It’s why this is called a “death spiral.” It’s almost impossible as a business to break out of the downward trajectory once you’re locked into it. Business strategies for growth depend on funding, but if you can’t get loans or investment because everyone thinks you’re dying, you can only sell off assets, downsize, or take on unsavory investors.
To be fair to Sears and Radio Shack, both businesses lasted far longer than the public consciousness thought.
I think the real strategy is “milk as much money left as possible, then file for bankruptcy.”
I don’t remember the details, but the company’s greatest asset is the land the stores are on, or the leases at least, which is now worth more than the stores themselves and that it’s being syphoned into the CEO’s private equity firm. So the more the company loses, the better it is for Eddie Lampert, the CEO. Nevermind the conflict of interest, eh?
What’s your business plan to take over the world then?
I’m being sharp but serious. Large B&M chains have huge sunk costs that can’t be easily switched direction; it’s like saying every stand alone Starbucks should be turned into a gas station or something.
Sears is a dead man walking because they’re in dying malls, no one shops there anymore for clothes, no one shops there anymore for tools, and only some people shop there for appliances still, mostly older people through inertia. How do you fix this? If you have an idea, apply to become the CEO of Radio Shack because they have the same problem. They just closed a 1000 stores last weekend, leaving only 70 left in the country.
I think Sears could have lasted maybe decades more, even though it’s a dinosaur. The bigger point is that it’s being actively mismanaged and run into the ground. Some of the articles below show how insane the company culture has become. Very few businesses have been sabotaged so effectively, it’s almost a study case.
Some articles:
I am not the CEO of a large company, let alone the CEO of anything at all.
Starbucks, is trying to take over the coffee world and they are doing a good job of it.
Yes, Sears is a dead man walking. Unless they get a plan to take over the world, they will die off. Even with a plan, they may still die off. I have no idea what that plan would be. If I did have a good plan, I certainly would not share it with them, Id be trying to take over the world myself.
Interesting I’ll have to look this up. I haven’t looked at Sears financials that closely having written them off - sounds like they’re being parasites from within.
This seems especially true of the Sears where I live. It is surrounded by smaller and newer shopping centers and they are always packed. Kohl’s is the mall’s only other anchor store. Where Sears is located, lot is 3/4 empty all the time and in extreme disrepair, potholes everywhere. Add to that there is land shortage in the area for commercial, without question the land is easily worth 50x what they paid for it back in the 1966.
Lehigh Valley Mall, Sears (1966-) (212,850 square feet (19,774 m2))
It was a good idea to build around a Sears, back in the day. I don’t think they are even walking at this point, more like crawling. It’s a miserable experience to go into a Sears store, and their online store is somewhat awful. They don’t have the resources to fix either of them. I don’t understand how these CEOs keep their jobs even as they drive companies into the ground.
Ah, well, he’s now more than a CEO, he owns 48% of the company. Sounds like he’s committed to liquidating the company’s assets and receiving the lion’s share of the proceeds. All about your skin in the game.
Dude, first of all, I didn’t know you were this close to me. Second, Lehigh Valley Mall has three anchors, Macy’s, JCPenney, and Boscov’s. I work for the latter so I’m pretty familiar with it and live close enough that I know the mall. I was at the Wegmans up your way just yesterday.
The Sears is in the Sears Whitehall Mall, which yes, is kind of a dump. It was also the first enclosed mall north of Philadelphia so it’s sort of unfair to use that as an example of Sears decay.
Retail has always been tough but having been in this industry for 20 years now, and seeing both the ups and downs, I can say that there is a definite place for Malls and big anchor stores. People still shop there and in much higher numbers than the Internet would have you believe.
Yeah its the Whitehall Mall, I should know as I worked at the Kohl’s there in the late 90s.
I like Wegmans, and also we have a Costco here in the Valley!
I could take up residence at Wegmans. I love that place.
400 head office jobs axed.
Sears Canada had been struggling for some time and now it running out of cash to operate through the rest of this year.
Can you imagine where Sears would be if it hadn’t disassembled its catalog division ~ 5 years before the Internet took off? It would be neat to see what could have been if Sears had the infrastructure for home delivery on the eve of Internet shopping.
My first girlfriend worked in the Sears menswear department after school circa 1980 or 81. Even back then as a teenager I wondered how they could stay in business. I’d visit her, and could sometimes talk with her for an hour before a potential customer wandered into the area. Granted this was usually between 7:00 and 9:00 pm after I got off work, so it was likely their slowest time, but still I marveled at how quiet that place was.
Except for the appliance, lawn mowers, and tools departments, which were fairly hopping. And for that brief period in the late 90’s when they were selling Packard Bell computers for $3,000 each, that section was relatively busy as well. They even had a small section that sold the original Gameboys. I bought a few Gameboy games there. They were overpriced, but at the time there was no internet, and I couldn’t find them anywhere else.
But clothing? Nobody ever seemed to be in those areas.
Yeah, and the thing is, the margins are way better on the clothing. All the stuff they became known for (appliances, tools, lawn mowers) went through a margin crash, but that’s what people came for all along. Then they bought KMart and made things even worse!
Walking into Sears is like entering the Twilight Zone. You smell death, but everyone’s alive. You’re convinced you stepped through some sort of time portal because everything in there is old and no amount of mopping is going to clean up that disgusting floor. Even their dressing rooms are depressing, and let me tell you, no one wants to buy clothes if they have to go into a closet that looks two steps away from burping out a monster from a horror flick.Even online pick up is a soul crushing experience. My Sears just lines up all the excess crap they can’t fit in the warehouse or something in the area that used to be their portraits place with things like mattresses as you sit there and wait. This is, of course, assuming they actually have what you ordered.
I will miss being able to get good deals on tools though, but I would have ordered more if I didn’t have to go to the store as often I as did to pick them up.
I should write up another Kmart story.
Yes please.