Fallen Titans: Sears Department Stores

Depending on how old you are, Sears stores can conjure up a number of memories. Such as their hardware commercials that came on during the less-exciting Sunday morning cartoons, getting a couch for your first apartment and being able to get everything else you needed in one trip before the popularity of IKEA and West Elm, or perhaps their phonebook-sized print catalogs where your mom circled everything from new dresses and undergarments to spice racks and baking dishes that would house future gelatinous abominations.

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Like many other things Millennials are now being blamed for killing, the mighty Sears Roebuck is one of the next major home goods titans to go after Pier 1. At the time of writing, the company is basically on life support but we can see the end coming. Like many former retail titans, the chain was at the precipice of death then COVID-19 expedited the process.

But Sears wasn’t just another home goods chain that went bankrupt after one string of private equity vultures after another picked its already-emaciated carcass: it was one of the most powerful retailers in the freaking WORLD, and one of the oldest in America. So, what befell the once fortuitous mall anchor? How did it all begin and what led to yet another corporate obituary speaking of obsolescence? Let’s find out!

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The Watch Business That Launched It All

Sears’ predecessor is mostly remembered as “Sears, Roebuck, and Company” but the store was first a solo effort by Richard Warren Sears, a Minnesotan who experienced an odd twist of fate. Sears had set out to be yet another trust fund boy who inherited a shitload of money from his parents, free to carouse at brothels and go cow-tipping after the colonist square dance or whatever you did in the late 1880s for fun. But suddenly, the Sears family’s wealth evaporated overnight, because the stock market is just a glorified casino and people still haven’t learned this over 130 years later. Sadly, the patriarch of the Sears clan passed away shortly after the shock of their newfound poverty had hit.

Sears had to take a variety of jobs to support his mother and siblings. He worked as a telegrapher and a railroad agent, which led to another odd twist of fate. While working at the train station, a local jeweler refused to accept a shipment of watches that arrived. Seeing an opportunity to try a side hustle before the term became commonplace (and abused), Sears relieved the beleaguered jeweler and shipper and bought the watches. He started selling them to other station agents for less than what comparable watches would sell for, and profited handsomely. He made $5,000 from this hustle, which is over $136,000 in today’s money. That’s a nice Fuck You Fund by modern standards, let alone the late 1800s.

Building off the momentum and money he made from this adventure, he started a mail-order watch business in 1886 quartered in Minneapolis, dubbed the R.W. Sears Watch Company. Through this interesting precursor to Amazon and Shopify, he met a watch repairman named Alvah Roebuck and hired him as an employee. The two pooled their knowledge and resources and took it to Chicago in 1887, expanding to a mail-order catalog replete with diamonds and other jewelry in addition to watches and offering a money-back guarantee.

Oddly enough though, Sears and Roebuck stores weren’t a thing just yet. Sears sold the watch company for $100,000 (almost $2.8 million after inflation!) and vamoosed to Iowa, where he was going to quietly live out a dream of being…a rural banker.

But his bromance with Roebuck would re-emerge in the future soon enough.

Sears, Roebuck, and Company and the Midwestern Frontier

The entrepreneurial spirit never really dies. Us natural-born hustlers will always gravitate to doing something, and dude probably got bored sitting in a bank all day since this was before the days of conjuring up exotic financial products.

Come 1892, Sears came back to Minnesota and had a reconnaissance with Roebuck that took him on as a business partner instead of an employee. Sears, Roebuck, and Company was born as a new mail-order outfit focusing on watches and jewelry. The bros moved to Chicago in 1893 and stepped up their catalog game big time, with 196 print pages that now expanded beyond jewelry. Sewing machines were a must-have item at this point in time, and Sears-Roebuck also sold saddles, shoes, bikes, musical instruments, and dozens of home goods that local stores might not always stock.

Sears had a knack for appealing to Midwest customers who mostly lived in rural areas. He sourced products that best fit their needs after dazzling them with his copywriting that spoke to them and led to constant influxes of orders. Nowadays, you’d have suppliers and manufacturers in place before getting that first sale. Not Sears-Roebuck: he got the orders then found producers. 

Would this fly nowadays? Maybe, maybe not, depending on what you’re selling. It could probably work for custom furniture. But it was pretty damn revolutionary for mail-order retail at the time, because this was before Amazon spoiled you with 2-day shipping windows. If you got something through mail order, you knew you’d have to wait a while before it arrived. Sears took advantage of that long window.

Sears took pride in his work and wrote all of the copy for the catalog, which had exploded to over 500 pages by 1894. He also wrote all the ad copy that got placed in newspapers and magazines, and made sure those ads were in constant circulation. Such a gargantuan catalog was something of a novelty for the time, and I suppose it manifested again with Internet shopping in the future: a search bar makes searching hundreds of thousands of products much easier. But at that time, catalogs had to offer more than both competing mail order businesses and local stores. Sears knew his Midwest farmer base, they had a hard time finding what they wanted and needed and often had to haggle on credit with local stores. He listed his prices clearly with his colossal selection.

As the catalog size grew, so did the company’s sales. They began selling necessary home living items like stoves and groceries, then also began to sell dolls and sporting goods as sales climbed to $400,000 in 1893 (almost $11.3 million today) then almost doubled just two years later. They even sold CARS through the catalog– totally pre-dating the ability to buy a car online!

But the bromance between Sears and Roebuck came to a halt during the National Panic of 1893, a less-discussed economic depression that predated the election of President McKinley. The country was in a recession and scads of merchandise that used to fly out of warehouses was now sitting unsold. Roebuck wanted to get out, which led to Sears offering his share of the company to a Chicago businessman, Aaron Nusbaum in 1895. He stayed on in a marketing and managerial role, but no longer owned the company even though it still bore his name.

Sears IPO and the Birth of the Consumer Spending Obsession

Nusbaum had company, his brother-in-law Julius Rosenwald. Sears owed Rosenwald money and figured he’d take this as an opportunity to benefit from the duo’s business knowhow and Sears’ intimate knowledge of his customer base to really take things to the next level. Despite starting their business relationship as a debtor one, ironically Sears got along great with Rosenwald but Nusbaum didn’t fit well.

After birthing a new corporation in Illinois in 1895, Nusbaum’s share was bought out in 1903. Rosenwald wanted to focus on what Midwestern farm households would want: dry goods, hardware, furniture, and other durable goods needed to run a farmhouse and make a happy home.

With Rosenwald’s business management prowess and Sears’ expertise in marketing to rural farm households, sales rebounded and continued to grow rapidly. With a grand vision for expanding the company, they decided to do an IPO and raised $40 million on the stock market in 1906. That’s over $1 billion today!

With this intense mother lode of cash in hand, Sears and Rosenwald opened a megaplex of catalog plant, office buildings, labs, and other buildings spanning 40 acres on Chicago’s west side. This enormous complex served as the corporate headquarters and housed buildings necessary for a giant mail-order operation until the now-iconic Sears Tower was finished in 1973.

By the 1920s and after the founder Sears’ death in 1914, Rosenwald used his personal wealth to get the company out of hot water after yet another economic downturn. This was before billionaires expected taxpayers to bail their asses out, apparently. With Rosenwald’s multi-million dollar bailout, Sears-Roebuck got back on track and then opened their first physical store in 1925 that would be tucked within the same megaplex. Rosenwald oversaw the construction until his retirement in 1924.

With millions of dollars in sales and customers now having an opportunity to visit the home of these vaunted catalogs, this is how business journalists and analysts came to track the consumer retail sector and become obsessed with it (then blaming Millennials for every damn thing a century later).

The Advent of Customer Wishlists and Shifting to Foreign and Urban Customers

If you’re on social media frequently, you probably see people posting Amazon wishlists. Most online stores that you shop at these days have wishlist functions. My first encounter with an online wishlist was in 1999, when I was 14 and had no money but dreamily filled my Hot Topic wish list with countless frocks, shoes, and accessories I had no hope of being able to buy.

Sears pioneered this concept.

The first Sears Wish Book came out in 1933, and it featured dolls, toys, confections, and other gifts that cemented its status as THE place where you ordered holiday gifts. Sears catalogs previously sold holiday merchandise, but the Wish Book was a totally separate catalog that wound up changing the way people did Christmas shopping.

While mostly remembered for its gifts for children, plenty of gifts for adults were also featured then they went all Katamari Damacy and started selling everything from furniture to ready-to-assemble HOUSES. WHAT. (Stay tuned for an article about that!)

Yes, you could wishlist a freaking HOUSE from Sears. You had to have your plot of land figured out, that wasn’t their job, but you could totally buy houses and components right out of a damn catalog without ever consulting an architect. What a wildly innocent time!

While that 300-page beast only made an appearance around Christmas every year until 1993, the “wish book” concept was replicated with the actual pages of that big honking catalog. I heard countless stories from my parents’ Boomer friends growing up about how they eagerly circled toys in the Sears Wish Book then would do the same with the standard catalog, while their mothers circled dresses, slips, dish towels, soap dishes, and other items. Their older Millennial kids did the same in the 90s with Delia’s and Just Nikki catalogs.

The Sears catalog had become a lifeline in rural America, because it revolutionized shopping for people who didn’t have many options. In rural areas where people couldn’t easily travel to big cities with block after block of stores, the Sears catalog opened up a whole new world to them. For marginalized people, especially Black people living in Jim Crow America, Sears catalogs granted them a way to safely shop without having to visit predominantly-white stores where they may have been barred entry or unable to buy certain products. It earned the name “The Consumers’ Bible”, just like how we refer to Amazon-ification of things today.

While Sears grew to epic proportions serving mostly rural communities in the Midwest, the company’s customer base had rapidly expanded and diversified because of the ubiquity of the catalogs and consistent magazine and newspaper presence. Foreign customers started ordering from the Sears catalog after American soldiers left some catalogs in Greenland during World War II, and other places the occupation had taken them.

As rural areas in America slowed their spending power and stagnated in population, urban America became the obvious customer base to adapt to. The first Sears store was built in the company’s office complex and other buildings related to their mail order complex, and catered the merchandise to working class city dwellers: men’s and women’s clothing could be found along with hardware, building materials, and durable home goods that you could pick up and walk out with without having to be waited on by a clerk like you would in a typical department store.

With the rise of suburban malls in the postwar boom of the 1950s, Sears stores were now beginning to eclipse the mail-order operations that initially catapulted them to the top.

Sears Becomes a Mega-Conglomerate with the Rise of the Mega-Store in the 1990s

Sears department stores were spreading like wildfire from the 1950s to the 1990s. Sears became such a popular anchor store with malls to the point they even formed a mall development company in 1959 that lasted 36 years. With Sears Auto Centers now providing a place to buy car parts and even get your vehicle serviced in some locations while you shopped, the company seemed indomitable.

True to their roots as a company that truly did and sold every damn thing under the sun, Sears didn’t stop at just pivoting from mail order to retail with the mall boom in the mid-20th century. They also created their own brands sold at Sears stores, like Kenmore appliances and Craftsman home and garden tools among other brands that are still well-known to this day, and got into everything from tech to real estate. Did you know that Coldwell Banker real estate brokerage was part of the Sears empire, and so was early Internet provider Prodigy?

Sears wasn’t just a titan; it was a virtual megalopolis. Its total GDP probably exceeded that of several Baltic states smashed together.

The company once operated over 3,500 stores across America, which whittled down to about 700 by the time they filed for bankruptcy protection in 2018. But while it’s inevitable that empires that big will someday fall, as history often proves, it can seem puzzling how this particular one reached this stage.

One of those factors was the rise of the “one stop” mega-store in the 1990s. Sears was the largest retailer in the nation until Wal-Mart nabbed that title. Online shopping was a newfangled concept and not quite there yet, but shoppers of the 90s loved the convenience that big-box stores like Big K-Mart and Wal-Mart Super Centers offered where you could shop for groceries and a new TV while you got a prescription filled.

With new competition coming from Home Depot in the hardware and home improvement sector and Best Buy in electronics, Sears management maintained their operations with hubris because of the company’s long history and customer loyalty. They didn’t see mega-stores as a threat on account of product and staff quality. But they were quickly proven wrong when Wal-Mart’s “race to the bottom strategy” started displacing thousands of mom and pop shops across the nation, and it wasn’t long before the big boys started to get bitten too unless they found a way to differentiate both their product offerings and customer experience

Sears decided to bring its focus back to retail, realizing it had too many pots on the stove. One subsidiary after another got stripped and sold away, including their mall development company and financial services company. They bought California-based Orchard Supply Hardware in 1996 and tried getting back into the home improvement game with The Great Indoors that had a sprinkling of stores on the west coast in the late 90s before getting bought out by Lowe’s in 2013.

But was it hubris alone that led to the company’s demise?

What Ultimately Shot Sears in the Foot?

Sears discontinued their iconic catalogs in 1993. This didn’t kill them overnight, but it was certainly death by 1,000 cuts.

What makes this so fascinating is that when you take a look at companies like Ronco, the operation thrived because pivoting to Internet orders was so easy after doing direct sales through infomercials for decades. But here…Sears totally utterly SQUANDERED infrastructure and customer information that took almost a century to cultivate!

Not only was the catalog discontinued at a time when people still ordered from them, but 50,000 people in the mail order division got laid off. You could argue that perhaps they didn’t see the ubiquity of Internet shopping coming, but things like email weren’t exactly this mysterious country off the coast of Italy (tweet me if you get THAT reference) but if I was the person who made that decision, I’d be smacking myself with a Craftsman wrench repeatedly.

To be fair, the cost of printing and mailing those enormous catalogs was getting expensive and not netting the returns it once generated. It didn’t seem necessary in this age when people were more reliant on stores and malls and it at least seemed more equal opportunity than general stores in the Jim Crow era. But DAMN, what a foolishly premature move this was in hindsight!

It also wasn’t the first time they fucked over their workers: salespeople stopped receiving commissions in the 1980s. This decision, along with the one to stock the same items in every store instead of each store being tailored to what the sales managers knew the customers wanted, also contributed to their downfall (and to be fair, deservedly so). Screwing your workers and patently ignoring the customers? Don’t cry that they both went elsewhere.

Another fallen titan, K-Mart, eventually bought Sears after K-Mart filed for bankruptcy in 2004, with the goal of merging into the Sears Holding Corporation. But this unholy merger was like trying to smash the Andrea Doria with the Titanic: all it did was slow down their inevitable sinking to this day.

Sears tried to bring the wish books back in the 2000s, but it was too late. Online retailers of all sizes and stripes already had infrastructure in place for wishlists and knew how to appeal to established Gen Xers and older Millennials getting their first jobs. We just didn’t have the same emotional attachment to the Sears wish book that older generations did. Unlike say, how 30-something Twitter lost its shit when we found out Dunkaroos are making a comeback and Dolls Kill started selling Delia’s clothes.

Eddie Lampert, the chairman turned CEO of Sears Holdings, got a lot of flack for mismanaging the company’s assets the way countless private equity vultures have done to numerous companies in the past 20 years. He pretty much did what you’d expect any hedge fund billionaire to do when handed the keys of a sinking empire: stripped its balance sheets for parts and hemorrhaged jobs by closing under-performing stores.

Sales and the company’s stock price initially rose under his leadership, but quickly began to fall once more because you guessed it — Sears did a shitty job at pivoting to online sales. After squandering that incredible mail-order infrastructure that took over a century to build, and what initially made the founders a killing on lean operating expenses. But it was definitely poor optics for a billionaire CEO to close stores left and right, killing poor retail workers’ employment prospects in areas where there weren’t many jobs, and this image only helped sour peoples’ view of Sears even further. He literally became the most-hated CEO in America! But according to those Glassdoor reviews, it wasn’t a totally unearned title. Then of course, the company filed for bankruptcy in 2018 and COVID-19 is speeding up its demise.

There’s roughly 130 Sears stores left, barely 3% of the footprint this megalith of a retailer once had. The company’s long history of trying to be anything and everything ironically didn’t contribute to the fall of the empire as much as simply forgetting about the customers and the people who work for you. It doesn’t matter how big and storied your brand is, if they can get a more personal touch at a mom-and-pop business or a better price on Amazon for that washing machine, AND one or both of them make it more convenient with more choices, that money won’t be yours.

But just wait, when the last Sears store shuts its doors forever, there’s going to be a deluge of angry Boomers on Facebook going on about how Millennials killed Craftsman tools when we had nothing to do with it. Mark my words.