Sears, one of the most iconic retail brands of all time, is headed straight for death.
The company is running out of cash after losing money for nine straight quarters.
For decades, Sears was ubiquitous.
But industry analyst Robin Lewis writes that Sears made a few crucial mistakes that ran business into the ground.
Sears’ unravelling started back in the late 1970s and unfolded over three decades, according to Lewis.
Here are the mistakes that led to business declining.
1. Losing focus of the core business.
By 1980, Sears had saturated the marketplace with stores in nearly every U.S. city. Instead of focusing on the quality of product in stores, the company began investing in ventures not directly related to retail. The company used profits from the retail business to invest in real estate, finance, and an auto business.
“This did not have to be fatal; however, it actually starved those resources (capital and management ) from the retail business, leaving it unable to respond and adapt to the needs of the evolving consumer and marketplace,” Lewis writes.
2. Becoming too bureaucratic.
As Sears grew, the company created many different divisions. This was detrimental because it left Sears unable to react to changing consumer tastes.
Having too many managers is a frequent mistake for business, Lewis writes.
“Sears’s culture became characterised by infighting and significant strategic redirects,” Lewis says. “This cultural sclerosis is a disease that cripples many large, older companies in need of change for survival.”
3. Ignoring the competition.
Sears felt invincible, and didn’t respond to competitors like Wal-Mart, TJ Maxx, and JCPenney, according to the book The New Rules Of Retail co-authored by Lewis and Michael Dart.
Between 1998 and 2010, the number of competitors within a 15-minute drive from any Sears grew from 1,400 to 4,300 stores, according to Lewis.
Sears could have fended off competitors by altering its strategy. Instead, the company became complacent, leading to a massive loss of market share.
Today, the department store “just doesn’t have the same resonance, it doesn’t have the same level of importance to people as it had 30 years ago,” Matt McGinley, managing director at International Strategy & Investment Group, told Bloomberg News.
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