The not-so-surprising failure of Sears.

The Sears store in my hometown recently closed its doors. Shut down after a 60 year presence in the market.

Can’t say I’m too broken up about it either. I bought a few tools there, once upon a time. And an appliance or two, but nothing I can recall. I certainly wouldn’t say I had any fond memories of the place, much less brand allegiance.

The recent demise of Sears, once the country’s largest retailer, is replete with lessons for business owners, entrepreneurs, marketing execs and brand managers. It’s a classic American entrepreneurial tale.

Sears dates all the way back to 1886 when Richard Sears started selling watches to his coworkers at the railroad. Alvah Roebuck was his watchmaker, and in 1893 the name Sears Roebuck & Co. was incorporated.

They grew the business rapidly by selling all sorts of merchandise through the mail at a price that undercut the local mercantile. The offerings were broad — everything from a Stradivarious violin to patent medicines and do-it-yourself houses — but the target market was narrowly defined: small towns where the general mercantile was the only real competition.

It was wildly successful niche marketing, for awhile.

Sears went public in 1901 and in 1925 the first Sears store opened, in Chicago. By 1933 they had 300 stores and the mail order business began to take a back seat to the retail business.

Mr. Sears got ridiculously rich. Industrialist, oil baron rich.

Over the next 50 years Sears became a multi-national retail empire, with 2200 stores and the world’s tallest building as its corporate headquarters. The company obviously did a lot of things right over the years.

One of many successful brands that Sears built.

One of many successful brands that Sears built.

For instance, Forbes Magazine reported that “Sears successfully developed some of the strongest and most famous private-label brands of any retailer, in any channel, in the U.S. Those brands include Craftsman tools, Kenmore appliances, Diehard batteries, Weatherbeater paint, and Roadhandler tires.

Those are great names, and the success of those product lines is textbook branding. Someone at Sears was well advised to resist the line extension trap and NOT put the Sears name on a car battery or a paint can.

Some Wall Street insiders believe it’s those proprietary brands that could save Sears from its current “slow motion liquidation.” In fact, there have been rumors that Sears will begin selling some of those brands through other retailers, including Costco. Maybe there’s a future for Sears as a wholesaler???

Sears is a good example of how success often leads to temptation and complacency. Temptation to expand and diversify into other businesses and complacency when it comes to the core of the brand.

Sears got into the insurance business with AllState, the financial services business by buying Dean Witter Reynolds, the real estate business with the purchase of Coldwell Banker and even the credit card business, with the launch of the Discover Card.

In the meantime, they missed an opportunity to dominate the direct marketing business, they lost sight of the retail business, failed to convert their catalog into a successful ecommerce business, and let their wildly popular house brands languish.

So much for a clearly defined Sears niche.

For 20 years Sears has been trying to re-position itself as a competitor to Macy’s, JCPenny, Kohl’s and Target. Remember the slogan, “The softer side of Sears?” That was an ill-fated attempt to sell clothing. Now they have the Kardashian Collection. Yikes!

The Kardashian Collection. Does this look like Sears to you?

The Kardashian Collection. Does this look like Sears to you?

Forbes magazine reported: “Sears is relying mainly on inauthentic celebrity exclusives (does anyone really believe that Kim would actually shop at Sears?) to attract younger, fashion-conscious consumers, and it is clear that Sears has lost its way.”

As Laura Ries put it, “When faced with a broadening of its category, Sears should have narrowed its focus and become a specialist. Instead of shifting to the softer side of Sears, the retailer should have further embraced its harder side.”

The department store niche is not the answer to Sears’ problems. Walmart has taken both the price and one-stop shopping advantage. Target is positioned as the aspirational trendy choice. Home Depot is the place to go for home improvement. Amazon has the online convenience advantage. Best Buy dominates in electronics. Lowes is succeeding with appliances. There’s just no room for a general purpose department store that’s trying to be all things to all people.

Even if there wasn’t all that competition, you’d still never convince people that Sears is a good place to buy clothing. That was never going to fly!

Sears Brand car battery

Not sure what can jump start Sears at this point.

It will be very interesting to see what becomes of the company now that it’s merged with Kmart and owned by infamous hedge fund manager Eddie Lambert. The stock has lost half its value. They’re closing 120 stores this year. And there doesn’t seem to be a plan in place to revive it.

Crain’s Chicago Business summed it up: “If the hedge-fund mogul knew how to fix Sears, he’d have done it by now.”

There are only two things the company has going for it: massive real estate holdings, and some great brands NOT named Sears.

About the Author

I’m a brand strategist, creative director, copywriter and published author living in the very livable town of Bend, Oregon. I’m also an ad agency veteran and owner of BNBranding. Read more about me »

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