Sears, the 125-Year-Old Iconic Retailer, Has 24 Hours To Survive (cnbc.com)

An anonymous reader shares a report: Sears, the employer of more than 68,000 filed for bankruptcy in October. Its last shot at survival is a $4.6 billion proposal put forward by its chairman, Eddie Lampert, to buy the company out of bankruptcy through his hedge fund, ESL Investments. ESL is the only party offering to buy Sears as a whole, people familiar with the situation tell CNBC. Without that bid or another like it, liquidators will break the company up into pieces. But as Lampert stares down a deadline of Dec. 28 to submit his offer, he is quickly running out of time. As of Thursday afternoon, Lampert had neither submitted his bid, nor rounded up financing, the people familiar said. Should Lampert submit a bid, Sears' advisors would have until Jan. 4 to decide whether he is a "qualified bidder." Only then, could ESL take part in an auction against liquidation bids on Jan. 14. It is possible Lampert, Sears' largest investor, secures financing in time to meet the deadline, these people said.

Comments

Business Model

[rlp]

When Sears operated in the 19th century their business model was to provide a large catalog of merchandise that was ordered by the customer electronically (telegraph) for fulfillment via delivery (railroad) to the customer. They switched to brick and mortar when their business model became obsolete. Ironically they're going out of business because they've failed to adapt to the return of their original business model.

Re:Business Model

[squiggleslash]

Let me guess, you think Toys R Us died for the same reason?

There are plenty of brick and mortar companies that still exist and are doing well (at least as well as they were doing twenty years ago.)

The issue with Sears boils down exclusively to mismanagement. Lambert is an ideologue, and insisted on breaking it up into parts that, for no good reason, compete with one another. That means the appliance department competes with the clothing line. There's no good reason for this, and it's impossible for the company to benefit from the synergy of having a wide range of products.

The first warning signs were about a decade or so ago. You may remember that its K-Mart stores turned into "Sears Essentials" (which was fine, it was just a marketing exercise), but then suddenly half the SE stores disappeared. Why? Because of a fiasco where none of the stores had extended hours in the run up to the Holidays, which traditionally is when most stores do most of their business.

Why was this? Well, because in order for that to happen, one division would have had to propose the stores open for longer. That division would then have been on the hook for the costs of all of the stores staying open. The divisions couldn't jointly propose this and share the costs, because Lambert had banned cooperation between them. So nobody proposed extended store openings, and the stores had normal opening times in the run up to Christmas.

Result? The first round of massive cost cuttings. Sears underperformed, and the entire network was pruned. Most Sears Essentials were within ten miles of a mall, which also had a Sears, so they were closed as redundant. This lead to increased losses because not everyone wants to shop at a fucking mall, Sears Essentials was a good idea.

Why does Lambert think this is a good way to run a company? Because this is his reading of Ayn Rand. Never mind the fact that businesses are a thing because people and entities achieve results when they work together, he really thinks that if womens lingerie competes for resources with appliances then somehow they'll both compete better with Macys.

Fuck Lambert. He's destroyed a once great company.

Quit it with the Bricks and Mortar obsolete bullshit. If they were obsolete they would have died long ago, Almost all B&Ms have always been a low margin business. I've heard of store chains actually selling goods at below cost, surviving by paying their suppliers three months late and making money from the Interest. If B&M was obsolete EVERY CHAIN WOULD BE DYING RIGHT NOW. Malls would be deserted. The Thanksgiving parade in New York would now be named "The NBC/Amazon.com Thanksgiving Parade." Walmart, one of the lowest margin companies on Earth, would be a punchline, not an ever growing threat to the economy.

Retail's fine. Businesses go bust from the time to time, even old ones. Lambert is terrible.

Re: Goodbye Sears

[ClickOnThis]

Wow, I didn't know that Sears used Linux; else why would this article be posted here?

The downfall of Sears is a consequence of the migration of commerce from brick-and-mortar to online. Like many other retailers, they were Amazonized, despite their own online presence. So this story is in the ethos of "news for nerds, stuff that matters".

Re:They should go online only

[Anonymous Coward]

"Sears definitely could have positioned itself as "Amazon" but as with Kodak's management at the early stages of digital photography, the management at Sears clung to the past decrying online shopping as "a fade that will not sustain itself into a viable business model.""

Wow. This damn near brought a tear to my eye. No, seriously. I used to work for Kodak, and this is EXACTLY what happened.

Idiot management really thought they could "bury" digital photography after they invented it, so as not to hurt film sales.

It's not Ayn Rand's fault

[rsilvergun]

it's people's fault for listening to her. Basing an entire social system around selfishness in the face of all reason and research (multiple studies have shown how imprinting to your mother creates human empathy and how imprinting is essential to the survival of our species) is just plain bad juju.

But Lambert was only doing the Ayn Rand thing for fun. His real goal was, is and continues to be bleeding Sears dry in a legal manner.

Re: Goodbye Sears

[chaboud]

For me, Sears hit a threshold when they began to think of the short term rather than long term relationship with the customer.

We purchased a mattress from Sears, and the wrong item showed up (different firmness). The retail side of Sears said that we would have to contact the shipping and logistics part of Sears to return the mattress, and the shipping and logistics part said that we would have to wait six weeks for them to pick it up (when they answered the phone, which was rare), and we could schedule then.

When six weeks had passed, both parts of Sears finally got on the same page: they wouldn't take a return because six weeks had passed.

I realized then and there that I'd be played by a company that just wanted my ~$1k and was willing to lose me as a customer to get it. I never went back to Sears. Never set foot in there, never bought a Craftsman tool, nothing.

It is far easier to lose a customer's trust than to gain it, and Sears has lost me forever.

Sears dying is a lesson in the value of customer service. Act like a shitty fly-by-night scam shop, disappear like one.