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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.
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.
[Insert pithy quote here]
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.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
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.
All those Craftsman tools I own with a lifetime warranty, appear to have just run out of life in the warranty...
"There is more worth loving than we have strength to love." - Brian Jay Stanley
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".
If it weren't for deadlines, nothing would be late.
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.
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.
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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.
"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.
Someone should put Sears on layaway. Then they can pay for it over time.
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.
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.
If it weren't for deadlines, nothing would be late.
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.
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.
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.
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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.
I read at +2. If your post doesn't reach that level I will not see or respond to it.
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 is the only place where I live that has an escalator. Now where am I going to go?
...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.
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.
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?
This posting is provided 'AS IS' without warranty of any kind, implied or otherwise.
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.
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.
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.
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.
your power drill in the ladies lingerie
sounds like a movie title ;)