{"id":9089,"date":"2023-10-14T22:02:00","date_gmt":"2023-10-14T16:32:00","guid":{"rendered":"http:\/\/www.tactyqal.com\/blog\/?p=9089"},"modified":"2024-05-17T09:22:25","modified_gmt":"2024-05-17T03:52:25","slug":"why-did-sears-fail-and-lessons","status":"publish","type":"post","link":"https:\/\/tactyqal.com\/blog\/why-did-sears-fail-and-lessons\/","title":{"rendered":"Why did Sears fail? : Lessons to Learn"},"content":{"rendered":"\r\n

Once a titan of retail, Sears has become a cautionary tale of failure to adapt and innovate. As a researcher following business trends, I wanted to analyze what led to Sears\u2019 downfall and extract lessons that other companies can apply to avoid the same fate.<\/p>\r\n\r\n\r\n\r\n\r\n\r\n

A brief history of Sears\u2019 rise and fall<\/h2>\r\n\r\n\r\n\r\n

Sears began as a mail-order catalog company in the late 19th century, bringing a wide array of products to rural customers. The catalog was essentially an early e-commerce site, allowing people across the country to browse and order items for home delivery.<\/p>\r\n\r\n\r\n\r\n

In the mid-20th century, Sears expanded into suburban department stores and became the largest retailer in the nation. At its peak, Sears accounted for over 1% of America\u2019s GDP.<\/p>\r\n\r\n\r\n\r\n

However, Sears struggled to adapt its catalog business to an online e-commerce model. Meanwhile, big box stores like Walmart and digital disruptors like Amazon lured customers away.<\/p>\r\n\r\n\r\n\r\n

Sears merged with Kmart in 2005, which only delayed the inevitable. Even massive store closures and asset sales couldn\u2019t stave off bankruptcy. Today, only a fraction of Sears and Kmart locations limp along.<\/p>\r\n

Here’s a timeline of their rise and fall:<\/p>\r\n

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\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n
Year<\/th>\r\nEvent<\/th>\r\n<\/tr>\r\n<\/thead>\r\n
1886<\/td>\r\nRichard Warren Sears founded the R.W. Sears Watch Company in Minneapolis, Minnesota.<\/td>\r\n<\/tr>\r\n
1887<\/td>\r\nAlvah Curtis Roebuck joined the company, which was renamed Sears, Roebuck and Company.<\/td>\r\n<\/tr>\r\n
1893<\/td>\r\nThe company was formally incorporated as Sears, Roebuck and Co.<\/td>\r\n<\/tr>\r\n
1925<\/td>\r\nThe first Sears retail store opened in Chicago as part of a mail-order plant.<\/td>\r\n<\/tr>\r\n
1933<\/td>\r\nThe first Sears Christmas Book (Wish Book) was published, becoming a holiday tradition.<\/td>\r\n<\/tr>\r\n
1973<\/td>\r\nThe Sears Tower, the world’s tallest building at the time, was completed in Chicago.<\/td>\r\n<\/tr>\r\n
1981<\/td>\r\nSears purchased Coldwell Banker and Dean Witter Reynolds to diversify its operations.<\/td>\r\n<\/tr>\r\n
1993<\/td>\r\nSears discontinued its general merchandise catalog, a staple of the business for over a century.<\/td>\r\n<\/tr>\r\n
2005<\/td>\r\nThe merger of Kmart and Sears was completed, creating the third-largest retailer in the U.S.<\/td>\r\n<\/tr>\r\n
2010<\/td>\r\nSears began to experience significant financial losses and declining sales.<\/td>\r\n<\/tr>\r\n
2017<\/td>\r\nAnnual sales dropped below $17 billion from a peak of over $53 billion in 2006.<\/td>\r\n<\/tr>\r\n
2018<\/td>\r\nSears filed for Chapter 11 bankruptcy protection.<\/td>\r\n<\/tr>\r\n
2019<\/td>\r\nFollowing bankruptcy proceedings, 425 stores remained, and ownership transitioned to a new entity, Transform Holdco.<\/td>\r\n<\/tr>\r\n
2021<\/td>\r\nThe number of remaining operational Sears stores dwindled to under 50.<\/td>\r\n<\/tr>\r\n
2022<\/td>\r\nFurther closures saw the numbers dropping to fewer than 20 Sears stores nationwide.<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n\r\n\r\n\r\n

Key mistakes that led to Sears\u2019 failure<\/h2>\r\n\r\n\r\n\r\n

Looking at Sears\u2019 history, we can pinpoint strategic errors that other companies should avoid:<\/p>\r\n\r\n\r\n\r\n

Failure to innovate<\/h3>\r\n\r\n\r\n\r\n

Sears dominated with its mail-order catalog but was slow to create an online version. The website it built lacked key features competitors offered. Sears missed the boat on digital retail and never caught up.<\/p>\r\n\r\n\r\n\r\n

Lesson: Industry leaders need to aggressively pursue innovation, even if it means disrupting their own existing business models.<\/em><\/p>\r\n\r\n\r\n\r\n

Inferior customer service<\/h3>\r\n\r\n\r\n\r\n

While new entrants like Amazon put customer service first, Sears stores grew cluttered and staff poorly trained. They lost out to retailers offering better experiences.<\/p>\r\n\r\n\r\n\r\n

Lesson: Customer service and experience build loyalty and prevent switching to competitors.<\/em><\/p>\r\n\r\n\r\n\r\n

Loss of brand identity<\/h3>\r\n\r\n\r\n\r\n

Sears was once a trusted household name known for value and selection. However, it failed to adapt its brand identity to changing consumer tastes. Meanwhile, Target and Walmart crafted hip, affordable brand images.<\/p>\r\n\r\n\r\n\r\n

Lesson: Companies must reinvigorate and modernize their brands over time while preserving core values.<\/em><\/p>\r\n\r\n\r\n\r\n

Bureaucracy stifling innovation<\/h3>\r\n\r\n\r\n\r\n

As a legacy company, Sears suffered from multiple layers of bureaucracy that slowed radical innovation. Newer competitors moved faster with flatter, nimbler structures.<\/p>\r\n\r\n\r\n\r\n

Lesson: Bureaucracy can prevent necessary pivots; streamlined management allows for flexibility.<\/em><\/p>\r\n\r\n\r\n\r\n

Failure to create stickiness<\/h3>\r\n\r\n\r\n\r\n

Sears\u2019 catalog and stores lacked stickiness\u2014there was little reason for customers to remain loyal. Competitors like Amazon Prime offered convenience that was habit-forming.<\/p>\r\n\r\n\r\n\r\n

Lesson: Customer loyalty requires creating an ecosystem or appealing service model that\u2019s sticky.<\/em><\/p>\r\n\r\n\r\n\r\n

Could Sears have saved itself? Hindsight on what it could have done differently<\/h2>\r\n\r\n\r\n\r\n

It\u2019s easy to criticize Sears in hindsight, but I wanted to offer constructive analysis on moves Sears could have made to possibly save itself:<\/p>\r\n\r\n\r\n\r\n