‘Idiotic’ error that felled global retail giant
Once the largest and most famous retailer in the world, now it has just a handful of stores left with barely any stock and even fewer customers.
Retail
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Generally, when a retailer hits the wall, the end may not be elegant but at least it’s mercifully swift.
Closing down sale signs go up, the remaining stock is marked down, shoppers rush in to grab bargains, then the shutters descend for the last time and that’s that. A shopping mall staple is then but a memory.
Bed, Bath and Beyond is in this category. The American homewares retailer announced it was shutting up shop last month and it will likely be gone by next.
But one iconic US retailer, for decades the largest in the world, has been spluttering on for years in a tragic and sorry state.
From a high of 3500 stores across the US, the Sears department store chain has just 17 branches and an e-commerce site left.
One of the last remaining Sears stores, located in New Jersey, is a depressing sight of mostly barren shelves, barely any customers and seemingly no future.
A former Sears executive told news.com.au that “idiocy” and “mismanagement” of the firm had allowed it to be bought up by a “financial pirate”.
Global retail icon
It’s hard to underscore how much of a household name Sears is – or rather was – in the US. Think Myer, and then some.
Found in 1892, Sears essentially invented the big box store surrounded by ample parking. Its home brands became household names. Its mail order catalogue was in every home.
Sears’ 108-story former headquarters building in Chicago was the world’s tallest building for a quarter of a century. Suburbs around America still sport art deco stores, mostly now shut, that have the Sears name etched into the exterior in stone.
Sad sight of store
Newport Centre in Jersey City, just across the river from the skyscrapers of New York, boasts one of just about every major US retailer. A JCPenney at one end, Macys at the other and in the middle – a shell of its former self – a lonely branch of Sears.
The lights are on but very few people are at home.
A cheery sign above the door said “welcome back” to seemingly no one.
Inside, there was so little stock in parts, it seemed more like a store selling shelving and display stands rather than clothes and homewares.
What products could be found were a hodgepodge, the placement of which made little sense. One table piled with electric heaters was next to a couple of exercise bikes and a rail of men’s jackets.
In other parts of the store, there were just stacks of unopened brown boxes, some containing dishwashers, others microwaves. But there weren’t many to actually touch and feel. It looked like the back of a warehouse, not a department store.
Yet, other areas were crammed with products. If you wanted a 450 piece mechanic tool set for $345 (down from $830) there were about 450 to select from. Incongruously they, and some fans and eskies, were in a section labelled “men’s workwear”.
However, even these oases of full shelves couldn’t hide the fact vast areas of the store were empty. Shelves seemed to have spaced further apart to try and fill the space. Yet more exercise bikes, big and bulky, were arranged in rows, to valiantly fill the gaps.
Indeed, there so little to sell in such a large space, that the back of the store was barricaded off completely.
The mystery remains as to what the strategy at Sears is. It has a website – albeit clunky and with too many pop ups – so it could be aiming to be a online only retailer. But if that’s the case why keep open a ragtag collection of stores that bring down the brand?
Mark Cohen held several senior positions in Sears Roebuck, Sears’ one-time parent company, culminating in his appointment as chairman and CEO of Sears Canada.
“The year I left Sears Roebuck for Sears Canada, 2000, was Sears Roebuck’s best year in its history,” he told news.com.au.
“When I left Sears Canada in 2004, profitability had been fully restored and the company was back on its way to growth”.
Sears’ painfully slow downfall
The next year, in 2005, Sears was bought for $16.5 billion by discount retailer Kmart (no connection to Australia’s Kmart). Kmart had exited bankruptcy less than two years prior chiefly due to the backing of billionaire investor Eddie Lampert.
Costs were cut and initially the combined group appeared to be a huge success with shares trading at $US195 ($A293) a pop in 2007. BusinessWeek magazine had Mr Lampert on the cover with the headline: “The Next Warren Buffett?”
It wasn’t to last. Customers were already drifting away from dowdy Sears to the likes of Walmart. Stores began closing and chunks of the company, like Land’s End clothing, began to be sold off.
In 2012, Mr Lampert was appointed CEO. He relinquished that role in 2018 when Sears and Kmart headed into bankruptcy. Mr Lampert then stepped in to buy the ailing firm.
‘Idiotic ploy’
Mark Cohen, who is now director of retail studies at New York’s Columbia Business School, laid the blame for Sears’ downfall at the store’s previous management and Mr Lampert.
“Whereas Kmart was more or less dead in the water when Lampert took over, Sears Roebuck, which had been tragically mismanaged for years, was badly damaged but still had a heartbeat,” he told news.com.au.
“Lampert mounted a ridiculous effort to manage the two businesses by cutting their operating and capital expenses to the bone which for about a year or two made it appear as if he was successful.
“Once the veil fell on this idiotic ploy he began liquidating the two banners which also included Sears Canada.”
News.com.au contacted Sears’ parent company Transformco, which is still run by Mr Lampert, multiple times for comment on the future of the retailer and the CEO’s role in its current state. Transformco did not reply.
In a 2018 blog post, no longer available but reported on at the time by CNN, Mr Lampert said his loans prolonged the life of Sears.
“This funding has given the company time it would not otherwise have had to adjust its operations, attempt to return to profitability, and maximise its asset values.”
Profitability remains out of reach.
But, Mr Cohen said, the real “underlying villains” were the previous management at Sears.
“Lampert is merely the financial pirate who took advantage of the circumstances he was given.”
After it emerged from bankruptcy, in 2019, the company said it would keep around 400 stores open, a shadow of the former number. However, as shoppers scarpered, hundreds more closed. The US Kmart, too, is down to just a handful of stores.
In December, Sears Hometown Stores, a company that worked with franchises to sell Sears’ products, announced all 115 branches would shut.
The handful of Sears stores that remain are scattered from Alaska to Texas, Hawaii to Puerto Rico. Supplying so few stores over such a wide area is undoubtedly costly.
One Sears doing well
Syracuse University professor of retail practice Ray Wimer told Fox News he expected the remaining stores to be shuttered.
“They do not have an appealing value proposition to customers and the amount of competition in the retail marketplace offering similar goods means the end will come at some point.”
But one Sears is thriving: Sears Mexico. It’s no longer part of Sears US but it licences the name from the American firm. It was once a huge asset to be associated with such a venerable retail icon – now it’s become a millstone.
In 2021, Sears Mexico executive Patrick Slim Domit said the firm was considering changing its name.
“We like the name … it is very well positioned in Mexico,” he said. “The downside is the royalty (of licencing the name) and that (people) compare it to the store in the United States.”
Damning indeed that a company that owes its very existence to Sears now wants its customers and suppliers to know it has nothing to do with it.
But when you look around the desolate, almost tragic, Sears in Jersey City you can understand why.
Originally published as ‘Idiotic’ error that felled global retail giant
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