As recently as your grandparents’ generation, Sears was the household goods icon for middle class Americans. The thick Sears catalog was the family go-to source for mail ordering anything from eyeglasses to bicycles, and, in earlier decades, even patent medicines and pre-cut houses complete with kitchen sinks.
Sears, which opened for business in the late 19th century, called itself “The Cheapest Supply House on Earth,” and, in its heyday, dominated home delivery with 75 million catalogs distributed each year, bringing goods to far flung farms, towns and other locations. But today’s customer, who can browse the Sears website but not order from its catalog service, which was dropped in the early 1990s, is likely to be ordering from Amazon’s marketplace instead.
“Amazon is the new Sears,” says Robert Spector, a retail historian who wrote Amazon.com: Get Big Fast, and other books on retailers. “It’s also the new Walmart, the new Barnes & Noble and the new Best Buy.”
has not retooled its venerable brand for the technology age, which was underscored this past holiday season when retail sales rose, and Internet sales soared, but the venerable store racked up such poor sales that it announced that it will close 120 stores, and projected that its earnings are likely to sink more than 50% for the most recent three months — usually the time of the year that retailers rake in their biggest revenues.
Sears, says Spector, “tried to hold onto what they were rather than trying to invent themselves. Like Kodak, Sears did not leap forward when it needed to do so.”
Yet Sears still has a loyal customer base, attracted by its sturdy Kenmore appliances, reliable Craftsman tools and well-made Lands’ End clothing. It totaled more than $40 billion in sales last year, but that amount is down more than $10 billion from its annual totals only a few years ago.
, on the other hand, had healthy sales during the holiday season, although no specific figures have been released. Consumers spent more than $37.2 billion on overall Internet ordering in November and December — up 15% over last year, according to figures released by comScore, which tracks such spending.
The Seattle-based Amazon launched in 1994, one year after Sears dropped its mail order catalog operation, which department store historian Michael Lisicky believes could have been Sears’ foundation to capitalize on its reliable reputation and to build a Web operation that could have cemented its place in the American home.
“Sears could have saved itself if they had switched to an Internet strategy, and combined price and the convenience of things coming to the house,” says Lisicky, who is the author of several department store histories, including the most recent “Gimbels Has It!”
Sears has invested in online shopping, mobile applications, and Sears Marketplace, an website that mimics Amazon’s reach, offering nearly 20 million products available through third-party sellers. So far, though, that has not bolstered its image or its sales.
Sears “could have used its brands to transcend its recent reputation,” agrees Spector, but “it has deeper issues of relating to customers.”
Shabby stores, scarce help, and average prices have rendered younger customers indifferent to the Sears brand. They gravitate towards more clearly defined and upscale labels like Apple
, or UnderArmour
. Or, for lower-priced apparel, they might chose arch rival J.C. Penney
Core Sears customers are working class, or those earning between $50,000 and $125,000. For something special, they might splurge on a chic brand, but as they struggle with job uncertainty, unemployment, and a grim housing market, many are increasingly buying their everyday items at stores like Walmart
, Dollar Tree
, and Target
And many consumers have postponed big-ticket purchases like refrigerators, stoves, and other home appliances until the economy and the outlook for jobs seems more secure. All of this has combined to squeeze out the middle layer of retail.
Consumers also changed their buying patterns, and their expectations. They “want to have a relationship with the company, as well as the right price,” says Spector. “Amazon, from the beginning, has been all about the customer experience.”
In its earliest days, Amazon tested out the book delivery market before it gradually branched out to other items, and, Spector says, “Amazon never promised something it couldn’t deliver.”
Consumers also are not wedded to malls any more, says Lisicky, “Shopping is no longer a social experience. And department stores, which anchor many malls, now are not service-oriented because it requires a huge labor force and that does not help the bottom line.”
When Edward Lampert, a hedge fund manager, acquired Sears six years ago, he merged its operations with discounter Kmart, which he had helped nurture out of bankruptcy. Notably, though, he did not invest in remodeling or refreshing the many worn 2,200 Sears stores and, instead, spent billions on repurchasing shares and left the employee ranks too thin — even though the parent company, Sears Holdings Corp., still employs some 250,000 people.
Even so, the buying public is willing “to forgo service for price, but they expect value and convenience,” Lisicky says, adding that trading down to discount stores began as far back as the 1980s when Kmart “perfected the full discounting store.
“That led to department stores abandoning their full set of offerings,” he says. “They closed their restaurants, shut their toys and sporting goods sections, for example. So they were no longer the place to find everything.”
Sears has been squeezed by other retailers, , says David Reibstein, a marketing professor at The Wharton School of Business. It was once the super general store. But it was crowded on both sides, by lower-price stores like Walmart, or high-service stores such as Nordstrom
. But it’s not the only store stuck in the middle market squeeze, but unlike Walmart or Target, it has not been able to attract a higher-income customer base.”
Amazon, on the other hand, “has moved beyond because of its convenience. It’s the new version of Sears,” says Reibstein.
Lisicky agrees. “Amazon is Sears 100 years later.”