It was 1886 when Richards Sears and Alvah Roebuck started up the retailer that took the name Sears and Roebuck. It began as a mail order operation and it wasn’t until 1925 that it began to open stores, while aggressively marketing the famous Sears catalog. By the 1950’s and 60’s, the Sears catalog was found in most homes and represented the equivalent of Amazon in those days. It was a super convenient way for consumers to order things over the phone or by mail and have them delivered. From the mid 20’s until 1989, this retailer grew into a true American icon.
It was 1989 when it gave up its title as America’s largest retailer; with Walmart taking over that role. Since then, the decline has been constant and growing in its negative momentum. It was acquired by a very aggressive financier in 2004 and merged with Kmart to form Sears Holdings as part of the hedge fund ESL Investments. Since then, the negative momentum has continued. In fact, between 2000 to 2015, Sears’ annual sales have dropped from $41 billion to $15 billion.
Recently several banks projected that the retailer will soon go bankrupt. The death of this icon of retailing is due to one simple fact: for the last 20 years there has been no significant change; while the retailing industry passed them by. The annals of business are filled with examples like this; such as Kodak, Blockbuster, and Nokia. During that two decade period, Sears stores have been drab, their image old and crotchety, no fresh marketing approaches, and they completely missed online retailing. Frankly, today they are irrelevant in the world of retailing.
Many people scratched their heads when a hedge fund purchased Sears. Their skepticism was valid. These financial guru’s basically micro-managed the organization, rather than develop a fresh strategy to tackle the future. They managed by financial numbers, ignoring consumer trends. Most importantly, their arrogance and confidence continued regardless of the year-by-year weak results.
The financial wizards who bought Sears failed on the most important rule of leadership:
At every juncture, you must take stock of the situation, develop an impactful game plan to get out in front of competition, and implement with excellence. You then go back to the drawing board and assess the results to date and develop yet another set of initiatives that will further improve the business.
Clearly Sears Holdings followed none of this and back in 2004 when many people were skeptical about a hedge fund guru leading a giant retailer, their assessment turned out to be dead right.