SEARS – the original Catalog company- had the chance to beat Amazon (online Catalog) at its own game. Instead, it gave up the fight – closed 2000 stores, laid-off 200,000 employees, is currently $4.2 billion in Debt & probably won’t survive.
Topics: History of Sears, Down-fall [Why], So what can Small Business learn from this? 5 things. Customer Fulfillment, Adding Value, Keeping up.
The Surrender. When a company announces to its investors that there is “substantial doubt” about its ability to continue trading, it is clear that there are troubling times ahead. When this happens to a company that previously held the accolade of “America’s largest Retailer“. This can act as a huge learning opportunity when Growing a Business.
History of Sears – Continual Strong Expansion. Sears built its business by starting & dominating:
1885 Two Watch makers formed a partnership to sell watches thru
Catalog Sales (beginning in 1888 (almost 130 years). This revolution in direct-to-consumer sales & a wide variety of products – created very loyal customers.
1925 opened 1st Store in Chicago. Created Kenmore appliances & Craftsman tools.
1931 added Allstate Insurance.
1936 stops selling Groceries thru catalog
1941 topped $1 Billion in Sales.
1953 introduces first Credit Card
1973 Sears Tower – tallest Building in the world – at the time
1981 exclusive agent for Pong – 1st Video Game
1985 introduces Discover Credit Card
1991 Walmart overtakes Sears as “America’s largest Retailer“. [Better prices]
1993 stops mail Catalog [Competition (ie, Amazon) is all online eCommerce with speedy Delivery]
1993-2015 sells most of it’s peripheral business to try to stay afloat – as Sales keeps getting worse.
2005 merges with K-Mart – who had lost to Walmart because of $$$ (2 losers don’t make a winner)
2013 sells it’s $30 billion Credit Card business to CitiBank
2015 raises $3 billion selling Stores to a Real Estate Investment Trust.
4 Jan 17 > $1 billion in Loan from various sources
3 Mar 17 announces Loss of > $600 million in 4Q16.
21 Mar 17 “throws in the towel” by filing with SEC that it doubts it can survive.
Down-fall Predicted. Jeremy Bodenhamer, CEO of Logistics SW company ShipHawk, theorized two years ago in an article in VentureBeat website, that Sears was “in the perfect position to crush Amazon,” by tweaking its focus away from cost-cutting & investing in infra-structure. Jeremy speculated that if Sears utilized its brick-&-mortar stores as Warehouses for final delivery, it would be able to not only beat Amazon Prime at speed but also convenience. Unfortunately, Sears did the opposite, and while one of its main competitors was trying to get closer to customers by building “local” warehouses, Sears closed its physical locations. Though intending to saving money in the long-term, Sears ended up distancing itself from customers and losing ground to a competitor in its key growth strategy.
So, what can Small Businesses “learn” from this Cycle?
Companies should constantly assess the potential of their assets and be aware of competitors’ growth strategies to ensure that they are aware of potential shifts in the market, and in customer expectation. The current shift in customer expectation towards
- More Choices of products switches from In-store to virtually unlimited with eCommerce.
- Speed of Delivery of products switches Customers from In-store to eCommerce with fast delivery.
- Freelance Services – including marketing is offered by Fiverr – who has become famous for swift design work,
- App Developer Bubble makes it quick & easy, to connect to Customers
- Low-cost Taxi servers, Uber & Lyft have brought Taxi pickup down to a few minutes.
GOAL: Customer Fulfillment. By working out how to get closer to the end user, and positioning the company in the best way to “delight” consumers, a business will ensure it remains relevant and stays on top of market trends.
Adding Value. Businesses must be mindful of ways they can provide “value” to their clients. In Amazon’s case, it has done this by honing in on the challenge faced by all online retailers — the supply chain. It then adds value by shortening wait times and then diversifies this value by opening up its newly created channel to external partners. Jerreme told me other companies like Sears could have taken advantage of its asset within the supply chain vertical: “The world-class supply chains operated by legacy retailers are a major advantage. By making these available to their sellers, they can offer low-cost distribution that helps sellers compete without the threats posed by Amazon and their ultimate goal of circum-venting the seller in order to single source. Empowering sellers is a powerful value.”
Keeping up & Staying ahead of the Curve. This flow over other industries and company sizes — evaluating how different assets can be diversified, examining where advantages can be gained through better positioning and a constant drive for innovation, plays a huge role in keeping a company ahead of the curve. With the exponential growth of technology, the ability to quickly adapt and accommodate for the changing customer expectations will only become more important in 2017 & beyond.
Comments: Are there any other Lessons you learned from Sears “rise & fall” that you think are relevant?
from Startup365France & USA Today 24 March 2017 enhanced by Peter/CXO Wiz4biz