How Does Sears Stay In Business?

[Planet13]

Hey there, Everyone:

yesterday I went to a mega mall for the first time in probably about a year.

Lots of shoppers at Target, lots of shoppers at BestBuy, and the other big box stores.

Strolled into a Sears and the place was like a ghost town.

Does anybody know how they stay afloat? It looks like they are in direct competition with the targets, costcos, walmarts, and all the other discount brands?

What is (or was) Sear's Value Proposition? (Or did they ever have one?)

[Planet13]

Although I don't really understand all that is in that article, I think the underlying premise is:

Sears is hosed.

[Mike_Feury]

"how did the relative new comers (walmart, costco, target) displace the other discount chains"

Walmart was mainly thru better supply chain management, probably the same for the others. May have learned from how the Japanese displaced other auto makers in the 70s & 80s.

[Planet13]

May have learned from how the Japanese displaced other auto makers in the 70s & 80s.

I thought for the Japanese auto makers it was based primarily on cost (Japanese cars were cheaper to buy), fuel economy (it was in the time of the oil embargo), and reliability (US autos had been having a reputation of breaking down more frequently).

[Mike_Feury]

Right, but those symptoms--improvements in quality and costs and time to market--came from improved ways of doing business. Much of it started in Toyota in the 50s, which is probably why they became the world's largest car manufacturer decades after the first surge of Japanese manufacturing in the 70s--allowing for overreaching by an ego-driven CEO in the last decade, which endangered them for a while.

You could also attribute Walmart's rise to symptoms like squeezing the suppliers and workforce. But behind the more visible or vocal elements was an improved way of doing business.

[lexipixel]

Does anybody know how they stay afloat?

I always knew they owned the Discover card -- but here's a bit more of what puts money in their corporate coffers---

"At the time the Discover Card was introduced, Sears was the largest retailer in the United States. It had purchased the Dean Witter Reynolds Organization (brokerage) and Coldwell, Banker & Company (real estate) in 1981 as an attempt to add financial services to its portfolio of customer services."

[en.wikipedia.org...]
(yeah, I know, I used a WikiPedia reference)...

break a tool? walk in and grab a new one no questions asked.

Only if it's "Craftsman" hand tools, (power tools all have limited warranties, Craftsman hand tools have lifetime replacement). On that note, Sears now sells a lower cost of imported "Champion" tools alongside the Craftsman ones -- the Champion tools don't have lifetime warranty.

Sears is hosed.

Kinda --- your comment makes me want to mention that Sears considers a garden hose a "hand tool". I've had them replace my leaky, cracked "Craftsman" garden hoses for the past 20 years -- walk in with old one, walk out with a new one, (the old ones were much higher quality -- but still "Lifetime Guarantee" makes it worthwhile).

The trick to offering a "Lifetime Warranty" is to produce such high quliaty goods that people will pay a premium for them and you'll never (or only rarely) have to replace them. Quality, value and customer loyalty are something retailers have lost sight off -- only selling on "low price".

I have the same Victornox Swiss Army Knife I bought over 30 years -- I broke a blade once and they fixed it (and sharpened everything up and cleaned it) for free. I'd never buy another brand of pocket knife -- and here I am "advertising" for them for free.

Manufacturing for "planned obsolescence" was good in the pre-green throw away days --- personally, I'd buy just about anything (at a premium price) that was high quality and had a lifetime guarantee over the "cheaper" model.

[lucy24]

The trick to offering a "Lifetime Warranty" is to produce such high quality goods that people will pay a premium for them and you'll never (or only rarely) have to replace them. Quality, value and customer loyalty are something retailers have lost sight off -- only selling on "low price".

Isn't it rather something buyers have lost sight of?

"Save money. Live better."

I could never figure out whether that was( meant to be (understood as)?)? two independent statements, or if the second was( meant to be (understood as)?)? a result of the first.

"Lifetime Warranty" is probably an increasingly good deal. The people who look for it are older and thus have shorter lifespans for the warranty to cover.

Don't perfectly understand who buys clothes at Sears, though.

[lexipixel]

Isn't it rather something buyers have lost sight of?

I call it the Bic Lighter Effect. Before "Bics" were flicked, many who bought a lighter opted for a Zippo that would last them a lifetime. Manufacturers now make products that have just good enough quality so you'll buy something you know will need to be replaced --and-- be happy enough with it so you'll buy the same brand again. It goes from disposable lighters all the way up to auto makers. Planned obsolescence is now ingrained in the (under 40 or so) consumer mentality. I guess manufacturers, buyers and sellers are equally guilty.

Don't perfectly understand who buys clothes at Sears, though.

I bought a new pair of sneakers there last week, (I'm over 50). My teenager would not wear anything from Sears even if the hip trendy fashion stores she shops at carried the exact same thing. There seems to be an "uncool" stigma for (some) teens to admit their parents buy them clothes at Sears.

Is that a real poncho or a Sears poncho?
- Frank Zappa (lyrics, variations of lyric used in both "Camarillo Brillo" and "Cosmik Debris")

[Planet13]

@ Mike_Feury:

Right, but those symptoms--improvements in quality and costs and time to market--came from improved ways of doing business.

Ahh... I see your point. Think it is called Kaizen (continuous improvement).

Great book on this is Corporate Creativity: how innovation and improvement actually happen, by Alan Robinson and Sam Stearns.

You could also attribute Walmart's rise to symptoms like squeezing the suppliers and workforce. But behind the more visible or vocal elements was an improved way of doing business.

Ok, but I don't see why the other lower end, high volume retailers (like K Mart or JC Penny) weren't able to fill that market space (I know I am going off topic a bit here).

[Planet13]

Quality, value and customer loyalty are something retailers have lost sight off -- only selling on "low price".

Ok, but in the case of Sears, they don't really seem to have a consistent message. How did you know that Craftsman tools (or the garden hose or the knife) had a lifetime warranty?

I'm guessing the same way I knew; my dad told me. Or some mechanic friend of mine who was a total gearhead told me. Or I noticed it on the warranty card AFTER I bought it.

But when you walk into a Sears, nothing screams out "lifetime guarantee" or shouts out "High quality" or says "Great Value," does it?

I guess what I am asking is, what is their value proposition? Is it higher quality products without paying premium prices?

If so, I don't think that they really convey that message too well. I don't think the way they have their stores set up shows higher quality. Nothing distinguishes themselves.

I think a good contrast is with a Trader Joes (sorry that I realize they are not in every state just yet). They have developed this sort of cult of personality that their products are somehow higher quality, and their prices are reasonable. They give off the impression of being a "boutique" super market (even though they are part of a very large German grocery chain).

[Planet13]

My teenager would not wear anything from Sears even if the hip trendy fashion stores she shops at carried the exact same thing. There seems to be an "uncool" stigma for (some) teens to admit their parents buy them clothes at Sears.

Yeah, well, my six-year-old son had better pray that by the time he is in high school, 80s bands are back in style, because the only thing he is going to be wearing are hand-me-down Tee Shirts from my closet from when I was back in high school.

Ambercrombie and Fitch? Hah. More like Flock Of Seagulls for you.

[Planet13]

Don't perfectly understand who buys clothes at Sears, though.

That is a great question.

I saw a big poster for a line of Kardashian Jeans at Sears.

Which makes me remember that I don't perfectly understand who watches the Kardashians. The only Kardashian "shows" I ever watch are on the internet, and they are the ones where they ain't wearing any clothes...

[lexipixel]

Ambercrombie and Fitch? Hah. More like Flock Of Seagulls for you.

Aberrcrombie & Fitch are UNCOOL right now.

60's, 70's, 80's and 90's (parents hand-me-down or repro) concert t's are COOL.

...and BTW, "COOL" isn't cool, "CHILL" might be, but I haven't checked the teen-angst how to talk "cool" list for the week.

...maybe Sears Toughskins, Die-Hard Workboots and t-shirt with the a retro faded 1903 Sears Catalog cover silk-screened on it will be hip, hep, zshuggi, or whatever the word for "cool" is by then.

Oh, and good luck thinking you'll have any idea what your 6 year old will allow you to dress them in in 10 years. :-)

[incrediBILL]

As incrediBill mentioned, they used to have more exclusive brands in the past.

Since it appears I'm already being credited for making salient points in a conversation I've yet to participate in it's only fitting I stop by and drop in my $0.02 worth.

Someone already mentioned appliances but when I was a kid growing up in a small rural KS town, EVERYONE, and I mean EVERYONE, had Kenmore appliances and Craftsman tools. My grandparents had a warranty on their Kenmore fridge and made them come do annual maintenance on it like clockwork just to make sure they got their money's worth!

The Sears catalog was the "wish book", the place you wished for stuff you couldn't afford, the catalog where you saw your first pics of ladies in <gasp> underwear, and in the end (pun intended), some of those catalogs did find their way into the few remaining outhouses of the day.

Yes, I have actually used outhouses. Even stayed overnight at friends when I was a kid that still had an outhouse and I'll tell you what, that's a summertime thing because nobody wants to go to the outhouse in the middle of a KS winter. For obvious reasons of a lack of plumbing nature, we became seasonal friends.

I digress...

Anyway, Sears also owns K-Mart which is now also suffering at the hands of Target, Walmart. etc. and closing stores. Our 2 local K-marts are thriving however but it's strange as they have been adopted by the local Spanish speaking population opposed to the Target stores located about a mile away from both K-marts. It's like stepping into a truly Mexican store south of the border as I couldn't even get help from employees who acted like I was the one speaking a foreign language! LOL

Ah, the adventures in California living!

[lawman]

Doesn't Sears also own Lands End Clothing?

[ken_b]

Sears also owns K-Mart

I thought that was the other way around, K-Mart owns Sears and came up with the name Sears Holdings to confuse the issue (or because Sears was better name at tne time).

[mslina2002]

Sears actually do sell Lands End clothing and the only clothing I do buy for myself occasionally and for my son who needs it for his school - khaki pants, collar shirts, etc.

Last year we were in the market for kitchen appliances for our kitchen and did check out Sears for some items we liked. As soon as you walk in you feel like you are bombarded by desperate sales people and there were many of them just hanging around with nothing to do. It seems many are underpaid, don't get enough hours to work, and just hate their jobs. [indeed.com...]

I felt sorry for them.

[Planet13]

@ mslina2002:

Last year we were in the market for kitchen appliances for our kitchen and did check out Sears for some items we liked.

Why?

Seriously, was it because you thought the prices would be better than at other places? Did you think the quality would be better? Were you thinking there would be a lifetime warranty? Did you just want a chance to brush up on your Spanish? :)

Seriously, I would love to know what is the mental picture you get when someone says the word "Sears" to you.

(The mental image I get is the picture you painted of desperate sales people who hate their jobs, and probably hate the clothes they have to wear.)

[lucy24]

The mental image I get is the picture you painted of desperate sales people who hate their jobs, and probably hate the clothes they have to wear.

Do there exist salespeople outside of WalMart commercials who love their jobs, are thrilled with their uniforms and make a family* wage? You don't meet a lot of kids saying "I want to work in retail sales when I grow up."


* Archaic term from the early labor movement. The idea was to have the whole family supported by one wage-earner working one job. I think it actually happened for about five minutes around mid-century.

[graeme_p]

What is even better as that during that "five minutes" a lot of people were predicting that as people (at least in developed countries) grew more affluent even that one wage-earner would need to work ever shorter hours to make enough money, and out biggest problem would be more leisure time than we could cope with.

[piatkow]

What is even better as that during that "five minutes" a lot of people were predicting that as people (at least in developed countries) grew more affluent even that one wage-earner would need to work ever shorter hours to make enough money, and out biggest problem would be more leisure time than we could cope with.

Something to do with computers wasn't it?

[lexipixel]

If we actually adjusted the cost of (American) living to account for the fact that a family was bigger just after WWII than it is today, that "mom" usually stayed at home, and that "dad" worked about 40 hours -- and that now; 1). families are smaller, 2). both parents work (and sometimes put in more than 40 hours each or work multiple jobs), and that the percent of "family income" for housing, food, fuel and other commodity items is greater, we'd realize that we have less "leisure time", the average person is expected to work much longer in their life (or not be able to retire at all), we'd have to ask ourselves some serious questions about "quality of life".

For the "99%", (of Americans) life seems to mimic the failure of Sears' slogan -- "The Good Life at a Great Price".

Nice site to read up on Sears: [searsarchives.com...]

[incrediBILL]

and that the percent of "family income" for housing, food, fuel and other commodity items is greater, we'd realize that we have less "leisure time", the average person is expected to work much longer in their life (or not be able to retire at all)

I quite disagree.

I semi-retired about 10 years ago, wife joined me 5 years ago, but we were busy making money, saving money and investing money instead of trying to compete with others for the nicest homes and cars, good for them, not for me.

For instance, the recent mortgage crisis where people were buying houses they couldn't afford, way out of their budget. Both parents have to work because now they're living beyond their means, house poor and probably car poor in some big fat gas guzzling SUV that costs upwards of $40K, the expensive phones with $100 fees, the big TVs and $100+ cable bills, so on and so forth. Then they don't have money for food and clothing and max out their credit cards and add $300/mo in interest paying for that money they never had in the first place.

People are pursuing junk they really can't afford, don't need and not shopping frugally yet it's all the fault of someone else that they're failing.

HUH?

If you want to spend all your money on bigger and better cars and houses, knock your socks off.

While some need to look cool in your $100 jeans, I can get 5 pair of Kirkland brand jeans at Costco, or similar at Walmart. Those $50 shirts look nice, the same thing for $15 at Costco looks just as nice, I'll take 3. Walmart will sell clothes under $20 and deliver them to your house for $0.97, which is cheaper than it costs to drive to Walmart!

While others shell out $5 for just a head of lettuce at Whole(PayCheck)Foods, I can get a whole bag of vegetables at the local Chinese Market or from one of the discount grocers like FoodCo for a whole lot less than the crazy upscale stores. Who in their right mind pays for all those fancy tile floors and chandeliers in a grocery store? Not me. I'll shop where they put the food, still in the box with the side cut out, on a metal shelf and the floors are concrete, no tile, and even bag my own food if I'm saving up to 50% on the same exact stuff.

However, I love my electronics and will spend top dollar on computers and big screen TVs. I can afford it since I don't blow it on $100 jeans and $5 lettuce, but I'll also keep them 5+ years and use the heck out of 'em.

FWIW, Sears almost sold me my 50" Plasma TV a few years ago, it was on sale for a great price, until the idiot salesman said the plasma TVs needing to have their gas serviced every 3 years. It was all I could do to not laugh like a hyena in his face and we walked away quickly while loudly snickering as we fled the store. That was the last time I ever went shopping for electronics at Sears.

However, we do have Sears patio furniture and washer & dryer, all good quality, all were a good price, and have held up well for years. Maybe that's Sears problem, they were always a simple store, never too extravagant, never trendy, just a good quality for a good price.

Sears needs to sell JUNK like the other stores that falls apart in a year or two so people will be back to buy more JUNK and then they'll be profitable again!

They can haul that JUNK in their about to be repossessed SUV back to their home that's almost in foreclosure and enjoy ;)

[lawman]

FWIW, Sears almost sold me my 50" Plasma TV a few years ago, it was on sale for a great price, until the idiot salesman said the plasma TVs needing to have their gas serviced every 3 years. It was all I could do to not laugh like a hyena in his face and we walked away quickly while loudly snickering as we fled the store. That was the last time I ever went shopping for electronics at Sears.

I don't believe for one minute that incrediBill walked away from a great price on a product he wanted because the salesman was an idiot.

[incrediBILL]

I don't believe for one minute that incrediBill walked away from a great price on a product he wanted because the salesman was an idiot.

Best move I ever made.

Couple of weeks later Circuit City, right before going bankrupt, sold the same TV for $400 less in some big Super Bowl Sale and delivered to my door for free! :)

Spent that $400 savings on a really cool TV stand that holds the Wii, PS3, DVR, etc.

[lawman]

Lucky for you the idiot salesman at Circuit City kept his mouth shut.

[lexipixel]

I quite disagree.

Everything you say proves my point. When I was younger I worked in restaurants. I could earn $10-$12 an hour cooking. Rent for an apartment was about $500-600/mo. Gasoline was well under a $1/gal. You could go to McD's and get a burger, fries and small drink for $1.

Today, the same job pays the same amount, ($10-$12/hr). Rent is four times higher, gas and food cost four times as much.

The average family shops at the average stores, pays the average rent and earns the average wages... in general, it used to cost 1 week of whatever the "head of the household" earned to pay the rent or mortgage for a month -- now it costs what (2) earn for (2) weeks... And I'm not talking the people that live in Mansions or McMansions or drive H2's.

Seniors in their 70's that paid into Social Security for 40 years and thought they would be able to retire and afford life now live at the poverty level, (and decide between prescription drugs, heating oil or food).

Like most other retailers, Sears decided to sell cheap, low quality imported goods which require more service calls, result in more disatisfied customers, and eroded their customer base. "Low price" is not value. Sears used to be value oriented -- now they are just another place to shop, (major example is their Major Appliances and Home Electronics departments -- which probably accounted for a good deal of their revenue). Those departments now sell every brand, (you used to be limited to Kenmore Applianes -- which may have been private label of other manufacturers -- but Sears didn't have to compete on "price", the Kenmore name was synonmous with the "Sears Guy" taking care of it when it broke down -- and the buyers had leverage to get a better quality since they were buying for the Sears chain.

I am not trying to blame retail for people's ignorance -- there is plenty of blame to go around. Blame Wall St., blame the oil companies, blame Main St... it doesn't matter.

Mega corporations like ADM, SuperValu, WalMart, ExxonMobile, BOA, etc.. aggregate goods and herd people into their stores and competition is gone.

The #1 problem in (in the USA) is loss of our manufacturing base. That leaves everyone just shuffling dollars, goods and time in a service economy -- there is no "product" in the GDP, (unless you count weapons sales -- and that hasn't worked out to good for Main Street once you count the cost of fake oil wars).

Maybe Sears should become a military supplier ---

DieHard^tm brand Body Armor
Toughskin^tm anti-missle tank armor
RoadHandler^tm highway checkpoint monitoring systems.

...the "LandsEnd^tm" brand could be used for the overall marketing camapign.

[incrediBILL]

What you describe is standard inflation. When I was 20 I lived in a $200/mo. apt, prices increased, so did my wages to match, what's your point?

The average family shops at the average stores, pays the average rent and earns the average wages

And instead of saving money so they can retire in their 70s the average family throws away money, literally burning it up in the case of idiot smokers, drinkers, people driving those big fat SUVs burning 2x-3x more gas, tossing it out the window on expensive smart phone calling plans and the thousand channel cable bills.

Yeah yeah, spend it all, don't save nothing, blame it on the economy.

Don't finish school, don't even self-educate, don't try to get promoted, but complain about the low wages.

Pay into social security for 40 years? Most of the elderly I know that did successfully retire also saved money, lots of it, they didn't squander every penny being house and car poor and most of them also shopped at Sears :)

There is no personal accountability.

That's the real problem with America is everyone wants what they can't afford and buy beyond their means. You can't retire at 70 with max'd out credit card bills and if you even carry a balance, even on your Sears card, you know you're spending more than you earn and you need to cut costs.

That's what the average American family needs to do, the same thing they did before everyone had credit for things they couldn't afford, personal accountability to only buy within your means, only what you need, not every little trinket you want.

When I was a kid if you couldn't afford it, you simply didn't have it, and you certainly didn't owe anyone else when you got it, except the mortgage on the house.

And we were happy that way, the whole family sitting around the table playing games at night, not out whining and protesting like a bunch of idiots because they can't afford the latest iPad.

[lucy24]

For years and years-- generations, in fact-- the canonical price for a family house was two years' income.* (That is: two years of your own current income, whatever it might happen to be.) Hm. At the highest income I've ever earned, that would get me a halfway decent double-wide. Good thing we're not prone to tornadoes or extreme weather.


* If you watch TV, you'll notice that the diamond industry swiped this equation by inventing the idea that an engagement right should cost two months' salary. And must, of course, be a diamond solitaire. And must be purchased before the proposal is even made, let alone accepted. Oops, my mistake, that last bit was Hollywood.

[lexipixel]

Yeah yeah, spend it all, don't save nothing, blame it on the economy.

Save? As in savings account? Money in the bank isn't worth what "money in the bank" used to be -- you get 1% interest and there's 3% inflation.

We agree on a lot of things... but we'll have to agree to disagree on others.

IMO - Corporate greed has outpaced consumer stupidity, (and caused it to proliferate).

Low wage jobs, cheap imports, schlocky advertising pitches, (e.g.- every mattress in Sears is priced at more than double what it's worth and they continually leave "50% OFF Sale" signs up in that department. "Champion brand" tools sit alongside Craftsman tools, but all the signs in that department say "Craftsman". The jewelry department sells diamond bracelets with "TCW" ratings, (total carat weight), when in-fact the bracelet has that weight in worthless tiny stones and chips.

It's not just Sears, this is modern retailing.

Big retailers now hire temporary workers for 89 days so they don't have to give benefits or pay unemployment insurance. Low wages. No benefits. No pensions. It's a different corporate America than 50, 40 or even 20 years ago -- one that pits employees against the companies they work for, and all against consumers.

Sears got my tire and battery business for 30 years, (as well as several brake jobs, exhaust systems and other automotive work), but now I shop around -- and haven't spent a nickel in a Sears Auto Center in about 10 years.

Sears is sort of stuck in the middle of the retail wasteland -- they don't want to market themselves as the "low price leader", and can't sell on brand identity, quality or service any more -- all they are left with is those of us who remember shopping there with our parents and are still willing to spend a few dollars there.

I agree -- a lot of the blame goes to lazy, stupid, wasteful consumers. Sy Syms used to advertise, "An educated consumer is our best customer." The company is now bankrupt. I guess there was a shortage of educated consumers...

[incrediBILL]

Save? As in savings account? Money in the bank isn't worth what "money in the bank" used to be -- you get 1% interest and there's 3% inflation.

Don't be so literal.

Did I say savings account?

I said SAVE, you have to save to build up funds to invest.

To save us from more literalism, by invest I don't specifically mean stocks and bonds either.

Sheesh.