Sears was in decline, but the point where everything hit the shitter was when the hired an Ayn Rand worshiping libertarian named Eddie Lampert for their CEO.
Lampert believed that humans do best when competing against each other for scarce resources. So he took Sears & Kmart, merged them (laying off thousands in the process). Then he divided them into departments - each with their own board of executives - and made them compete for company resources.
I’m not just talking executive salaries, here. The basic necessities for operating a retail business were all apportioned according department performance and the degree to which executives toadied up to him. Advertising, cleaning supplies, lightbulbs, floor space - if you weren’t bringing in the numbers and/or giving Lambert rimjobs, your department received no corporate support in any of the areas where unified corporations are supposed to be more efficient than a dozen competing businesses.
Lampert believed that this would lead to department heads acting in selfish yet rational ways to bring out the good in their own departments. What happened was that Sears devolved into a dozen armed camps that spent more time sabotaging the other departments than they did vacuuming their floors (the vacuum was restricted, too, naturally.) Sears and Kmarts became filthy and run down and started lousing business in droves. What money they were making for Lampert and his favorites was put into stock buyouts.
Lambert is still at Sears, which is drowning in billions of dollars in debt. He wants to peel off Kenmore now and sell it to his personal hedgefund since Kenmore is still the Sears brand with any hope of profitability. The rest of Sears will presumably be set on fire and kicked to the curb in what is basically “a slow motion liquidation”.
I get the impression that he’s never put someone who knows anything about retail or merchandising in charge. Because looking at the success Target has, Sears or Kmart could have had the same thing.
Wow, that Alternet article is terrible. It confuses some very ordinary, and even quite decent business practices, and can’t seem to distinguish between Lampert’s Randianism and the Leveraged Buyout game. There are legitimate reasons to think that Lampert has questionable management instincts, and many to think that Leveraged Buyouts are bad, but the two don’t really overlap.
In any case, Lampert is probably making out good off of K-Mart and Sears. It’s an ugly practice, maybe, and potentially even morally wrong, but he’s likely to end up with a nice wad of cash. This is a pattern with people in that biz - just see Carl Icahn or Ron Perelman. All three have a mix of very successful business deals, combined with occaisionally blowing the companies they got their grubby mitts on for private gain.
The Alternet article relies on the reporting from the Bloomberg article, which is currently paywalled. (The original article used to be freely available. I remember reading about it five years ago when it was first published.) The Alternet article is not paywalled, which is why I included it. The Salon article, also unpaywalled, is basically a reprint of the Alternet article.
For the purposes of the OP’s question, I think all the articles explain why Sears is hopelessly doomed due to Lampert’s stupid libertarian management style.
As for Lampert’s outlook in the future - he was a white collar billionaire when he got the job - so, yeah, he’ll be fine. This article from April outlines his performance numbers:
He’ll still have his golden parachute when this is over, but it’s hard to say it’s been any kind of success for him.
Oh - just happened to find this link about Lampert’s declining hedge fund:
Again, he’s still personally a billionaire, but this is not an endorsement of his business philosophy.
No it really isn’t serious. And the basic reason before even considering the merits of a major US retailer making that their theme is it takes capital. Either that the company has, or markets have the confidence to newly invest via new issuances of stock or bonds at a reasonable price. Sears/K-mart lacks that. Non-starter for them.
Beyond that, the natural trend in consumer businesses in emerging markets is not to replicate where the developed world was decades ago, but where it’s going now. A lot of businesses are in fact much more internet, and particularly mobile phone, oriented in developing countries than developed ones. Replicating in the developing world old business models formerly successful in the developed world is generally a losing idea.
No. Thirty years ago I experienced lack of spare parts availability for Craftsman snowblowers. That happened again 25 years ago. I’ve never considered purchasing a Craftsman product since. Craftsman lawn mowers have always been known as Crapsman in the lawn care industry.
Wow. I just lost about 3 hours in this maze. Transfixed by the absolute crazy fashions from the 1969 Sears Wishbook. Especially the men’s and boy’s stuff.
Matching pajamas and robes. Did boys really dress like that?
Sears does still have salesmen on commission, or they did two years ago which was the last time I bought anything there (I never would again). They had a policy of beating any advertised price and a salesman reported that a woman had found a great deal from a retailer in Maine. The sales manager first said no, then okayed it as long as the woman bought the full extended warranty. Utterly shameless, the whole conversation took place right in front of me.
No. They’re in a death spiral. In any organization, 10% of the staff (including execs and management) are responsible for 90% of the income/profit. At Sears, almost all of them have already jumped ship.
For my entire life they’ve offered good and reliable quality and service. It’s very depressing. Sic transit etc.
About 15 years ago, my SO and I had this discussion. At that time, we figured that Sears needed to drop their clothing, jewelry, makeup and similar departments, and keep their appliances, tools and automotive departments. They needed to leave the big city malls, and move into small town strip malls. I think they could have stayed in business, with a pared down size and selection. They could have kept selling this kind of stuff, and the vacuum cleaner bags, water filters, dehumidifier filter, etc, that go with them. Today, it’s way to late.
Obviously Lee isn’t dumb enough to have an exclusive with Sears, so is the reason you couldn’t find them other places due to being sold out or old seasons/discontinued?
I’ll miss them and seeing the Wishbook archive was awesome. Now where are Brenda and I going to find paintings? Though truth be told we’d had it already over 40 years ago.
Don’t stockholders have a say on who the CEO is? Why do they let him stay on the job, when year after year they see their own money going down the toilet?