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

[fluffernutter]

That is a true statement, but Sears had problems with inventory and prices too. They wanted to sell premium stuff and premium prices; and some lines were great such as the Craftsman line. But the quality in clothing and electronics was never really there to warrant the prices.

Re:Business Model

[kbonin]

Like most people I know who stopped shopping at Sears, it was because of quality. Craftsman was one of the actually premium quality brands they used to carry. But when they dumped their high quality supplier and started rebranding cheap import tools as "Craftsman", they were no longer significantly different from cheap imports sold anywhere else. The "lifetime" warranty would clearly die with the store, so that lost any value and the brand was burnt for a few quarters of boosted profits in true modern American MBA success story SNAFU. I've spent thousands on Craftsman tools in the past, and once upon a time that meant I spent tens of thousands at Sears on decent quality appliances, clothes, tires, etc. But with a collapse of quality, why bother going there? Most "premium" brands worldwide are now repeating this pattern to cash out their brand equity.

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:Business Model

[Greyfox]

Mom and Dad had a grudge against them from the '70's. Apparently they'd purchased a TV there that never worked, and Sears jerked them around about the problem until it went out of Warranty. So they went elsewhere and bought a Sony color TV that lasted 30 years and the family never bought anything else at Sears. I like to think that this in some small way contributed to their demise.

Re:Business Model

[DerekLyons]

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.

The first warning signs were about a decade or so ago.

No, the first warning signs appeared back in the 80's as Sears began to slowly lose ground to big box retailers. Circuit City and Best Buy chipped away at it's home electronics and home appliances business. Lowes and Home Depot chipped away at it's tools and home appliances business. By the 90's, Target was eating away at pretty much all of Sears' traditional markets, and even Wal-Mart started to take it's share as the death of the middle class accelerated. And then there's Amazon...

There was also mismanagement problems as a great deal of power had devolved to the corporate buyers (who individually decided what Sears would and wouldn't carry) and the regional managers (who controlled where and when stores would be opened and closed).

Or, to put it another way - the problems at Sears go back a long way, and it's been quietly dying for decades. At worst, Lambert accelerated the process.
 

If B&M was obsolete EVERY CHAIN WOULD BE DYING RIGHT NOW. Malls would be deserted.

If you've been paying attention to American retail (as opposed to parroting crap you read somewhere but don't understand)... Chains are dying, and malls are becoming deserted. This isn't due to bricks and mortar being obsolete (though the net has played a role), but rather due to the loss of purchasing power among the American middle class.
 

Walmart, one of the lowest margin companies on Earth, would be a punchline, not an ever growing threat to the economy.

Walmart is an increasing threat to the economy not because bricks and mortar aren't obsolete... But because they sell stuff cheaply, and in real terms American's have ever less purchasing power.

Re:Business Model

[squiggleslash]

No, the first warning signs appeared back in the 80's as Sear

The current year is 2018, around 30 years after the period you're talking about. Since then everything has changed. Sears has different owners, different management, and for the most part the staff is different.

The events I described are post Kmart merger, with the current management, and relate to how the current management system has impacted the company. Whatever happened during the 1980s is really mostly irrelevant. It survived those events.

If you've been paying attention to American retail (as opposed to parroting crap you read somewhere but don't understand)... Chains are dying, and malls are becoming deserted. This isn't due to bricks and mortar being obsolete (though the net has played a role), but rather due to the loss of purchasing power among the American middle class.

You're accusing me of parrotting crap when you yourself repeat the nonsense that American retail is dying? Seriously? Who is parroting bullshit here? 'cos what you've written is textbook "Woe wither retail thanks to Amazon" stuff that could have appeared in Forbes.

So explain it: explain why the vast majority of chains that existed 20 years ago still exist - sometimes rebranded, but almost all of them are still there. You're suggesting that the "middle class" has lost its purchasing power. That should, by rights, given the tight margins of all of retail, caused virtually every chain to be wiped out.

But strangely, the only major chains that have been wiped out have been those you can easily point at and say "That wasn't a loss in business, that was mismanagement." Why do you think that is? Off the top of my head, the only major retail corporations missing now are Borders, which is the one example of a company that might have been killed by Amazon, Circuit City (which was never mall based, and which was poorly run, making some major gambles that didn't pay off including DIVX and firing all their salespeople), Toys R Us (which was extremely profitable, but was intentionally bankrupted by a consortium of vulture capitalists who loaded it up with debts for loans it never saw a dollar from, and forced it to pay them down and pay the interest on them), and, now, Sears, which again we know was mismanaged.

My local mall doesn't seem any less full of stores than it did 20 years ago. And that's surprising, because you'd expect individual retailers to become obsolete as fashions change and technologies to develop entirely new classes of things to buy.

Walmart is an increasing threat to the economy not because bricks and mortar aren't obsolete... But because they sell stuff cheaply, and in real terms American's have ever less purchasing power.

I didn't say they're an increasing threat to the economy because bricks and mortar aren't obsolete, I said they wouldn't be a threat if B&M were obsolete. WALMART IS BRICKS AND MORTAR. If Bricks and Mortar were obsolete, Walmart could not threaten the US economy. It does.

Re:Business Model

[Actually, I do RTFA]

Some malls are dying, other malls are thriving. The problem is that one company tends to buy/control all the malls in a given area, and push there to being several very high profit malls with all the anchor stores, by relocating the stores from the other malls. They then hold onto the abandoned malls which they move poorer performers to and then they die. Back when all malls competed, there wasn't as large a caste system in the mall, and many could thrive.

Re:Business Model

[drinkypoo]

Mom and Dad had a grudge against them from the '70's. Apparently they'd purchased a TV there that never worked, and Sears jerked them around about the problem until it went out of Warranty.

We had this with an A/C unit from them just a few years back. The warranty claim was actually approved and being processed when the warranty ran out, and then they deleted everything and told us they didn't have any information on the claim. Luckily, several more hours on the phone yielded a replacement. Unfortunately, it was the middle of a heat wave so we wound up settling for an inferior replacement unit, because that's all they had in. Forty years later, same old shit.

Re:Business Model

[Hadlock]

I think DerekLyons is correct, Sears lost to big box retailers first, mismanagement second. You can manage your way out of the mismanagement box, but Sears went from being this amazing everythng store attached to every mall in America, to.... this weird everything store attached to every mall in America. Malls became this shopping hell where women went to buy clothes, and big box shopping centers became where you went to buy everything except clothes (and sometimes clothes). I can't remember the last time I set foot in a Sears, except for one time in high school (1999? 2000?) when I went to go meet a girl I liked that worked at JC Penny and I parked at the wrong mall entrance. Nobody under 45 probably actually went to Sears to buy anything on purpose, as Sears had the wrong real estate and the retail market moved towards big box stores.
 
Yeah, they royally screwed themselves over the last 10 years, but 25 years ago they needed to be competing directly with lowes and best buy. This mismanagement stuff in the last 10 years was basically rearranging the deck chairs on the titanic. Way more systemic stuff was happening long before we got to the point you are trying to argue.

Re:Business Model

[ewhenn]

And other malls are fighting..... https://www.wgrz.com/article/n...

Re:Business Model

[DerekLyons]

So explain it: explain why the vast majority of chains that existed 20 years ago still exist - sometimes rebranded, but almost all of them are still there. You're suggesting that the "middle class" has lost its purchasing power. That should, by rights, given the tight margins of all of retail, caused virtually every chain to be wiped out..

An assumption on your part (that virtually every chain should be wiped out) does not require an explanation on my part. The economic woes of the American middle class are well and widely documented.
 

But strangely, the only major chains that have been wiped out have been those you can easily point at and say "That wasn't a loss in business, that was mismanagement." Why do you think that is?

That you can "easily" repeat the most widely blamed cause, means you can easily repeat the most widely blamed cause. Nothing more, and nothing less. It doesn't mean that you're anywhere near the truth.
 

My local mall doesn't seem any less full of stores than it did 20 years ago. And that's surprising, because you'd expect individual retailers to become obsolete as fashions change and technologies to develop entirely new classes of things to buy.

Maybe your local mall doesn't seem so. But, and brace yourself because this is very hard to grasp, that doesn't mean the same conditions hold true everywhere. My local mall is virtually dead - but fifty miles away there's several that "seem" as lively as ever. But nationwide, the trend has been visible for nearly two decades - the malls are dying are the middle class the powered them dies. As to your second sentence, once again you're attempting to elevate an assumption on your part into a fact.

Or, to put it another way, you basically have no clue what you're talking about because lack the ability to discern the difference between assumption and fact.

Re:Business Model

[PeeAitchPee]

This isn't due to bricks and mortar being obsolete (though the net has played a role), but rather due to the loss of purchasing power among the American middle class.

What in the absolute fuck are you babbling about? This past holiday retail US shopping season was the best in the last six years. American consumers (you know, that middle class you claim that has no purchasing power) spent $850 *BILLION* dollars between November 1 and December 24, up 5.1 percent from last year. By all definitions, (online) retail totally crushed it.

Please feel free to refute with links to real reports or numbers backing your claims of a broke-ass US middle class with no purchasing power. Seriously, if you're gonna post total unsupportable bullshit, at least try to disguise it a little better.

Re:Business Model

[Actually, I do RTFA]

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

And, they wouldn't capture the profits. Otherwise they would have been fighting to push the extended hours.

Re:Business Model

[rtb61]

This is the model, it is weird but true. They hire a flashy smooth talking psychopath and offer big bonuses for increased profit, not revenue, PROFIT, there is a difference. So the psychopath, does the psychopath thing, knows full well he can inflate profits for a period of time by selling trust, you of course sell trust by replacing good product, support and services for cheap product, not support and poor services, eliminating costs whilst sucking in your customers who are paying for what they used to get, and keep buying until they get sick of being lied to and sold shoddy product and stopped going. Well by then the psychopath has cashed in on huge bonuses, they are here today gone tomorrow people, they know it will kill the company, they do not care, more money now.

The smart psychopath then bails just before the collapse, sell their stock options based upon inflated profit margins and moves onto the next company to sell it's trust. Happens all of the time, it is part of the core of capitalism, the psychopath expressing the core of capitalism, makes as much for yourself as fast as you core and legally get away with, consequences are for other people, those other people being those the capitalist preys upon.

Re:Business Model

[Impy the Impiuos Imp]

About 8 years ago I went by a Sears in the week before Christmas at about 7 pm. There were a few dozen cars around the side entrance, but the vast majority of parking space was empty.

No A Christmas Story here anymore.

Marshall Fields was even worse.

Re:Business Model

[Toad-san]

I humbly submit that the current online cataloging will never replace the original:

https://digital.library.unt.ed...

Re:Business Model

[toddestan]

Sony used to be top quality stuff. I can easily believe a Sony TV from the 70's lasting 30 years, because I've seen it myself. It wasn't until the 90's that they really started to cheapen their stuff.

Re:Business Model

[Hadlock]

I wasn't even aware Marshall Fields was still around, I thought they went under in the 1970s.
 
All my friends did their shopping online this year. Last time we stepped in a mall was end of 2016 to go look for a new bedspread and some pillows... ended up ordering something else online instead, after digging through a bunch of overpriced crap at Macy's for two hours.

Re:Business Model

[drsquare]

How much of that purchasing is because of credit? All the panic over the feds putting up interest rates is pretty telling.

How Sears Was Gutted By Its Own CEO

[Anonymous Coward]

How Sears Was Gutted By Its Own CEO

Re:They should go online only

[Opportunist]

They're by far not the only catalog retailer that got killed by the internet.

Yes, they should have been what Amazon is now. They had it all going for them. They had the whole logistic and infrastructure in place, all they had to do is to simply trade catalog for online presence.

For this, though, you need managers that actually see past their quarter report and can anticipate trends. Old, entrenched corporations rarely have that.

Re:They should go online only

[ISoldat53]

Sears was a top heavy behemoth that couldn't program "hello world."

Re:They should go online only

[TRRosen]

They should have won the online race with their catalog history.

They did. They sold them all off and left behind the rotting corpse of brick and mortar to die.
Sears liquidated long ago. The financial term is cash cowing. Selling off everything of value and abandoning the rest.

Re: Goodbye Sears

[LifesABeach]

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

Revises my definition of Lifetime I guess

[SuperKendall]

All those Craftsman tools I own with a lifetime warranty, appear to have just run out of life in the warranty...

Re:Revises my definition of Lifetime I guess

[rlitman]

Actually, the Craftsman brand was sold off previously and is not at risk. Though your warranty status is still in question.

Re:Revises my definition of Lifetime I guess

[fattmatt]

The warranty is still honored by the new owners.

Re:Revises my definition of Lifetime I guess

[Pascoea]

Curious, any feedback on the quality? The last "Craftsman" thing I bought was from Sears about 4 years ago, but it was still Chineese crap. (Bad chrome on the sockets, wobbly crappy ratchets. If nothing else, the gear wrenches and combination wrenches seem decent.)

Re:Revises my definition of Lifetime I guess

[SuperKendall]

Good news then, thanks. I had not heard that.

Re:Revises my definition of Lifetime I guess

[krray]

I believe Stanley Black & Decker bought out the Craftsman line (last January for 700 to 900 million?).

The lifetime warranty should still apply... ?
https://www.craftsman.com/cust...

Re:Revises my definition of Lifetime I guess

[EvilSS]

They were bought by Stanley Black and Decker. They are making hand tools in Asia (China and Taiwan) but are looking at bringing some of them back to the US. The first new tools hit Lowe's last quarter and seem decent. The new power tools appear to be slightly down-spec'd DeWalt tools. AvE took one of the impact drivers apart and the internals are basically identical to its DeWalt sibling. The torque rating is slightly lower and the batteries are marketed as 18v vs 20v (which is really 18v, the 20v is marketing fluff).

Re:Revises my definition of Lifetime I guess

[Pascoea]

Thank you, I'll have to check out AvE's video. Just wondering if it's time for my ratchets to quit functioning and if Lowes would actually honor the warranty...

Re:Revises my definition of Lifetime I guess

[EvilSS]

Also this applies to the Craftsman tools being sold outside Sears. The ones on the Sears site appear different. I think Sears is still allowed to source their own Craftsman lines. Which is just weird and confusing. But it looks like that might not be a problem for much longer.

Re:Revises my definition of Lifetime I guess

[EvilSS]

Stanley has said they will continue to honor existing warranties, however there are still questions on what they will replace some tools with. Right now it looks like Sears is selling completely different tools than Stanley under the Craftsman brand. Plus Sears Craftsman line has a much bigger selection, particularly for specialty tools. If you have something on the edge I'd head to the nearest Sears ASAP to get it swapped out.

Re:Revises my definition of Lifetime I guess

[93 Escort Wagon]

I used to shop Sears regularly because they sold quality stuff. I still have some Craftsman tools (purchased at Sears quite a while ago) and a couple Kenmore appliances (ditto). My cars used to always ride on Sears tires.

It’s been sad to watch the company go down the drain.

Re:Revises my definition of Lifetime I guess

[atheos]

The warranty is still honored by the new owners.

That's questionable. I tried to warranty a ratchet last year, and they insisted on the original receipt. The tool is over 40 years old. I was sent away with my broken ratchet.

Re:Revises my definition of Lifetime I guess

[Chris Mattern]

All those Craftsman tools I own with a lifetime warranty, appear to have just run out of life in the warranty...

It's a lifetime warranty. They just didn't say whose lifetime.

Re:Revises my definition of Lifetime I guess

[kenai_alpenglow]

That's pretty much true about most (all?) lifetime warranties. It's more the lifetime of the manufacturer (or even just that particular line) than the lifetime of the purchaser.

Re:They should go online only

[Anonymous Coward]

Their stores seem way to big for the volume of traffic.

Sears has been out maneuved by the car and now the internet. They should have won the online race with their catalog history.

No. They put K-Mart clothes on the racks and moved Crafstman tool production to China.

It used to me my go-to store for everything. After that, I never went back.

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".

Yet another thing to make me feel old

[Arkham]

When I was a kid, Sears was a cool store that sold Craftsman tools (most of my tools still are), and had a candy counter that was the only place to get Swedish Fish and chocolate covered orange candy.

Now it will be "back in my day there was a store called Sears..."

Amazon didn't kill Sears

[Anonymous Coward]

Eddie Lampert did.

He knew years ago the most valuable thing that Sears had was the land under the buildings. Sears, like many older companies owned the land on which their stores sat.

The long therm plan was always to milk the company of all its assets.

Sears performed a land leaseback deal in 2015 - essentially becoming a tenant on many of its own properties:

https://www.hbsdealer.com/news/sears-pulls-its-sale-leaseback-deal/

Once the retail business stopped spinning off cash, sale of the land assets is all that remains and the plunder of the company will be complete.

Sure, you can blame Amazon but Amazon is simply a fantastic cover for the enormous plunder of company assets pulled off by management in broad daylight.

Re:Amazon didn't kill Sears

[ErichTheRed]

I'm not an MBA or accountant, but I think this is a very common thing. It's not in fashion accounting-wise to own a large number of assets. It's the same thing that's driving companies to the OpEx/cloud/subscription model of infrastructure.

What I don't know is why it isn't good for their accounting. Having untold quantities of prime retail space land and buildings on your books should be a good thing. For the MBAs or accountants out there...what's the reasoning? Is there some measure of revenue that gets hurt by owning things?

Re:Amazon didn't kill Sears

[jandrese]

Because then you are in danger of being bought out by a hedge fund, having the debt from the buyout transferred to your company, and have to sell off all of the assets to pay for your own buyout and then going bankrupt when the new overhead costs of renting make your business unprofitable.

Re:Amazon didn't kill Sears

[PPH]

Having untold quantities of prime retail space land and buildings on your books should be a good thing.

Not when the state tax man starts rubbing his hands together. You are better off structuring your business to lease everything. So it becomes a deductible expense. And having the land, building and other taxable assets held by a private entity that can structure them as a loss. Now, the loss isn't on your books, so your income statement looks good. The private entity can transfer the paper losses to highly profitable firms and wealthy individuals so they can use them to reduce income taxes. Basically, playing state and local tax policy against federal.

Re:Amazon didn't kill Sears

[Actually, I do RTFA]

And, IIRC, the other entity in the land leaseback deal was Lampert's fund. You know, just to make sure the stockholders got fucked good and hard.

I don't understand how there;s not a class-action lawsuit from the shareholders. It seems like theft, plain and simple.

Re:Amazon didn't kill Sears

[ewhenn]

So in other words it's a BS maneuver to sleaze your of paying the taxes that you should owe. 'Merica at it's finest.

Re:Amazon didn't kill Sears

[PPH]

BS maneuver to sleaze your of paying the taxes that you should owe

Or a reasonable response to tax laws that make your business no longer viable.

Re:Amazon didn't kill Sears

[Chris Mattern]

Is there some measure of revenue that gets hurt by owning things?

Yes, it's called "return on capital", and it's a fairly basic way of evaluating a company. The idea being that if you have bought stuff to produce revenue, that's an investment. The more stuff you've bought, the more revenue you should be making. If you're not making more revenue, the stuff should be sold and the money invested in something that will produce more revenue.

Re:Amazon didn't kill Sears

[drinkypoo]

Having untold quantities of prime retail space land and buildings on your books should be a good thing.

Not when the state tax man starts rubbing his hands together. You are better off structuring your business to lease everything. So it becomes a deductible expense. And having the land, building and other taxable assets held by a private entity that can structure them as a loss.

They could have done that without selling the properties off, though. They could have transferred them into some holding company that would have done what you described. Owning their own property was actually a great help to Sears, but they sold that stuff off for short-term gains and it hasn't turned out the way you described.

If they didn't have their own truck fleet, Sears would have gone out of business long ago.

Re:Amazon didn't kill Sears

[SuiteSisterMary]

In some cases, yes, but in most, it's a perfectly reasonable response to labyrinthine and contradictory local, state, and federal tax policies, which generally have a ridiculous amount of exceptions, gotchas, and other stuff insisted upon by special interest groups.

In other words, hate the game, don't hate the player. This is an argument often used for various flat tax systems.

It's got nothing to do with business model

[rsilvergun]

they got bought out by a Bain Capital style "Vulture" capitalist, Eddie Lampert. He started off his tenure by mismanaging them in a crazy, Ayn Rand themed style where each department was pitted against the other, resulting in massive infighting. Meanwhile he was busy extracting anything of value from the company for his own personal gain. At the moment he's been loaning them money to set himself up as the primary creditor so he gets paid when they liquidate. That's how he's legally extracting the assets without running afoul of laws designed to protect shareholders in a publicly traded company.

The real problem is that in America you no longer make money by running successful companies. You make money by firing up a startup and waiting for a buyout or by buying up an existing, longstanding company and gutting it like a fish. That's the reason guys like Lampert go to school for business, they're learning how to legally do things that should be illegal.

Re:It's got nothing to do with business model

[Anonymous Coward]

I agree that Lampert did what you're describing. But Sears and K-Mart were in deep trouble far before Lampert got at the helm. K-Mart bought (really merged) with Sears way back in 2003 as part of K-Marts bankruptcy. AFAIK Lampert wasn't involved with this. The problems of Sears/K-Mart goes back a long way.

It's not as if Lampert started with this great, successful company and just drove the thing into the ground. Lampert started with a sick, aging company that was going into the crapper, and completely failed to save it, and then gutted it for his own gain.

Re:It's got nothing to do with business model

[squiggleslash]

K-Mart didn't merge with Sears as part of their bankruptcy, they bought Sears a few years after their bankruptcy because they were profitable again. Neither company was having significant problems at the time of the merger, and were healthy and successful until Lampert took over.

Re:It's got nothing to do with business model

[JBMcB]

At the moment he's been loaning them money to set himself up as the primary creditor so he gets paid when they liquidate.

All the good stuff is gone. The assets of Sears that are left will barely cover the costs of bankruptcy. What *is* worth money are various tax credits that Sears holds. Lampert can use those to cover tax liabilities in other areas, but not if the company is liquidated.

https://webcache.googleusercon...

Re:It's got nothing to do with business model

[PeeAitchPee]

The real problem is that in America you no longer make money by running successful companies. You make money by firing up a startup and waiting for a buyout or by buying up an existing, longstanding company and gutting it like a fish.

This is complete horseshit. You are cherry-picking one high-profile example of someone being a Trump-like dick in the aftermath of an enormous merger in the most turbulent sector in the entire world and painting the entire US economy with the same brush, which is just nonsense. There are 30.2 million small businesses in the US of tremendous diversity which employ 58.9 million people, or 47.5% of ALL workers in the US, and the median income for self-employed people working for an incorporated business was $50,347 in 2016 (certainly not "vulture capitalist"-class income). Looking at the report, these owners are NOT all "startups waiting for a buyout" and they're definitely NOT all people buying an "existing, longstanding company and gutting it like a fish" (source: US Small Business Profile, 2018). They're just the owners of plain old businesses (the kind you say don't exist anymore) in health care, food service, retail, manufacturing, tech, construction, waste management, you name it. Do you have ANY numbers to back up your ridiculous claims?

The US still innovates far better than any other country in the world, and this in turn provides ample opportunity for smart and hard-working people to build real, successful companies which provide truly valuable goods and services, with growth and long-term profitability in mind. These in turn create jobs and economic opportunity for the people they employ, as clearly documented in this report.

Is it easy? Absolutely not. But it never has been, and it's not supposed to be.

Re:It's got nothing to do with business model

[AndrewFlagg]

uh, yeah. i have worked many of C-Level lately and uh, yeah. sadly, let them die and pull the plug. monkey wards went away a long time ago too. next? JC Penney is next, and a bunch of others that should just go away. want the list? i have the shortened version.

Re:It's got nothing to do with business model

[alvinrod]

Do you have ANY numbers to back up your ridiculous claims?

He never does. He just makes outrageous claims that read well to people looking to buy into some outrage he's peddling. There was one some months ago where he was complaining about how much money Jeff Bezos made each day and if you bothered to do the math, it came out to some impossible yearly figure where Amazon would need to more than double value each year for it to work out. Either the figures were completely pulled from his ass, or he grabbed something he'd read and tried to extrapolate in a completely inappropriate way.

If you stop to think about the idea that he's proposing, you'd realize it's pretty stupid. Why spend a lot of money to acquire something in order to ruin it to squeeze a little bit of profit out of it. You're better off just not spending your money on it to begin with, never mind that it makes everyone else pretty hesitant to do business with you in the future and the next buyout would be vastly more expensive simply because the sellers won't trust you. If you actually look at Eddie Lampert's net worth it's estimated to have gone down considerably since he took over Sears, so it's pretty hard to say that even if he's some nefarious vulture capitalist that he's had any success. In 2006 when Sears and K-Mart merged, he was estimated to be worth $4 billion. As of earlier this year, he was only estimated to be worth $1.6 billion. The same Forbes article indicates he was worth twice as much in 2013 when he took over as chairman of Sears.

Re:It's got nothing to do with business model

[magarity]

they got bought out by a Bain Capital style "Vulture" capitalist, Eddie Lampert. He started off his tenure by mismanaging them in a crazy, Ayn Rand themed style where each department was pitted against the other, resulting in massive infighting

Rand's fictional CEOs never do a you describe. It's always the overbearing government beauracracy doing that while the brave CEO tries all by him(her) self to stave the infighting regulatory agencies.

Re:It's got nothing to do with business model

[grep -v '.*' *]

Do you have ANY numbers to back up your ridiculous claims?

He never does. He just makes outrageous claims that read well to people looking to buy into some outrage he's peddling.

Just like the Huff Post, whenever he takes a stand on something, I exactly know my initial starting place -- exactly OPPOSITE of him. Vary rarely have I later on changed opinions to even partially agree with him.

If he changed his Firefox trailer, I'd be lost.

Re:It's got nothing to do with business model

[inking]

Could you describe the exact gutting mechanism? This is basic private equaty. You buy a business that performs poorly, fire a ton of people and salvage whatever is left. Then you sell the business. How exactly do you buy a business that is allegedly not performing poorly, make it run worse and make money out of it? This is some high tier insane rambling.

Re:It's got nothing to do with business model

[drinkypoo]

The real problem is that in America you no longer make money by running successful companies. You make money by firing up a startup and waiting for a buyout or by buying up an existing, longstanding company and gutting it like a fish.

This is complete horseshit. You are cherry-picking one high-profile example of someone being a Trump-like dick in the aftermath of an enormous merger in the most turbulent sector in the entire world and painting the entire US economy with the same brush, which is just nonsense. There are 30.2 million small businesses in the US of tremendous diversity which employ 58.9 million people, or 47.5% of ALL workers in the US,

The problem with your analysis is that most small businesses are never going to make much money. Actual great fortunes are based on great crimes, or at least on great swindles. The people who really have the bucks really do tend to get them by destroying the lives of others in one way or another. This is true all across the world, though.

Cause of death: hedge funds and myopia

[ErichTheRed]

I'm 43 so I did grow up in an era where Sears, JCPenney and a couple of regional department stores were the source for everything that most middle class families bought. People forget how easy it is to find out about new products and buy them now, compared to even 20 years ago. Memories of Sears for me include the tail end of the catalog, and the place I saw home computers for the first time as well as video games. In those days, these stores were the way people found out about new things to buy, and in some respects were the tastemakers for the average non-fashionista crowd.

I think the hedge fund vultures swooping in and loading up the companies with debt was the accelerator (Toys R Us would probably still be here if they weren't in so much debt.) But the big thing appears to be too much inward focus and not keeping up with competitors. I wonder if this will eventually happen to Amazon as well. Sears was the country's largest employer for quite some time, and I'm sure most people would have considered it foolish to start a retail business that directly competed since they were untouchable. I think I read somewhere that Sears executives didn't even consider Walmart a competitor until they got bigger and started selling similar things.

Companies can't go chase every new idea like an ADHD kitten chasing laser pointers. But, they do need to keep an eye on what's happening and respond to trends. Walking into my local Sears is like walking back into 1985 or 1990. Too agile and you're just chasing the next fad, but milking the cash cow too much will kill it eventually.

Re:Cause of death: hedge funds and myopia

[EvilSS]

Speaking of JCPenny, they just became a penny stock

Re:Cause of death: hedge funds and myopia

[PPH]

Walking into my local Sears is like walking back into 1985 or 1990.

At least you can walk into one. The one in my town is gone.

Re: Goodbye Sears

[Anonymous Coward]

Wrong. The downfall of Sears is a consequence of competition from Walmart/Target - which happened before Amazon was even on the scene.

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.

Simply

[alvinrod]

I have a feeling it isn’t that simple. The people at Sears had experience and expertise in running stores and managing the logistics of such an enterprise. Whether they were the best people at that job or not, I would no more expect them to succeed at transitioning to an online retailer than I would expect an ENT to start performing heart surgeries. You might do it in a pinch if absolutely necessary, but you’d rather find the correct specialist.

Re:Simply

[Hognoxious]

Converting catalog sales to internet sales should be comparatively simple because structurally it's very similar - there's an almost one-to-one mapping between the components & steps of the paper process and the computerised one.

Put Sears on Layaway

[jfdavis668]

Someone should put Sears on layaway. Then they can pay for it over time.

Re:Put Sears on Layaway

[krray]

Best post ever.

Re:Put Sears on Layaway

[Anonymous Coward]

Someone should put Sears on layaway. Then they can pay for it over time.

Essentially, Sears put itself on layaway and paid for their own demise.

See, Eddie Lampert bought Sears, but then he loaned them money to bail themselves out of problem ... he did this several times amounting to $2 billion or so.

This now makes him a secured creditor, and has effectively transferred the value out of Sears and into his hedge fund. Of course, he did this after he'd already turned the company into a shit show and led to them being insolvent in the first place.

What has happened here is a billionaire hedge fund manager bought it, ran it into the ground, transferred the value to himself by 'loaning' the money to Sears which was the instrument of their own destruction.

The value of Sears was stolen from the shareholders by the person who was the cause of many of their problems in the first place.

The CEO of Sears was also the owner of ESL Investments, that ESL Investments then 'loaned' money to Sears that no other creditor would give them, they could skim the equity out of the company ... you know, here's a loan to keep you afloat, now sell your real estate and pay us back for the loan .. now you no longer have the assets of the real estate, and the value of that has been paid back to ESL to cover the loan. Repeat until bankrupt.

This guy was basically acting as CEO for Sears to make decisions which hurt Sears and helped ESL Investments.

This shit is like something out of the Sopranos. But make no mistake about it, this was someone deliberately and systematically squeezing the value out of Sears.

Re:Put Sears on Layaway

[Fly Swatter]

This is a round-a-bout way of saying embezzlement. Someone had to say it.

Re:Put Sears on Layaway

[Anonymous Coward]

This is a round-a-bout way of saying embezzlement. Someone had to say it.

Except made all nice and legal through the magic of corporations and creative accounting.

You should expect many many more businesses to collapse this way, and then the US is going to be really wondering WTF to do next, because there will be no jobs or employers.

This guy has managed to pilfer all of this money out in the open, and it's shocking just how many articles you can find which explain how it all worked.

Done correctly, you can literally steal all of the value of the company out from underneath the shareholders, and make it look like you're doing them a favor in the forms of the initial loans -- the reality is, he loaned Sears money from his company, as CEO of Sears agreed to it and then sold/spun out the real estate (to himself or his companies), and then used the money from the sales to pay back his company which did the lending in the first place, all while Sears now having to pay rent to the company they transferred the real estate to which further lines his pockets.

He literally acted on both sides of the transactions, in such a way as to give himself the best deal in the middle, and effectively cause Sears to pay him to take their assets from them.

The scary thing is this isn't illegal. It should be, but apparently it isn't.

As CEO of Sears, he basically made choices that enriched himself at the expense of Sears. How that isn't criminal I have no idea.

Re:They should go online only

[Anonymous Coward]

They did not get killed by the internet. They got killed by Eddie Lampert.

Re: Goodbye Sears

[Anonymous Coward]

The downfall of Sears is a consequence of the migration of commerce from brick-and-mortar to online

Well, it's also a result of Eddie Lampert's management.

He bought it, skimmed off the value and directed to his own company, and then left a failing business behind him.

This really is a story about how predatory capitalism can strip the value out of a large business, and lead to the failure of that business. This was a transfer of wealth out of one corporation and into another, to the detriment of the corporation being sucked dry.

One might argue that the fiduciary duty to the shareholders of Sears took a back seat to Lampert's holding company. I would argue this was theft on a large scale by a vulture capitalist.

Here in Canada they basically did this, and left all of the employees with no pensions.

This shit really is the most awful aspect of capitalism, rich assholes only looking out for their own profits can destroy large corporations.

You think all those jobs at Sears are coming back? The societal cost of this shit is staggering.

Old retailers

[richman555]

It is just the old retailers mentality. They still want physical stores to rule the roost. Just take a look at Boscov's (one of the financially 'healthy' retailers).... They couldn't be more confused... Physical stores vs Internet - https://www.readingeagle.com/m... . This article is about Cyber Monday... and yet all they can think about is their physical stores.

sears killed the catalog before the Internet took

[Joe_Dragon]

sears killed the catalog before the Internet took off.

Re:They should go online only

[c]

all they had to do is to simply trade catalog for online presence.

The problem is that by the time Amazon rolled out, Sears had mostly traded catalog for brick and mortar.

Re:Goodbye Sears

[ClickOnThis]

Everything dies in time.

Yup, one day we will see Amazon end the same fate.

Quite possibly, but it's hard to see how right now. Amazon's business model essentially is to provide things efficiently. Things that include merchandise, computation, cloud storage, and more recently, entertainment. They work constantly on improving their infrastructure to this end. The risks to their business might include becoming frumpy (like Sears), over-diversifying (like General Electric), running into legal problems (like [insert-your-favorite-example-here]), and others. I can imagine Amazon being humbled because of missteps or regulatory actions, but not because of complacency.

Mr Roebuck is laughing at last.

[140Mandak262Jamuna]

Sears and Roebuck started the company, but Mr Roebuck bailed out early. Sold his stake to Sears for the princely sum of 25,000$. Later, after Sears became a super success, he came back. Sears installed him in a very ornate office in the Chicago HQ and paid him a salary. Good cop/bad cop negotiations with small vendors will include, "No, Mr Hancock, even if I agree to this deal, Mr Roebuck would not. Let us see if we can convince him". Mr Roebuck played his part by saying yes or no according to instructions.

Now finally Roebuck can console himself, "I knew it would go bankrupt, eventually. Glad I got out with my investment intact!".

Re: Goodbye Sears

[jellomizer]

Which seems rather Odd. Because Sears origin was with Mail to Order Catalog shopping. Online shopping really isn't that much different then from that model.

Re: They should go online only

[michaelmalak]

They programmed Prodigy

Loved Sears

[Ferretman]

That was THE store to go to when I was a kid at the mall....the sheer volume of stuff, the acres of floorspace, the huge display of lights at Christmas! Awesome times, awesome store.

They didn't adapt quickly enough, sadly.

Ferret

Re: Loved Sears

[UnknowingFool]

If you read more about the downfall of Sears, it had much to do with Lampert. Had he not interfered maybe Sears would have survived like Target and Walmart are doing well enough these days.

Re:They should go online only

[Anonymous Coward]

The last Sears catalog was 1993. So they really didn't have a catalog business by the time the web existed. They were a brick and mortar department store. What really killed them was the rise of suburban big box stores. The web just finished them off with a lot of help from the financial vultures.

Re: Goodbye Sears

[ClickOnThis]

Which seems rather Odd. Because Sears origin was with Mail to Order Catalog shopping. Online shopping really isn't that much different then from that model.

Indeed. Other posters have pointed that out. Sears didn't even drop the ball -- they joined the game too late.

Re: Goodbye Sears

[Anonymous Coward]

Just like the US laws do nothing. Business as usual.

We had a hedge fudge owner running for President for Christ sakes a couple years ago.

Re: Goodbye Sears

[ClickOnThis]

Which seems rather Odd. Because Sears origin was with Mail to Order Catalog shopping. Online shopping really isn't that much different then from that model.

Indeed. Other posters have pointed that out. Sears didn't even drop the ball -- they joined the game too late.

Hit enter too soon. More correctly, they left a game they were once the masters of, and then re-joined it too late, after the game had changed.

Further extensions of the metaphor are left as an exercise.

Re: Goodbye Sears

[LordKronos]

It's actually a combination of competition from many faces. Clothing is a major item for Sears, and yes Walmart and Target (and Kohls) are competion for thier price point. But another big item for Sears is appliances (at least in my mind, that is what they are best known for, but I'm not sure if that's the biggest part of their bottom line). In that area they've faced competition from Best Buy, Home Depot/Menards/Lowes, Costco, and others.

Along with clothing and appliances, tools is the one other thing that comes to mind when I think Sears. And again, Home Depot/Menards/Lowes is big competition here, but I really feel like (and I may be way off) Harbor Freight is a huge source of competition for them here. Yes there is a bit of a quality difference (though that is a bit diminished as I don't think craftsman quality is quite what it used to be), but honestly for most people the cheap Harbor Freight tool is sufficient 9 out of 10 times, and for the price of the craftsman tool you can just replace the harbor freight tool 5 times (and that's not even considering most of the HF non-power tools have a lifetime replacement warranty anyway)

Of all the things out there, I really feel like Amazon is one of the smallest contributors to Sears' demise.

Re: Goodbye Sears

[jellomizer]

I think it is more indirect, Sears use to be a major Mall Corner Store. Walmart/Target was in competition with all those little stores between the corner stores. Which then cause the malls to be waste lands. So no one wanted to go there. Thetop three rules for Retail Business is Location, Location, Location. Malls use to be the Hip and trendy place for the Late Boomers and Gen Xers. Now no one wants to go there. So they are stuck in bad locations.

Then What I think they really did to kill their business was many of the Popular Sears only brands, such as Kenmore and Craftsman were sold off to different companies. So there isn't much an attraction to go there anymore.

Re: Goodbye Sears

[RhettLivingston]

The downfall of Sears is a consequence of the migration of commerce from brick-and-mortar to online.

Which is pretty crazy considering they were the original mail order phenomenon. Sears' past is not a brick and mortar past. It was catalog orders and many of its customers never saw a store.

They were essentially beat at the game they pioneered. The only real differences between Amazon and the Sears of years ago (that was the only source for goods in much of rural America) is a live catalog versus a paper catalog and a modernization of the distribution system to take advantage of computer-based tracking and organization to partially decentralize it.

I'd have to look carefully at the numbers to decide if Amazon is any more dominant today than Sears was in rural America in the early 1900s.

Re: Goodbye Sears

[RhettLivingston]

Sort of. That competition forced them to brick and mortar. Prior to those stores building out in rural regions, Sears had a catalog / mail order based monopoly in much of America which was far more rural at the time.

Essentially, what Walmart / Target / KMart did to Sears is what many would like to see happen to Amazon.

Ironically, it opened the door for Amazon to be the one ready to take advantage of new technologies that gave new life to the very old mail order business.

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:It's not Ayn Rand's fault

[kenai_alpenglow]

Recognizing that people (and animals) tend towards selfishness, and basing your * system around that *fact* (I assume you believe in darwinism--you know, survival of the fittest?) results in a more successful system that those who base their * system on the fantasy that everyone will look out for someone else. So you assume everyone is looking out for #1, and pit those forces against each other and (hopefully) balance them out. Kinda like the Constitution was originally set up as. See multiple examples world-wide for failures to consider that fact.

Re: Goodbye Sears

[jwhyche]

Since, for some reason, we are talking about the Sears and the catalog here on /., I figured I would toss in some trivia that is just as relevant.

The original Sears catalog was printed on outhouse friendly paper. It was done so because the main place the Sears catalog would end up was in the outhouse. Where a it would be the primary reading material while one was taking a shit. Then when you where done you would just rip a page out of the catalog and wipe your ass with it.

Sears knew this was what the primary purpose of the catalog was being used and designed it to act accordingly.

Re: Goodbye Sears

[StuartHankins]

Absolutely agree. Craftsman electric tools have gotten worse over the years as many are rebranded Ryobi and others. Once Sears sold Craftsman rights to Lowe's they lost one of my only reasons for shopping at Sears -- note that was after Craftsman was purchased by Stanley. Maybe a better way to say that is here: https://www.chicagotribune.com...

Sears has no money?

[fustakrakich]

Just enough to pay the bonuses to the top execs that ran it into the ground...

Collectors' items

[Rick Schumann]

Little did I know, all those years ago, that the Craftsman mechanics' tools I bought, simply because I wanted high-quality tools, would become collectors' items.

Re:Collectors' items

[Fly Swatter]

Craftsman is it's own entity now. It is sold at Ace Hardware and Lowes. Don't know about quality, most claim it went downhill years ago. Some of the older tools are indeed sought after.

Re:Collectors' items

[Rick Zeman]

Yeah, most of it's cheap quality Chinese shit now. Old US-made Craftsman hand tools should be treasured and never sold.

Re:Collectors' items

[93 Escort Wagon]

I’ve got a thirty-year-old Craftsman miter saw that’s still running great, as well as a handheld circular saw and hand drill of the same vintage. Sears tools used to be quality.

Re:Collectors' items

[ewhenn]

Pretty much this. If I want a good tool I'll buy one made in the USA, Germany, Japan, or Canada. If I want a cheap use it once tool, I'll buy the one made in China from Harbor Freight. No way am I paying extra for a "name brand" tool like craftsman when it's made in China just like the much less expensive Harbor Freight one is. Their brand lost value immediately once they started importing Chinese junk with the Craftsman name put on it. Value wise your tools are only as good as what you will sell me *today*, yesterday doesn't matter.

Bye bye escalator

[AndyKron]

Sears is the only place where I live that has an escalator. Now where am I going to go?

Re:They should go online only

[supremebob]

Have you actually tried buying something from sears.com? It's a pretty bad experience. Their selection sucks, the prices are higher than Amazon's, and it's filled with "affiliate" retailers that basically just drop ship stuff from other retailers.

I bought something from them this Christmas, but only because I had a gift card that I wanted to use before they finally went bankrupt.

Re: Goodbye Sears

[UnknowingFool]

Yes those were factors, however, the fact that Sears was part of an LBO by Lampert which saddled them with huge amounts of debt was a significant factor. Also since he was the biggest creditor he installed himself as CEO and made sure he was enriching himself. For example, Sears sold off almost all of the valuable real estate properties to a company he owned then charged Sears exhorbitant rents.

Re: Goodbye Sears

[ShanghaiBill]

Sears made many mistakes. They were hit by Walmart on the low end, and "prestige" stores like Nordstroms on the high end. It is hard to survive in the middle, although Target is thriving there.

They were in decline long before Amazon, yet they were better placed than anyone to compete with Amazon. They had done mail order for more than a century. All they needed to do was move the ordering on-line. Instead they shutdown their catalog operation. In hindsight that was an insane move, although it didn't make much sense at the time either.

Poor planning

[DogDude]

As always, US companies are interested in THIS QUARTER'S numbers. *Maybe* next quarter's. That's what US business schools teach: cut costs any way possible to increase profitability *now*. Planning for a year from now? That's unheard of in most big US companies. Adding an e-commerce website is trivial. They're turn-key. They can be set up by an individual. Sears should have been planning for e-commerce and been selling online 20 years ago. They should have been updating their stores constantly, but most haven't been updated in decades. A tremendous lack of planning on their part and a focus on immediate earnings did them in. Now the private equity vultures are just picking apart the scraps.

Re:Poor planning

[DogDude]

Good point, AC. I completely forgot about that. Prodigy was pioneering. I was an active user for years, in fact. That's right... they sold Prodigy. I remember thinking at the time that that was a dumb move.

Re:Poor planning

[drinkypoo]

Prodigy was pioneering. I was an active user for years, in fact. That's right... they sold Prodigy. I remember thinking at the time that that was a dumb move.

Prodigy was a typical example of Sears-related technical incompetence. Just as they would later go on to squander the opportunity to dominate web retail with a terrible web site with ridiculous prices, Prodigy was technically inferior for an audience that wanted internet access. Though I believe the service eventually went IP-based, early Prodigy appeared to encapsulate IP in its own protocol... poorly.

As Bones McCoy said...

[Locke2005]

"He's dead, Jim!"

Re: Goodbye Sears

[syn3rg]

Add Best Buy to that mix, and you're not far wrong.

The last straw for me....

[Rick Zeman]

...I needed a car battery. Looked at Sears.com, found one on sale that fit my car. Drove to Sears to buy that battery and found out that said battery was priced wayyyyy higher than online.
I asked how that could be. The answer was staggering: "[Brick and mortar] Sears and sears.com are owned and run by different entities with different pricing structures."
In other words, how to fail at both at one time as neither got my business.

Re:The last straw for me....

[Rick Zeman]

Brick and mortar Sears wouldn't match/honor. I should have said that in my post instead of just implying it.

Re:The last straw for me....

[drinkypoo]

If you need a car battery you should find an interstate shop. Not just a dealer, but a shop. They have reconditioned "econo power" batteries that are something like half price. I have one in each of my cars. At worst, they won't have one that fits, and you can at least buy a battery from someone competent.

Re:The last straw for me....

[PurplePhase]

I had exactly the same problem with Target a year ago - though not with a car battery. Damaged product at pick-up, no way for a refund because they're different businesses, etc. Only by the grace of the cashier did she let me leave the product there!

Never going to use Target.com again!

Re: Goodbye Sears

[syn3rg]

Well to be fair, "Sears don't make nothing but money". Lately they don't even make that.

Re: Goodbye Sears

[techno-vampire]

I think you have that backward. Sears catalogs were thick and heavy, so they were printed on thin paper to cut down on shipping costs. Once the family was done reading it, and making any orders, putting it in the outhouse saved money because they didn't have to buy TP, assuming it was even available back then.

Re:They should go online only

[zilym]

The genius of Amazon wasn't that they were an online version of a mail order catalog, it was the fact that they would ship your item out extremely quickly compared to when you ordered it.

Maybe if you got prime, but for those without prime, Amazon sucks biggly for shipment time. Amazon purposely DELAYS shipment of items from time to time, probably in an effort to get you to sign up for their prime subscription.

For me, the only draw of Amazon is rock bottom prices and wide product range. The online customer reviews are fairly useful too. With Amazon charging sales tax and intentionally delaying my shipments, I tend to prefer buying from eBay whenever possible over ordering from Amazon, although I'll happily research an item on Amazon for the reviews.

Re: Goodbye Sears

[jbengt]

Agreed.
I did a lot of work for Sears in the 80s thru the mid 90s. They were constantly changing their idea of who they needed to be. One year they're trying to compete with K-mart on the low end, the next year Walmart eclipsed them both, and they switched to trying to compete with high-end department stores. One year clothing is the answer, the next it's hardware, and then maybe appliances, or electronics, or small specialty stores, or big department stores, or whatever the big idea of the year is.
At their heydey, they were a big conglomerate that owned real estate, banking, insurance, and they launched Discover Card. Then one-by-one they divested or spun off their profitable divisions in order to concentrate on their core (in)competency - Retail Sales.
But their biggest mistake was closing the mail-order catalog sales just before internet sales started to take off. They could have been Amazon if they had tried.

Re: They should go online only

[jbengt]

And Discover Card.

Sears was a fly, and Eddie Lampert was the spider

[clawsoon]

Sears struggled for multiple obvious reasons - online competition, the hollowing out of the middle class, etc. - but Eddie Lampert sucked a lot of juice out of the body while Sears was still alive. And he stands to gain even more from its bankruptcy:

"As of now, Lampert’s ESL and a related fund called JPP own roughly $2.66 billion in Sears debt. The cash flow just on the interest on these notes is between $200 million and $225 million per year.

"This figure continues to grow—ESL announced on Monday another $300 million debtor-in-possession loan to support operations through the end of the year.

"Presumably, this debt would be significantly curtailed in bankruptcy. However, a fair bit of the debt is secured by Sears’s real-estate assets. For example, real-estate collateral on 46 Sears properties backs a $500 million loan ESL made in January 2017; the bankruptcy could lead to Lampert’s fund simply obtaining those property rights. In all, Lampert’s interests own around $1.5 billion in secured debt backed by real estate."

Re:They should go online only

[Voyager529]

all they had to do is to simply trade catalog for online presence.

The problem is that by the time Amazon rolled out, Sears had mostly traded catalog for brick and mortar.

No, Sears trade catalog for real estate. Most of their business has to do with land and building holdings, rather than selling goods...which is why they have existed for the past decade, long after their foot traffic had been lost to Wal-Mart and Amazon.

To the bigger topic, I don't know if Sears could have truly made the transition to the internet the way Amazon did. Bezos knew the key was "get big fast", and they did it by offering $20 books for $10, basically letting their early investors subsidize purchases, and expanding once it was practical to do so. This helped tremendously because they had to get people over the hump of using their credit cards online (remember when people were terrified of that?), and it's far easier to get logistics down with smaller items like books. Sears had lots of the logistics already in place, but they would have been expected to start with washing machines.

Sears wasn't going to offer a $100 Craftsman toolset for $70 if it was ordered online and shipped, people looking to get Sears products were unlikely to opt to use the internet to get those products just because it was the internet, and while people order everything from toilet paper to RAID controllers from Amazon *now*, Sears following the lead of a nascent internet bookstore that spent a decade selling everything at a loss would have been laughable in 1995, and justifiably so.

Yes, being overtaken by Amazon will be the final chapter in the story of Sears, but that's only obvious in the rearview mirror when the winner is known. It is both effective management and luck that Amazon is the new Sears, and not a nostalgic footnote like Pets.com or Myspace.

Re: Goodbye Sears

[Lije Baley]

I would agree on Harbor Freight being a factor, though on tools Home Depot and Lowes are very convenient these days. Appliances are one place where Sears should still have had the upper hand, because they were the only store in my area that had a large locally-stocked selection. Forget Home Depot and Best Buy -- in recent years they have dwindled their in-store appliance inventories to practically nothing. So it's Sears vs Lowes around here, and Lowes wins for me because Sears' website is garbage. My measure of a store is whether I can find what I want at a decent price, at a local store, on their website without being bamboozled by "marketplaces" and out of sync inventory systems.

Re: They should go online only

[scottrocket]

They programmed Prodigy

That's kinda sad - maybe they came in too early? Unrelated to Prodigy, I seem to remember that back in the late 1970's my parents (I think using a touch-tone phone) could dial a number, enter the product & account numbers (or by voice), and the package would be magically shipped! The amount due would be appended to the phone bill, or to the charge account. Sears was my Amazon of the '70's: Cassette players, stereos & K-Tel type records, groovy bell bottom pants & platform shoes - even a beginner's guitar. Frankly I never knew whether Prodigy was ever any good, just something that was on a lot of unsolicited floppy disks. Good bye Sears, RIP.

Re:moe szyslak

[Joe_Dragon]

He moved the to spice channel after that.

Re: Goodbye Sears

[aaarrrgggh]

Not at all. It has been happening for 40+ years; they failed at every opportunity to deal with any form of competition. A stupid example, but the Sears store near me used to reek of mold, miserable merchandising, and no brand differentiation. But, people shopped there because they had a good appliance selection (and reputation), it was the closest place for a lot of people with reasonably good tools and basic sporting goods, and it was somewhat functional.

When they closed, it was torn down and they built a Bloomingdales which is prospering.

Re: Goodbye Sears

[Scarletdown]

Their catalog mail order wasn't that big a monopoly. They did actually have good competition in that arena from Montgomery Ward and JC Penny.

Still, the annual Sears Wish Book was always my favorite every year.

Re: Goodbye Sears

[jbmartin6]

Right, they spent billions over the last decade or so on stock buyback programs. I wonder what Sears would be like today if they had invested that money into staying competitive?

Re: Goodbye Sears

[ShanghaiBill]

Another mistake (in my opinion) was their move to "zones" with separate checkout counters in each zone, rather than a row of checkouts near the exit.

Zones require a lot more employees, and employees only know about the products in their own zone. If you ask a random Sears salesperson what aisle had the power drills, the answer is often "That's not my department". I never get that answer at Walmart or Home Depot.

If no one is staffing the checkout register in one zone, you have to wander around the store looking for another that is open. So you end up buying your power drill in the ladies lingerie department.

Nordstroms uses zones, but they are a prestige brand and charge prices high enough to justify the extra staffing.

Re: Goodbye Sears

[Aighearach]

I grew up with Sears and I wanted to shop there, but the last 20 years or so the customer service has just sucked. I don't really mind that the workers are clueless if I ask a question; I should have just read the manual anyways. But at Sears, there are so few workers that it is hard to get any help, and when you ask a question they're a bunch of jerks. At Home Depot or Lowes, they have lots of employees to ask questions, and they actually know the answer. The danger is that they might follow you around like a puppy trying to make sure you found what you needed. That's a lesser evil compared to clueless jerks, for sure.

I was still reminiscing about the Sears I grew up shopping at when I was shopping somewhere else. No surprise they're shutting down.

The website stuff shows why they couldn't succeed at switching to online, either. They did both poorly, instead of doing one well. If they had done either one well, they could have survived as a smaller version of that. But they can't survive by sucking at both.

Re: Goodbye Sears

[RhettLivingston]

Here is an interesting shot of toilet paper being sold on toilet paper. :-)

Note toilet paper being sold in 1897 Sears Catalog. The offerings start at the bottom left corner of page 23 with a picture that is very much like the modern TP roll, perforations and all. A case of 100 rolls started at $2.25, an amount that was comparable to a day's pay at the time.

Re: Goodbye Sears

[Aighearach]

Location, Location, Location is not the top three rules for retail.

It is a book. About fast food restaurants. It is a good book with lessons for all types of retailers, but it is more of a biography of a businessperson than it is some sort of textbook. As penance for referencing it, you should be expected to go and actually read the whole thing, cover to cover! Repent!

Sears was a destination store; people would be at home, decide they wanted to go shopping, and drive to Sears. Location is a bigger concern for the smaller stores; they wanted to be near a Sears! And now, the other large stores with similar products to Sears are out at the edge of town. Not in any sort of premium locations. Location for them might just mean it is easy enough for the trucks to make deliveries, not having a high traffic rate like a fast food restaurant needs.

That book will teach you nothing about selecting locations for big-box retail, because it is explaining how this business guy ignored the traditional rules of selecting locations, and replaced them with a new set of concepts more appropriate to convenience shoppers. And in this new system, the location of the location becomes the primary thing; whereas for non-convenience stores, things like cost are really important, and having a super-premium location isn't.

Re: Goodbye Sears

[RhettLivingston]

An interesting note on the offerings in that 121 y/o catalog. The highest end TP product, in the second column, was marketed as "The Puritan" and was "guaranteed free from injurious chemicals". Oh how little really changes.

Re:Sears was a fly, and Eddie Lampert was the spid

[PPH]

It's not really Lampertâ(TM)s fault. He was brought in when Sears was effectively a corpse.

How Sears got there is the real question. Having both brick and mortar stores as well as a viable catalog sales division (easily shifted to on-line sales) should have been a no-brainer. They had stores, warehouses and a fleet of trucks delivering orders. The coexistence of mail/online orders and storefront cultures was a solved issue.

They should have ended up looking like Amazon.

Re: Goodbye Sears

[jwhyche]

This is a very possible. I'm fully embracing the urban myth part of the Sears catalog here. More of that urban myth is the catalog stopped being used for this purpose some time after they switch to glossy paper. This could have been because by then most houses had access to purpose made cheap toilet paper. But I prefer to believe that it was because shit would simply no longer stick to the glossy pages.

Re: Goodbye Sears

[Hognoxious]

This is retarded, as are the mods. What would they gain from doing that?

The explanation given elsewhere that thin paper = cheaper postage seems a lot more feasible.

Re: Goodbye Sears

[jwhyche]

Well it is kind of hard to improve on toilet paper, even after a hundred years. That is if they got it right in "The Puritan." One of the biggest issues with toilet paper, it took them awhile to come up with a perfect way to get all the splinters out.

I wonder if the "The Puritan" is guaranteed to be free of that issue too?

Re: Goodbye Sears

[jwhyche]

The explanation given elsewhere that thin paper = cheaper postage seems a lot more feasible.

You are probably correct and this is the original reason. But as to what could be gained from doing that? Well it was well known that a number of the Sears catalogs where used as toilet paper. Good cheap paper was hard to come by on the prairie. It would make good business sense to embrace this use.

Think about it. What would have happened to the catalog after the family got through ordering from it? It probably would have been thrown out if it couldn't be repurposed. If it finds its way in to the out house, where you have a captive audience reading it, it might mean more sales.

To me this would only seem logical. It's going to be used as toilet paper eventually, so why not embrace that? Turn it to your advantage.

Re:They should go online only

[drinkypoo]

Have you actually tried buying something from sears.com? It's a pretty bad experience. Their selection sucks, the prices are higher than Amazon's, and it's filled with "affiliate" retailers that basically just drop ship stuff from other retailers.

Does the site actually work these days? It was a total shitshow the last time I tried to use it, but that was many years ago. It's not like they ever have the best price on anything. At the time that Amazon was just rising, Sears' site was basically unusable.

Re: Goodbye Sears

[Daemonik]

Actually, the major factor against Sears succeeding was Eddie Lampert himself. He had zero knowledge or experience in retail stores, being a career hedge fund manager. He's a devoted Libertarian and forced each department of the company to act like it's own separate company, fighting for funding. If Kenmore (Sears branded) appliances were on sale, they had to pay their ad department more than what other brand appliance mfgs. were paying or they wouldn't get mentioned in the stores own sales fliers. The constant bickering and loan servicing simply ate into all their revenue until the company imploded like KMart (also owned by Lampert) did before them.

Re: Goodbye Sears

[jonwil]

Too many once great businesses have been killed by Wall Street greed.
Sears (and K-Mart).
Toys R Us.
Dick Smith here in Australia.
And no doubt others.

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.

Re:They should go online only

[cnaumann]

Sears teamed up with AOL before there really was an internet. If anything, there were in the game too soon.

Re: Goodbye Sears

[Aighearach]

How would they even know if they got a bid?

https://www.reuters.com/articl...

Sears Holdings Corp Chairman Eddie Lampert has submitted a roughly $4.6 billion takeover bid for the bankrupt U.S. retailer

On the news. They're big enough to do it that way.

Re:They should go online only

[Deadstick]

I used "ship to store" a lot in the 80's. You could usually get a tool item that way at less than the over-the-counter price. There was a section for it right by the loading dock where you'd submit an order, then come back when you got a phone call, pay and pick it up.

The best part: The people who translated your written list to stock numbers were morons working with a fragile system. You might order a drill BIT and get a drill PRESS -- and you paid for what you ORDERED. If you didn't like it, they'd take it back.

The same system also handled warranty repair, they did it on an exchange basis just like automobile starters, and again they might send back something significantly different from the broken item you returned. Send in your busted 1/4" drill and you might get a 3/8".

Re: Goodbye Sears

[ClickOnThis]

My favourite is the "Climax" at $3.95 per hundred rolls. Sounds like it was marketed for more than one use in the bathroom. ;-)

Re: Goodbye Sears

[phantomfive]

It will happen when people leave, new people come, and the whole thing just runs on inertia. Already there are plenty of competitors to Amazon.

Re: Goodbye Sears

[Alypius]

They decided to use a proprietary kernel that was unstable and eventually collapsed.

Re:Goodbye Sears

[jcr]

After decades of management incompetence.

If Sears had played their cards right, we never would have heard of Amazon.

-jcr

Re: Goodbye Sears

[jcr]

Not even that. It's a consequence of management that didn't give a shit about customer service, and failed to fix the problems they were told about.

-jcr

Re: Goodbye Sears

[yes-but-no]

your power drill in the ladies lingerie

sounds like a movie title ;)

Re: Goodbye Sears

[Cylix]

They degradation of their tool line was almost immediate after shipping production out and redesigning for affordable. At that point, it really wasn't worth the extra cost to purchase those products when the quality was on par with every other low end brand. That was a huge theme for a while, market something cheaply made, but put a premium sticker price on it. I'm still salty over replacing components in their ratchets with plastic.

That kind of behavior erodes trust and eventually people establish a replacement or at least other conditions for how they spend their dollars. Amazon has a lot of garbage on their website and for every low end niknak there are several rebadged products.

It turns out, when you displace your customers they will take convenience over quality. It is a really huge hassle to have to dig through a ton of hot garbage to find something not terrible. Niche sights to a degree still don't compete even when they have tremendous quality. I'm personally hard pressed to divulge my credit card number to any random e-commerce website because I've seen how poorly it has been implemented.

Brick and mortar stores can exist and there are several that are still thriving. However, if you are going to sale the same things Amazon does and charge massive prices then maybe it isn't worth the short drive.

Their prices have gotten a lot better and I can say that as I actually did purchase a nice vest for the shop and a jacket just this week. I just wish my particular Sears didn't smell like mold and old cigarettes.

Re: Goodbye Sears

[Cylix]

They also had a terrible period of trying to bundle a metric ton of garbage at the checkout counter. It was like, 'Hey, you know what no one likes? That thing best buy does where they offer you warranties and credit cards when you check out. Let's double that!'

I had to get a tap and die set because I may have cross threaded a nut. Eventually, I found a checkout counter that was staffed and this was after hunting through multiple levels. An older couple was in front of me and it was like they couldn't say no to anything the checkout employee asked. Credit Card? Hell yes... lets wait five minutes and fill out that form? Warranty? Can't say no to that and let's go over all the details. Magazine Subscription? Sure thing! Some other offer I can't remember? Don't forget to give us your phone number? Oh you haven't made an account!

Needless to say, I was tired of waiting 15 minutes for one customer in front of me and did not care to divulge my phone number. She goes on to tell me I won't get a warranty if I don't give them a phone number. I think to myself, I'm not sure they going to actually replace the tap if it breaks and I don't really see myself actually coming back if that happens. I eventually punch in a phone number for her and she was really upset I entered 555-555-5555. She voided my entry and wouldn't let me use it. Nevermind it is so popular there are at least 15 didn't entries for that number.

Fun fact, when they were doing rewards at the register, you could claim it towards your purchase. I had a less caring cashier one time let me use the Arizon magic 5's and I was able to redeem something like 50$ in credit.

Re: Goodbye Sears

[Bob_Who]

Amen. This is how pensions, promises, and propriety cannibalize all remaining brand value and trust. This is how business behaves when it can't run a successful business nor manage to steal successfully. Just watch how everyone will regret the morally bankrupt corporate failures ahead.

Re: Goodbye Sears

[kenai_alpenglow]

As a kid I always preferred the JCPenny catalog for toys than Sears. And Wards was pretty lousy (if they had any at all). But JCPenny never sold Bees or chickens.

Re:Goodbye Sears

[kenai_alpenglow]

I agree, not right now. But people retire and get replaced, and many times complacency starts rearing its head. Innovation stops, and someone else starts eating at their market share. Or the market changes (two generations ago who would have thought we'd be using this "internet" thingy to buy stuff?) But right now, yeah, it looks like Amazon is a going concern.

Re: Goodbye Sears

[drinkypoo]

The downfall of Sears is a consequence of the migration of commerce from brick-and-mortar to online.

Which is pretty crazy considering they were the original mail order phenomenon. Sears' past is not a brick and mortar past. It was catalog orders and many of its customers never saw a store.

Nope. The original mail order phenomenon was Montgomery Ward, which predates Sears by some thirteen years, but the founder screwed up their lead during WWII. MW faded out just before internet shopping came along, so they never even faced the choice of whether to become an internet retailer. Right before they died I remember going into their store in Capitola, CA and seeing all the really fancy, expensive stuff that nobody was buying — like LaserDisc players, and the 3DO.

What these two companies' stories have in common, besides being early pioneers of mail order, is that they failed due to incompetence. Lampert was able to seize Sears because it was foundering. Montgomery Ward destroyed themselves with poor stock decisions. Instead of carrying what people wanted to buy, they carried what they wanted to sell.

Sears has the same problem, plus so many others. They basically depend on taking advantage of people who don't know any better, mostly old people who have been shopping at Sears for decades. They slap their name on other people's appliances and outdoor equipment, then provide inferior service of every kind on it. When the internet came along and you could not only find out what company actually made the stuff they sold, but what the original model number was, Sears' business model was obsoleted. You can buy the same clothes anywhere, and you can buy everything else somewhere else for less money and with a better experience.

Re: Goodbye Sears

[drinkypoo]

It put sears into the hands (and asscracks) of people for whom Sears would be an aspirational brand. The Sears Catalog was a product, they didn't just send it out for free. You had to buy it. Having it be useful for TP made the sale, at which point it was TP with advertising on it. Whether it was a deliberate marketing strategy or not, it should have been.

Goodbye TP.

[Ostracus]

Does the world really need ad-covered TP?

Re:Goodbye TP.

[jwhyche]

At one point it seems like it did. Although "need" would be a generous term for it. What I find interesting is today we conciser ads being stuck to things to be something new. Its nice to know that 100 years ago people had the same problem with it that we have today.

Since we are well in the territory of useless trivia I learned one more thing about advertising through out the ages. Did you know that Roman gladiators would give product endorsements? They cashed in on their fame just like modern athletes. They don't show this in the movies because it wouldn't fit in with the image we have of the period. So Disney's Hercules was more to life than the movie Gladiator.

Consumer Model

[Ostracus]

And the public's role in this? How about no longer wanting to pay premium prices. The thing about slides to the bottom is they always have a top, and the buying public didn't want to remain there. People talk about quality, and better service, but they don't want to pay for it, and that makes them as shortsighted as the management they decry.

It's got nothing to do with greed.

[Ostracus]

Honestly, nothing wrong with that. I've known quite a few that have stated they were deliberately staying small.