Chasing the Customer … Sears, Down the Up Escalator – 3

Sears Roebuck & Company

What Went Wrong? The 3 C’s of failure

In 1972,three out of four American’s shopped there. Sales were more than 1% of the Gross National Product. Sears was one of the seven or eight largest corporations in the world.

More than half the U.S. households had a Sears credit card. One-third of American families had a credit card balance average of $256. Time after time, surveys confirmed that Sears was the most trusted economic institution in the country.

There were nine hundred big stores, over twenty-six hundred smaller retail and catalog outlets, and well over one hundred warehouses, catalog plants and other distribution sites. Sears, Roebuck, over a century, had assembled the most advanced society of producers and consumers and served as the central warehouse for the American culture.

And Sears was rewarded. A single share of original Sears stock was now worth $20,000. A generous half century old profit-sharing plan meant that secretaries and elevator operators were able to retire with stock valued at upward of $500,000.

Then, rather suddenly, around 1972, Sears began to falter. Within five years, America’s largest seemingly invulnerable company was badly injured. The company was lacking in direction so fraught with internal strife that malaise verged on paralysis.

Lawsuits, government investigations, adverse publicity, and uber high interest rates all added to the merchandising, operations and competitive problems, so much so that it began to appear that the American middle class, the customer base which fueled the Sears economic engine for so long – had given up on the company all together.

Nothing decided or decreed from the top of Sears Tower inspired direction or even activity at the bottom of the store empire. Nobody at Sears was able to discern what had happened and nobody had any idea what to do.

To paraphrase Winston Churchill, the collapse of Sears is apparently ‘a riddle wrapped in a mystery inside an enigma’.

Some 42 years later, I will offer a perspective. I am not an academic by learning or skill set. I spent my career as a grocer, with a sidebar at the great advertising agency, Leo Burnett. I had an opportunity within that career span to learn something about retailing, the wonder of technology, the art of communication, and mostly by walking grocery aisles in almost every state in American over those 40 plus years, I had a great opportunity to get to observe and know the patchwork of people, the gender, age, race, color and creed that are the American customer.

My perspective is also based on the fact that I am a ‘son of Sears’. My Dad was in charge of Dept. 732 A, which in Sears lingo translated to advertising. I grew up on Sears brands, JC Higgins, Craftsman, Kenmore, Roebucks. Bicycles, baseball bats, blue jeans, laundry detergent – all were Sears brands. One summer I painted houses with Sears paint, because it was the best. I even cut lawns with a Craftsman power lawn mover.

Many of the personalities and issues were everyday conversations as I grew up. The people involved were neighbors and family friends as well as my father’s business associates. Gordon Metcalf, a Sears Chairman, and my parents grew up together in Sioux City, Iowa. As a young boy, I shook the hand of General Wood on a Saturday office visit with my Dad. I even got to visit Ed Brennan in his 66th floor Tower Office. Every ‘Sears man’ , as they liked to be called, always seemed proud and dedicated. I never heard my Dad speak ill of an associate. I am sure that there were conflicts and disagreements, but that seemed an era, at least at Sears for the most part, where people could disagree and then go to lunch together. They were dedicated and worked hard to maintain and grow Sears.  And then things ‘went wrong’!

Since hindsight is often the best perspective from which to view history, I will offer my perspective based on the knowledge I lived and the lessons I believe I have learned. Hopefully this is a perspective that will have a relevance for today and tomorrow for those of you who are now responsible for your enterprise.

What Went Wrong? The 3 C’s of Failure

  1. Culture
  2. Customer
  3. Change

In the next three installments, I will visit each of these individually. I am sure many of you will disagree and offer comments. That’s fine with me.

R/L

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Comments
2 Responses to “Chasing the Customer … Sears, Down the Up Escalator – 3”
  1. Richard Essigs says:

    Ron, I continue to enjoy reading the series. Thank you for taking the time to share perspective regarding an important time in the history of retail.

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