmart Holding Corporation, along with Sears, Roebuck, and Co., was transformed into the new Sears Holdings Corporation.
The new corporation announced that it would continue to operate stores under both the Sears and Kmart brands. In 2005, the company began renovating some Kmart stores and converting them to the Sears Essentials format, only to change them later to Sears Grands. The combined company’s profits peaked at $1.5 billion in 2006. By 2010, the company was no longer profitable; from 2011 to 2016, the company lost $10.4 billion. In 2014, its total debt ($4.2 billion at the end of January 2017) exceeded its market capitalization ($974.1 million as of March 21, 2017).
Sears declined from more than 3,500 physical stores to 695 US stores from 2010 to 2017. Sales at Sears stores dropped 10.3 percent in the final quarter of 2016 when compared to the same period in 2015.
Digital Transformation Introduced Very Late and could not stem downward Spiral
in 2015, Sears stated that the company was looking to focus on becoming a more tech-driven retailer. Sears’s CEO and top shareholder said the sell-off of key assets in the last year had given the retailer the money it needs to speed up its transformation. Sears Holdings had lost a total of US$7 billion in the four years to 2015.
In part, the retailer was trying to curb losses by using a loyalty program called Shop Your Way. Sears believed the membership scheme would enhance repeat business and customer loyalty in the long term. However the technology initiative could also not stop the downward spiral of Sears. Perhaps, they were introduced too late.
Competitors Rapidly Gained the Ground
Sears’ Competitors Walmart, Amazon and others were at the forefront of the technology Revolution and quickly moved the ladder of Digitally Transforming themselves which gave Customers an elevated comfort in their shopping experience and journey to the purchase point. The Competitors adapted themselves to the changing needs of the customers and were quick enough to introduce various touch points across the digital – mobile and web channels which made shopping effortless and seamless. Ominchannel Experience offered by the Competitors became a key differentiator.
Sears’ Lack of Innovation
Modern day consumers look for online and mobile experiences apart from physical stories. Sears failed to create an Omnichannel strategy and Experience for the customers and was too late in adopting Web and Mobile experience. They held on to traditional way of doing business for too long, and were very slow in embracing change due to changing consumer habits. The Consumer habits rapidly changed due to exploding digital choices triggered by the Smartphones, Internet and rapid shift to E-commerce & Social Commerce.
Failure to Adapt to the Changing Retail Landscape
As the Stores continued to be closed Sears Failed in Adapting to the rapidly changing Retail Landscape by holding on to its outdated views and strategies of doing business in the dynamic retail market for too long. Opening of new stores, loss of sales and finally closure of the store became a norm in the decade 2010-2020. Mere opening of new stores without making necessary changes in the areas of Customer Journey, Customer Experience and Service, Outdated Supply Chain and Operations Strategy could not help them achieve their Revenue and Sales Targets.
Reluctance to Adopt Newest Technologies AI and Robotics
Their reluctance to adopt technologies in all the spheres of business did not have help either. For Example the way their Competitors were using AI, Robotics and Big Data to transform their Supply Chains, starting from sourcing to warehousing to delivery and shipping to delight their customers, they failed to achieve that. This led to rapid declining of their Customer Base because in the era of 24/7 Customer Service which perhaps went missing at Sears.
Failed Relationships Amplifies the Decline
In October 2017, Sears and appliance manufacturer Whirlpool Corporation ended their 101-year-old association, reportedly due to pricing issues, although Whirlpool continued supplying Sears with Kenmore-branded appliances. In May 2018, Sears announced it had formed a “special committee” to explore the sale of Kenmore. Vendor Disputes and Failure of their many business associations also led to their ultimate decline.
Further Decline Post 2018
On November 23, 2018, Sears Holdings released a list of 505 stores, including 266 Sears stores, that were for sale in the bankruptcy process, while all others would hold liquidation sales. In September 2021, Sears announced that it would close more stores, including the last Sears store in New York City. The New York City Sears closed by November 24, 2021, and will potentially be redeveloped.
On January 19, 2022, Sears shuttered the remaining 15 Sears Auto Centres in the United States. Although the organisation is a shadow of its former self, it still operates a few locations. In May 2022, it was announced that roughly 100 more Sears Hometown stores, including the last four in Michigan, would close permanently.