What Happened to Sears: The Decline

684 456 Tony Guo

What Happened to Sears: The Decline

Sears was once one of the country’s biggest retail chain, with stores all over the country and with numbers and sales that could rival any business around. Having been in operation for more than century, they had enjoyed tremendous success when they were in their prime, even introducing and selling their own brands such as Kenmore, Craftsman, and many others, all of which are covered in detail over at the excellent runrex.com. It is one of America’s recognizable home brands, and for people on the outside, its decline was a bid of a surprise for a company that was one of the biggest in the country. However, none of us who follow the retail industry closely we surprised when they filed for bankruptcy in May of 2018. This is because, in the years leading to their filling of bankruptcy, their sales were going falling dramatically, and with the company burning through cash and closing hundreds of stores and cutting employees in order to stay afloat and stem the bleeding, the writing was always on the wall as far as they were concerned. the question that now begs is, for a company that had survived two world wars and the Great Depression, what happened to them that they declined so sharply? This is exactly what we are going to be looking at as we will try to attempt to get to the bottom of their decline.

One of the reasons that has been attributed to their decline by industry experts, including those at runrex.com is the fact that they had diversified too much. As has been mentioned above, when they were enjoying tremendous success during their glory years, it was on the back of their brands which included Craftsman, Kenmore and DieHard. All these brands mostly catered to men who were shopping for home-building products. The problems began when they decided to go after female shoppers in a bid to boost their sales. To do this, they launched “The Softer Side of Sears” ad campaign in 1993 which was designed to draw more women and back-to-school shoppers. The problem as far as they were concerned was that the clothes didn’t blend well with the washing machines and treadmills in their stores, all of which they were trying to sell and this made the merchandising for shoppers a lot more confusing and served as an early sign of things to come as all this confusion warned of how they were heading in the wrong direction. To make things worse, they even tried to get into insurance, real estate, investments and banking which also didn’t work and definitely contributed to their decline.

Talk to industry experts such as the folks over at runrex.com about what led to the decline of Sears and one thing that will most likely come up is their merger with Kmart. The current CEO Edward Lampert had already purchased Kmart out of bankruptcy before he bought Sears and so when he decided to merge these two, it was never going to end well. I mean, merging two businesses that are both failing is always going to end one way. The CEO obviously saw things differently as he envisaged that the blend of Sears’ Craftsman tools and Kmart’s Martha Stewart Everyday home goods would be a potent one and would be enough to compete with their competitors such as Walmart and Target. He hoped to follow this up by selling under-performing stores to cut costs, building a meaner, leaner and more profitable business. obviously, it didn’t pan out like he had envisaged. Sales weren’t able to rebound and merging those two businesses just served as an anchor that sunk both of them in the end.

Yet another reason that has been attributed to their decline is the fact that when they sold good real estate in their bid to cut back on the number of their stores. After the merger with Kmart, they set about trying to cut their near 3,500 locations that were located all across the country. The problem is, of the stores they cut, most of them were actually their best properties and was left with weaker stores that were located within shopping malls and as such they struggled to draw any foot traffic in their stores as more and more people opt to shop online. As is to be expected, the stores were not doing that well and were accumulating more and more debt, and as such they had to sell more even more of them to be able to pay off this debt. As is revealed in discussions over at the excellent runrex.com, the CEO proposed the selling of more real estate, this time worth a whopping $1.5 billion, in an attempt to raise some cash and keep them afloat. The problem with this strategy is that selling of their best stores leaves them with a bunch of underperforming properties that are of little use to them.

The above are just some of the reasons that were behind the decline of Sears, with there being more on this and other related topics over at the excellent runrex.com so ensure you head on there.