Monday, October 15, 2018

Sears, Roebuck, and bankruptcy


It is sadly ironic that Sears is declaring bankruptcy during what would have been Wish Book delivery season a few decades ago.

I don't remember when exactly Wish Books, the special edition of the Sears catalogue with an emphasis on toys and gifts, were sent out. It was after school started, and probably no earlier than late September. I believe they were delivered before Halloween. As kids, we had several weeks to go through page after page of toys and imagine what fun we would have once Christmas came, as long as we got our preliminary lists to Santa before the Thanksgiving deadline.

(Postal carriers must have hated Wish Book delivery season, almost as much as they hated delivering the much thicker seasonal Sears catalogues, which were full of...well, mostly clothing. But all those things got delivered by the United States Postal Service, along with lesser catalogues from places like Montgomery-Ward and local retailers Stroud's and Jewelcor.)

Sears is being described as the Amazon of its time, and that's an apt comparison, except Amazon, as far as I know, has never offered houses - house construction kits, really. But you could order all sorts of things from Sears. Toys. Clothes. Housewares. Major appliances. Jewelry. Tools. Lawnmowers. Sheds. Tires. Glasses. Ventriloquist dummies. Houses, in kit form, in the early part of the twentieth century. I think my Advanced Dungeons & Dragons Dungeon Master's Guide came from Sears. And while the stores were a wonderland of available items, much more was available through the Sears catalogue.

(Historian Louis Hyman has written some amazing stuff about how revolutionary the Sears catalogue was for opening up retail markets to blacks and people of all ethnicities. You can find him at @louishyman on Twitter, or visit his website https://www.louishyman.com/.)

Once upon a time it might have been inconceivable that Sears would ever go out of business, as inconceivable as it would be to think about Walmart or Amazon going out of business today. But even a few decades ago, Sears was feeling...stodgy. Hidebound. Old-fashioned. You knew it was a place your parents had shopped at, and your grandparents. It wasn't the coolest place to shop.*

Sears is on its way out, and earlier this year toy retailer Toys 'R' Us, which until recently had dominated the toy market after putting competitors Kids and Kay-Bee Toy and Hobby (later KB Toys) out of business, closed its doors. Both may have been victims of their own success. Sears and Toys 'R' Us each  dominated an older business model based on catalogue sales or bricks-and-mortar stores, and were unable to transform themselves to the new reality of online sales - and someone else muscled in and took their spot. I had a friend who worked for Toys 'R' Us in the late 1990's when they decided to try selling stuff on this newfangled "internet." The site that they had rolled out for the Christmas shopping season was quickly overwhelmed and crashed. They tried to keep a focus on online sales for a while but eventually gave up and ceded the online sales crown to (what was at the time) bookselling giant Amazon. Similarly, Sears, the king of catalog sales, should have been able to easily transition into online sales. But again, Amazon dominated.

Part of the problem may have been the same thing that happened in the CD/DVD manufacturing industry. For decades, places like my employer - Specialty Records, later WEA Manufacturing - were innovators, investing heavily in developing new technologies, new forms of media storage, new manufacturing techniques. But other companies were able to come along and build on what we had done without taking the risks or making the capital investments. And while streaming was clearly the next big thing in the early 2000s, WEA Manufacturing was sold off in the aftermath of the debacle of the AOL Time Warner merger** and bought out by CINRAM, a Canadian replicator with no interest in non-disc technologies. Any plans for streaming technology went out the window. CINRAM eventually sold the facility, which was permanently closed earlier this year. Now CDs and DVDs are rapidly losing market share as most consumers stream their movies and music. (Frankly, a facility dedicated to streaming technology would have probably employed 100 or so people at most, anyway. Most of the people employed at WEA Manufacturing and CINRAM were in the business of making discs. Without discs to be made, a lot fewer people would have been needed.) Other people were able to build on our experience and do what we did for far less. And when the world changed, we weren't able to respond to the change.


*A few years ago I shepherded a soon-to-be-orphan through a difficult spot in her life, and I found myself at a Sears store several times with her, trying to resolve an issue involving a bed that her mother had ordered before she went into the hospital. The order became terribly confused, bits were delivered, other bits were backordered, and the whole thing had been paid for in a way that couldn't be refunded easily. While the two of us were at Sears trying to get this resolved one Friday night, we noticed a group of teens idly hanging around the store and wandering its aisles. We decided that there were few places less cool to hang out as a teen on a Friday night than Sears.

**A quote from this summarizes this whole post:
The business was up against a phenomenon I refer to as transient advantage; namely when a combination of capabilities that at one point made a firm a leader, erodes and is replaced by the next form of competitive advantage.
Which is either terribly insightful or terribly obvious.

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