Sears is a well-known brand in the U.S. and Canada, but most people think it's only a few steps from bankruptcy. I don't think that's true, as there is a lot of value left in the brand, but the future doesn't look great.
Most people today don't associate the Sears brand with innovation and trust; instead, they see Sears as a leftover from the Mall era, large stores in huge buildings, surrounded by equally huge parking lots, stocked with unappealing merchandise, and frequented by grandmothers and mall-walkers. Sears is dying, or at least, it appears to be. In fact, things seems so bleak that Sears is currently leasing space in almost every Sears and KMart store.
Some would argue that Sears has been eclipsed by a new approach to retail. Amazon.com has made it too easy to shop, click, pay, and (if you're a Prime member) have your items appear on your doorstep in two days. But dismissing Sears as a product of a bygone era overlooks the opportunities that Sears had to change their destiny. Sears had every tool at their disposal to thrive, to be Amazon.com before Amazon.com existed, and to completely own the retail space, both online and in a brick and mortar store, yet they failed. Let's go back a few years.
Sears: The BeginningSears was founded in 1886 and launched their catalog a few years later. This catalog had everything, including houses that were sold in kit form, many of which are still standing today. Sears was the original brick and mortar store killer, allowing the average American to pick from a huge selection of products for the home and business, send in an order form, and receive their selections in a few weeks. A 19th Century Amazon.com, if you will.
But Sears didn't just have a huge selection of products that weren't available in local stores. They had much more...
Sears Builds an EmpireIn 1984, Sears, CBS, and IBM formed a joint-venture, called Prodigy. Prodigy was one of the first ISPs, allowing consumers to access news, sports, weather, and shopping from home, using a modem and a personal computer. As Prodigy grew, they increased their offerings. including Zagat Reviews (now owned by Google, with the reviews being integrated into Google's core review offerings), articles from a fully staffed newsroom covering every topic you can find online today. They also had articles and reports from Consumer Reports, bulletin boards, and email services. Hell, they even launched ESPN's first foray into online sports journalism. Prodigy even offered online stock trading and online banking.
Sears didn't just have experience with stock trading and banking through Prodigy. In 1981, in an attempt to get into the financial services industry, Sears purchased Dean Witter, a stock broker and securities firm. They also picked up Coldwell Banker, a realtor. In 1985, Sears launched Discover Card, the first real competitor to Mastercard, Visa, and American Express.
Think about all that for a few moments. You have one of the most recognizable brands in America history, a brand that people trust enough to stake their lives on their products. People lived in their houses, they used their tools to earn a living, and they bought their clothes there. America loved Sears. And Sears broke into markets that thrive in the U.S. They were offering a competitive credit card, they could help you find a home, the could help you save for retirement. And, they created a system to help you do all of this online. What could go wrong?
A lack of visionSears was uniquely positioned to take advantage of a hundred years of goodwill and trust, built one mail order catalog at a time. The recession of the early 1990s, driven by oil prices rising, waking up from the debt binge of the 1980s, and inflation, caused Sears to begin acting irrationally, exchanging short-term gains for long-term stability.
Sears panicked. In 1993, they began to divest their non-core businesses, like Coldwell Banker, Discover, and Dean Witter. They closed their catalog. They pulled back to brick and mortar stores, abandoning any designs on changing their business model.
Anyone know what happened in 1994? Jeff Bezos quit his job, moved to Seattle, and launched a company that would evolve into Amazon.com by 1995. Just as the internet boom is starting, the ONE company in the U.S. who was positioned to take advantage of this emerging technology starts selling off the avenues it had to succeed.
We all know the rest of the story. As people began to trust online shopping more, malls became less relevant and the stores inside them started to struggle. Imagine, for a moment, what Sears could have done by leveraging the goodwill it acquired in it's first hundred years to smooth the transition to online retailing? Imagine if Discover had become the credit card of the internet. Imagine if Coldwell Banker became the destination to research and buy a home online. Imagine if Dean Witter became the first online stockbroker.
Why Sears is DyingIt comes down to a lack of vision. Most people could not have imagined the internet becoming the transformational force it is today. Most people could not imagine a world where people point and click, not drive to a store. Most people could not imagine the volume of spending that occurs online today. But some people did. And while Jeff Bezos may not have imagined ever aspect of how Amazon.com would integrate itself into our lives, he did have a vision of a retailer that provided almost everything a customer would want.
An essential part of Bezos' vision was knowing that it would be a long slog to success. After Amazon.com went public in 1997, stockholder complained that Amazon wasn't profitable. Bezos pushed back, relying on his vision of a company that would put the customer first, that would provide low prices and a mind-boggling selection of products.
Meanwhile, Sears languished, tossed around by market forces they didn't understand, depending on antiquated retail models that consumers were abandoning. At the end of the day, Sears should have been Amazon. Sears had the talent, they had the tools, and they had one of the best logistics systems available. But they lacked vision, and without vision, they lacked the drive to persevere through the hard times and challenges of becoming a success.
[Though these words and the research supporting them are mine, I was inspired by the news that KMart was, potentially, closing all their stores, and by an old comment on MetaFilter by PastaBagel.]