USA TODAY International Edition
Our view: The long, sad decline of America’s iconic retailer
History has many examples of great companies fallen on hard times. Eastman Kodak, for example, once had a near monopoly on the film needed for photography. And Pan Am was once the preferred ticket to the exotic, international jet-setting life.
They were brought down by tectonic shifts in technology, economics, or both. Film all but vanished with digital photography. And Pan Am could not compete when foreign governments began subsidizing national carriers.
But what to make of the long, slow and sad decline of Sears, America's iconic retailer? While it is superficially like other retailers that have lost ground to Amazon, Sears sticks out for an obvious reason.
The company that’s mostly an afterthought this Black Friday or Cyber Monday should have been positioned to thrive in the digital age, not surrender to it. In fact, it has eerie parallels with Amazon.
In the early 20th century Sears, Roebuck & Co. was America’s dominant company in the home delivery of merchandise. It ran this catalog-based business for decades before it opened its first store in 1925.
Like Amazon, Sears used its retailing strength to expand into related industries. It launched its own merchandise brands, such as Kenmore and DieHard, created Allstate Insurance, and even ventured into the stock and real estate brokerage businesses.
It once owned and occupied the tallest building in America, the Sears Tower in Chicago. It even had the foresight to partner with CBS and IBM in an early Internet portal known as Prodigy.
But by the time Amazon was founded in 1994, Sears had become interested in little but protecting its increasingly ho-hum brick-and-mortar stores.
In its latest chapter, an appropriate coda has been written by CEO Edward Lampert. The hedge fund manager turned executive has tried to compensate for Sears’ decline by merging it with Kmart, financial engineering and micromanaging from the top.
It hasn't been working. A decade ago, the company had 3,400 stores and a stock price of $144. Now it has 1,250, roughly evenly divided between Sears and Kmart. Its stock trades at a little over $4.
Sears, like other companies, is failing in part because it did not understand that this is an age of visionaries, not administrators. The wildly successful companies of today, including Amazon, did not merely ride the waves of change that swamped the likes of Sears. They created them.
They succeeded by thumbing their noses at conventional wisdom. That has meant pouring vast resources into good ideas, sometimes not knowing how they’d make money. It has also meant cannibalizing existing lines of business on the understanding that if they didn’t do it, someone else would.
Millions of Americans have fond memories of shopping at Sears’ stores or ordering from its Christmas catalog — dubbed the “Wish Book” — in bygone times. But capitalism ultimately rewards innovation, not nostalgia.