Name: Sears Could've Been Amazon, What Happened?
Uploaded: 2019-05-18
Duration: 6 min 38 s
Description: Sears had everything needed to be an e-commerce leader, but poor decision making and lack of foresight left the retail giant trailing its competitors.

People can point to a million factors that ultimately doomed Sears, and in the aggregate they did. But fundamentally, what the company neglected to do, was to understand the importance of stores and the importance of merchandise and the importance of e- commerce and have all three of them feed one another. It's incredible in retrospect, to look back And think of what e- commerce became, and then look at what Sears had, because it had everything, and they were simply a non- entity in e- commerce once it actually became established. [ MUSIC ] Shopkeepers say the Christmas bonanza started earlier than ever this year, with record sales in November. On the spending spree still going strong. [ MUSIC ] The dominance of Sears over retail over many aspects in American lives was such that at it's peak it represented one percent of the US gdp all on it's own. It's market cap had reached 96 billion in 1965. Dollars, that was in the mid 60's. But also was just it was the place where a lot of Americans built up their credit history so that they could buy homes and they could buy big ticket items. The catalog was a fixture of American life. Sears sold prefab homes to people. It was a very inescapable part of American life for decades. [ MUSIC ] [ MUSIC ] It dominated retail and the stat was booming. Everything just look like it was going great. The CEO's didn't have a whole lot of incentive to change things. Why rock the boat when you're Performing so fantastically. We're at a Sears Store to find out why Sears is where America's shops. I do a lot of shopping for out of town family. You can order from the catalog and have them shipped it to wherever you want anywhere in the United States. So the company started life in 1886 as a catalog. And thrived and of course, a lot of retailers including Amazon today discovered it needed stores, which it opened the first of its kind in 1925. And then, in the 60's it really expanded with malls across the country. [ MUSIC ] The catalog renamed it a crucial part of the business and actually very much part of American culture and peaked in revenue at 4. 1 billion in the late 80s but by that point it had gotten very expensive to produce it was 1500 pages and you were saying it to millions of people and there were so many different kinds of items and a lot of low margin and unprofitable items. And it really became an actual albatross for the company and so by 1993 they said bye bye catalogues. Because of the catalouge it had, Addresses, purchase history, billing information about millions, tens of millions of customers. It had the infrastructure for the catalog business. Meaning warehouses and distribution centers all over the country. It had tremendous expertise in mailing staff, sending products out to people through the mail. It apparently just did not occur to them that all the data they had from that catalog operation. And that vast distribution network that they had built up for 100 years was the perfect setup for getting into e commerce. Instead, they shut it all down, sold it off and it just disappeared. Pretty fancy computer there. Wanna give it a test drive? Me. lll Come on Jack. I'll show you something absolutely super. Sears was suprisingly advanced in the world of using the Internet. [ UNKNOWN ] First of all they had a good website. You could go and look it all kinds of information, look at prices, look at merchandise and stuff like that. They even realized that it would be great for you to be able to order something and then go pick it up at the store. Well there are retailers that are just introducing that today. They were offering it Close to 20 years ago. But e commerce doesn't work if your stores are shabby and your merchandise isn't great. Why go to a website and buy something if you don't like what you see? And so ultimately the tech muscle was pretty good at Sears in the last decade. But the merchandise and the relationship with stores was not there. That was one of the biggest miscalculations in the former CEO, Eddie Lampert's strategy for the company. He saw stores and e- commerce as a zero sum game, and as we've seen, you need stores to support e- commerce, because you need stores to as a place to go pick up online orders, to ship orders, and also to maintain brand visibility. [ MUSIC ] Every store is like a giant billboard for your company. And when you close the stores down, that visibility just evaporates and you're no longer a presence in the consumer's mind. And that really ended up hurting them. Amazon is extending its reach with a big move into the major appliance market. The online retail giant will begin selling Kenmore brand appliances from Sears. Up until very recently, Sears still had 29 % of the US appliance market. And what that allowed it to do is over the years Accumulate a lot of information about his customers what they bought. It has an enormous database of information on installations and what brands. They were also doing that for appliances that they didn't sell, so that a potential lucrative form of revenue that they could have sold the other appliance makers. And that should have been something that it could leverage into the home services market. So in theory the whole smart home business should have been there's but because so much of the company was in decline and there was chaos and in fighting. But the company just never leveraged that advantage and so smart home services was a business that eventually went to Amazon. And it eventually went to Best Buy as well. A company that, only a few years ago, was thought to also be in a downward permanent spiral. If you haven't been to Sears lately, you haven't been to Sears. The whole lesson that we should draw out of this, the reason the Sears story should scare us, Is that these things can happen so easily without them being visible and that certainly what happened with Sears In the early 1990 Sears had everything it would need in its toolkit to become the dominant ecomerce player. It had [ INAUDIBLE ] works, it had information on millions of millions of shoppers and it have the Overall infrastructure. So really e- commerce dominance was Sears to lose. And in fact that's exactly what it did and later Amazon was the one that picked up the prize. [ BLANK_AUDIO ]

Sears Could've Been Amazon, What Happened?

Finance

Sears had everything needed to be an e-commerce leader, but poor decision making and lack of foresight left the retail giant trailing its competitors. 