America in 1886 had a population of only 58 million people, nearly two-thirds of whom lived in rural areas of the then 38 states. Richard Sears lived in North Redwood, Minnesota where he worked as a station agent for the Minneapolis and St. Louis railway. He was entrepreneurial at heart, selling lumber and coal to the locals to augment his income. When an unwanted shipment of gold-filled watches showed up at the station, Sears negotiated to buy them at a discount. He sold those watches to other agents and locals – making a tidy profit.
Seeing an opportunity, Sears sought to buy more watches to sell. His efforts were so successful that he placed a want ad in the Chicago Daily News seeking a “Watchmaker with reference who can furnish tools.” It was 1887. Alvah C. Roebuck, from Indiana, responded and was hired. The two began a mail-order catalog which, at first, was selling only watches and jewelry. The business – Sears, Roebuck & Co. – was officially formed in 1893. Sales that year topped $400,000. Within two years, the catalog had dramatically expanded, both in items offered and page count.
By 1895, the catalog featured virtually any item one could want – shoes, clothes, fishing equipment, wagons, china, bicycles, saddles and firearms. Sales nearly doubled in those two years, topping $750,000. Also, that year, Julius Rosenwald, a Chicago clothing manufacturer bought into the company. It was Rosenwald who brought operating processes and efficiency to the company, essentially a modern-day COO.
In order to raise capital for expansion, Sears, Roebuck & Co. went public in 1906. Even though Roebuck had already sold his interest to Sears for $25,000, the company chose to keep the company name unchanged.) That money helped the company to further expand its reach and product line. At the same time, it allowed improved operations by creating cutting edge mail order and shipping systems and initiating quality standards.
When it became apparent that catalog sales lagged greatly in bigger cities, the company made the decision to enter “brick-and-mortar” retail – opening its first store in 1925. Store sales surpassed those of the catalog by 1931. The following year the company created the store planning and display department. This new discipline designed stores which were built around the merchandise and shoppers’ tendencies. The merchandise was given the same level of attention. The only thing that slowed the growth of Sears and its stores was World War II.
The end of the war marked a new lifestyle shift in the U.S. Soldiers returning home were getting married, starting families and seeking the ideal place to raise their family. The answer? Suburbs. Cities began to expand into what once were rural areas. Sears & Roebuck seized on the opportunity, becoming a leader in the creation of shopping malls. Sears stores would become one of the ‘anchor stores’ in the new mall concept.
The catalog business which launched the company eventually peaked and began to dwindle. The retail stores had become the backbone of the company. While these two channels may seem distinctly different, they share a trait which was critical to the success of Sears. Each business model was based on the concept of bringing merchandise to the people. They reached rural America through mail order. They reached the urban and suburban customer by building stores near them which were designed with the customer in mind, had plenty of parking, as well as other shopping options. Simply put, Sears, Roebuck & Co. (Sears) was built to be a fearless brand.
Fearless Brands meet customer needs and wants in a relevant manner
Sears must be acknowledged as one of the true pioneers in business to consumer selling. The company was the leader in the mail order catalog business. Adapting to the needs and wants of urban consumers, Sears began to open retail stores in the ‘big cities’. Once again, the company adapted to changing times – new consumer behavior and locations – by fueling the growth of retail malls.
The 1973 opening of the Sears Tower in Chicago – then the tallest building in the world – is perhaps the symbol of Sears’ peak. Since then, a variety of poor decisions and missed opportunities has led to a modern-day Sears which is in dire straits. At one point Sears’ ad slogan was “Sears has everything”. Sadly, that mentality has led to the brand’s downturn.
Sears expanded into business which had no synergy with its primary business and locations – securities and real estate. These products had little or no relevance to shoppers in Sears stores. Separately, the decision was made to expand by creating free-standing stores for certain categories – hardware and appliances. These stores diverted traffic from the anchor stores which had led to much of Sears’ success. As these moves began to strain the company’s capital resources, the company began to sell off some of their exclusive product brands – Lands’ End.
The ultimate cause for today’s Sears is the direct result of the company being purchased by a former Goldman Sachs executive turned hedge fund manager, Edward S. Lampert. Lampert had big ideas to scale Sears sales, trim expenses and generate a company with an immensely greater value than when he bought the company. That has not happened.
Countless business and financial experts have put forth their opinions as to what has gone wrong. From a branding perspective, there is but one reason. Lampert lost sight of what had been at the heart of Sears’ success – the customer! Instead, the focus has been on cost-cutting, stock buybacks and selling elements of the company to raise cash to address debt. Simply put, the focus has been strictly on the financial ROI of Sears, with no regard for the customer. Poor merchandise, outdated stores and fixtures, diminished customer service – an overall disregard of what consumers want and need. Importantly, Sears has not been relevant in online sales efforts.
A once fearless brand is now struggling for its very existence. The lessons are simple but powerful.
Branding is a never-ending discipline. Business – the world – is ever changing and evolving…improvise, adapt, overcome.
Be relevant – Sears’ success came from seeing that needs and wants of consumers weren’t being met – then identifying a viable way to fulfill those needs. Sears had always been relevant to their customer base! That focus was lost.
Provide great value – Sears, at one point, was known for offering high-quality merchandise at fair prices – the word for that is VALUE. At one point, Craftsman Tools, a Sears’ brand, had a lifetime guarantee – if anything happens to a tool, Sears would replace it. Just last week – January 5, 2017 – Sears sold its Craftsman brand to Stanley Black & Decker for $900 million.
Stay focused – Being all things to all people just doesn’t work. The temptation to expand and diversify in order to continuously grow revenue and profits is great – a money focus. A brand which loses its core purpose is destined to fail – maybe quickly, maybe slowly – but fail it will.
Sears may find a last-minute miracle cure for its business problems. The company may be able to pull out of its current down-spin. In reality, that is highly unlikely. Within 5 years, in my opinion, Sears and Roebuck Co., will not even remotely resemble the company that was spawned in the 19th century. Becoming a fearless brand is one thing – remaining one takes work, awareness and commitment.