One of the few arms of Sears that is still profitable and that works really well is their home warranty service. They’ve fixed both my washing machine and the stove, and they include AC and heating system checks twice a year for free.
The husband of a friend of mine works for Sears, in a similar (if not the same) service unit, doing repairs and maintenance on small-engine equipment (lawnmowers, snowblowers, generators, etc.) From what she’s told me, that business unit, too, seems to be doing pretty well, at least here in Chicago.
Given that, I’d have to suspect it’s just a matter of time before Sears spins those services businesses off to someone for a quick hit of cash, which they’ll then burn through.
They probably missed the opportunity by months but that may have been for the best. U.S. consumers had been shifting their retail purchases from the Sears catalog to retail stores for decades. By the early 1990s, the Sears catalog was losing money and there was no trend that was likely to increase its profits. Sears shuttered the catalog in 1993. Once it was closed, Sears had little more advantage in selling through the mail than anyone else.
I can imagine that even if Sears still had its catalog operation in 1994 and it added online sales, the decline in its catalog sales would have outpaced any growth in online sales. The world had only somewhere between 3 and 30 million internet users in 1994. Thus, chances are, the internet sales weren’t going to be enough to offset the loss of catalog sales and the combined operation would just have continued losing more and more money for quite some time.
The internet population was growing rapidly but internet sales posed other problems. Web browsers didn’t offer convenient built-in encryption to support secure transactions and internet users were taught never to send credit card information over the internet. Home internet users were accessing the internet through dial-up connections that maxed out at 56Kbps, or about 1% of the slowest “high speed” 5Mbps connection you can get today. It could take a few minutes to load a single picture, so offering things like clothes online with only low-res thumbnail pictures would be a tough sell.
Amazon was founded in 1994 and they were one of the earliest companies to recognize the potential for selling over the internet. Even Amazon didn’t earn their first profit until 2001 because competing in internet sales required enormous continuing investments. Most of Amazon’s significant competitors died out in the 2001 internet bubble. A public company like Sears was unlikely to want to sustain those kind of losses in its mail order division for such a long time. Even if the Sears catalog had hung on into the early internet era, it was unlikely to survive until today.
You, too? Our family bought two pounds of English bees from Sears. It was hand delivered to us by the postmaster on a Sunday. Seems that when a box of bees comes into a suburban post office, everyone wants it gone as soon as possible. Two sides of the box were screen, to let air in, which gave everyone a good view of the bees and let you hear the humming really well. 
Did you paint the screen sides with sugar water and watch their little tongues, like rippling velvet, as they drank it up?
It doesn’t have as much real estate as you think.
Remaining real estate might be worth a couple billion dollars:
Yeah, one part of the classic action chart in business school management consulting type case studies is you just run the business down making as much cash as possible. Not necessarily even a ‘profit’, which includes charges for depreciation of assets which are sunk costs (ie you can’t get that money back by not operating).
That’s the vibe I get in my local Sears. Much smaller inventory of car stuff, practically nothing except the tire service center itself. The tool area is somewhat hollowed out also. Just get enough people to keep going there who have always gone there, via inertia, make a few more bucks above variable costs if possible, then shut down when that becomes impossible.
I know in real life managers of companies are reluctant to consciously adopt that strategy: their personal reputations are better served by at least attempting ‘turnarounds’. But still when they look at each other option (expand internationally, seriously?) none of them work, so de facto they just ride it down. But that’s sometimes the right answer. Not a dramatic turnaround, not to necessarily shut down today if you have locations where you can generate net cashflow. Close the ones where you don’t. Sell off valuable assets without conducting a fire sale (like real estate where you own it, Craftsman, etc). What Sears/K-mart has been basically doing for a long time. But the end point is in next to no doubt, IMO.
Yes, seriously. There are growing economies in nations that US business historically brushed off as Third World. Who serves them right now? In nations that are just now achieving prosperity and building modern infrastructure, I doubt many of the residents just go online, order shit from Amazon, and have UPS drop it at their house the next day. In such economies, stores offering general goods, known to be genuine and not counterfeit, at regionally reasonable prices can expect to do good business. Hell, working there may well become a desirable thing, itself. What Sears would have to do, to make this plan work, is drive out the Mom & Pop stores in those areas, just as the department store chains did here in the US. Selection, price, service.
I agree this is probably Sears’ only viable option. They have been circling the bowl for a long time and eventually will go down the pipe unless they think and do things VERY differently. Perhaps entering overseas markets will allow them to go back to their roots as a reliable, one-stop provider of a lot of useful things. They would need to overcome distribution challenges, of course, but it could be done.
I think Sears’ biggest value and their reason for holding-on is the real estate, I would guess selling one of their properties would translate into several overseas, depending on the country.
The US market is crowded with well-heeled big box competitors who have taken Sears’ piece of the retail pie, and there is no online way to catch up to Amazon at this point. They need to think differently if they want to exist.
Confirmed. We had an unhappy mailman. Although we did give her some honey.
Indeed if you want to see a really cool “history book” find a copy of an old Sears catalog (or online HERE) especially from the early 1900’s. It is amazing how many farm implements they sold.
Also catalogs from the 70’s with the wild fashions.
Fair enough, from the standpoint of what they still have under their own ownership (and, to be honest, I was suspecting that they didn’t have much left at this point). I strongly suspect that it’s been the cash generated by selling off real estate over the past few years, like the deal that you linked to, which is what has allowed Sears Holdings to stay open up until this point.
What I hadn’t been aware of, until you shared that, is that Lampert has a big role in Seritage. That seems to me to be the endgame – Sears Holdings gets sucked dry by Seritage, and Lampert walks away from the body with a nice shiny real estate holding company.
I guess it’s a matter for debate whether Sears has been circling the bowl, or most of the way down the pipe already.
Sears sold the Craftsman name to Stanley Black and Decker last year. The outlook was already grim, but that cemented the end for Sears in my mind
Quoted for awesomeness.
There is website here that has complete scans of Sears Christmas Wishbook Catalogs:
http://www.wishbookweb.com/the-catalogs/
The last Sear Wishbook listed is from 1991 and has all 811 pages available to browse. It looks like they have Wishbook catalogs dating back to the 1940s.
The heyday of Sears is long behind them, which is sad. They’re definitely a shadow of their former self. I grew up with them, and as a kid I have fond memories of paging through their holiday/Christmas catalog (Sears Wishbook) which advertised all of the new toys coming out (early 1980’s). Unfortunately, all good things must come to an end. I don’t see of any way they can survive in the current retail climate, and am actually surprised they didn’t go out of business many years ago.
The last Sears product I got was a Kenmore refrigerator, over 5 years ago (it still works, thankfully). And, I remember going into the store to order this & it was practically deserted. That store has since closed; it was stand-alone, but was in the parking lot of a Mall. Once the Mall got torn down a couple of years ago, the Sears went with it…
Going to be blunt here. Apologies in advance.
The purpose of Sears Holding and the Kmart Holding it came from is to make money for people at the top. That’s it. Not just big salaries and bonuses, but with deals that Sears/Kmart makes with companies the top people have an interest in.
As long as those people are in charge nothing will happen until it is completely gutted. Then they’ll get a huge “retention” payout for walking it thru bankruptcy.
Look at what happened with Kmart. They kept borrowing money for multiple cycles of “updating” the store look. (Never noticed a single change after any of these.) They borrowed heavily to do this. Eventually the debt outweighed the value of the company and bankruptcy ensued. The debt holder got the company, renamed itself Kmart Holding, borrowed money against the Kmart assets and took over Sears. The Kmart stockholders got squat.
just seeing this thread right now I was curious where the next closings were. Dang there was one Sears I was planning to go to, and it’s on the list. Guess it is doing liquidation now to close in next six weeks. It was a huge one too, though I wondered as one weekend I went there and it was just mom and I browsing through the clothes one day. The first Sears that was closest to me closed down last year, it was just falling apart. I recall picking up my eyeglasses from its store Saturday afternoon and there were no customers around.
I’m sorry to say but internet really killed the browsing around a dept store. concept. With me working longer hours, I have simply bought clothes online and if they didn’t fit, I was able to return / refund completely.
If I thought the name “Sears” still had any brand equity, I’d blow up what’s left of it and start over again. The problem is, if you go department by department – women’s clothes, men’s clothes, jewelry, furniture, etc. – the only place Sears had any brand equity left was in automotive, tools, and appliances, and Lampert has already sold off or ruined those sub-brands.
You could also buy guns (J.C. Higgins) and motorcycles (Allstate) from the catalog.