Retailers Who Missed the Writing on the Screen

Sears, once king of retailers, is now a cash-starved shell whose future is in doubt.

Sears was once one of the biggest names in American retail. Today it’s barely hanging on. As shoppers abandon the chain, more and more locations are closing. While Sears Holdings ran 3,500 Sears and Kmart stores combined in 2005, that number will soon be fewer than 900. Some blame it on the company’s failure to invest in its online business and compete with online retail.

But L. Ron Hubbard, in his article entitled “THE ESTABLISHMENT OFFICER,” says, “It has been found that the whole reason for any lack of prosperity of an organization is INTERNAL. The surrounding area of the public has very little to do with whether statistics are up or down.”

Sales at Sears and Kmart stores plunged 16 percent and 17 percent in November and December 2017 compared to those months in 2016, and they continue to fall. Sears has also been losing appliance market share to the likes of Lowe’s, Home Depot and Best Buy.

In its heyday, it was more than just the largest U.S. employer or the country’s largest retailer. It actually reshaped the nation, transforming the average citizen’s lifestyle.

More than a century before the advent of online shopping, the Sears catalog brought a nearly limitless assortment of products into American homes—homes where people often made their own clothes or furniture or did without. Many kids had no other shopping experience than the Sears catalog, whose glossy pages brought a virtual treasure chest from which to choose their Christmas presents. Housewives could order washing machines from a Sears catalog.

However, the company is now struggling. Sears Holdings, the corporation that owns both Sears and Kmart, warned investors recently that it can no longer promise it will remain in business. Though not in bankruptcy, it has posted losses of $10.4 billion since 2010, while debt soared and the value of its stock tumbled.

In the twelve months ending May 31 of this year, they had closed 400 more stores while announcing the closing of 63 additional locations (48 Sears and 15 Kmart stores in 29 states), bringing the total of those remaining open to 831. As revenues fell 31 percent overall in the three months ending May 5, Sears Holdings lost $424 million.

The company has lost more than $11.2 billion since 2010, which was its last profitable year. In attempts to gain much needed cash, they have already sold off the Craftsman tool brand to Stanley Black and Decker last year and are now attempting to sell off the Kenmore appliance and possibly DieHard brands. They even have initiated a partnership with Amazon to install tires that customers purchased on Amazon in the Sears Auto Centers—perhaps too late?

How could Sears’ executives have let it go this bad for so long? What led to this retail giant’s failure? Where is the concept that had led to their incredibly successful catalog sales?

Clearly, there were many people not taking responsibility for doing their jobs. Who was looking at online markets and other opportunities while brick-and-mortar sales plummeted? One expert suggests, “In simplest terms, hedge-fund-manager-turned-retail-CEO Eddie Lampert thought he could turn the company around, but he couldn’t. Instead, he’s continued to chop off revenue-bearing pieces of the company while mismanaging the remaining components. Now there’s little left of the company to do anything with—save perhaps the name itself.”

Is it All Due to Online Shopping?

The rise of Amazon has definitely hurt many retail brands. The so-called retail apocalypse has hit multiple chain stores hard. Some, like H. H. Gregg, Wet Seal and Gander Mountain, have folded entirely. Others such as J. Crew and Claire’s are still hanging on.

What happened to all these retail chains? Mr. Hubbard said, “All booms and depressions of an organization are due to its being expertly built up and then, having a peak period, is not maintained in that well-established condition and disintegrates.

“In the vital flurry of getting the product and expanding, the organization becomes disestablished.”

Rather than examine their internal structure, most stores blame failures on the rise of the internet. That’s certainly a reason many retailers have failed, but not every chain has moved in the wrong direction. Some seem immune to internet competition, while others have adjusted and found a way to compete.

More Than Half of Shoppers Still Shop In-Store Before Buying Online

Retail Dive surveys of consumers have shown the notion of “see in store, buy online” is true. More than half of surveyed consumers (56 percent) said they visit a store—at least occasionally—to see, touch and feel products before ordering them online. Furthermore, roughly a third make this practice a habit, reporting that they always or frequently go to stores to see or try out items before buying on the web. One in ten shoppers said they always visit a store to see items they then buy online.

Capturing that in-store shopper is the key, offering competitive prices or a price- match guarantee so that he or she will buy right then and there rather than go home and order online. Free delivery to one’s home would also encourage shoppers to take advantage of buying in-store.

Multi-channel purchases are a key component of current shopping trends.

Following the natural laws that L. Ron Hubbard defined could have potentially made the difference between success and the total Sears debacle. What if Sears had kiosks in-store that allowed a customer to order an item they’d seen and have it shipped overnight for free to their home? With a price-match guarantee, this seems like a pretty simple solution to having their customer walk out of the store and go home to order the product online.

Some Are Succeeding Despite the Online Invasion

Take these four other retailers who are actually thriving:

1) Walmart had its struggles in dealing with online competition, but the company recently has found its way. The retail chain saw overall revenue rising to $117.5 billion. In addition, e-commerce sales grew by a stunning 63 percent over the same quarter last year. They clearly found a way to compete, offering free two-day delivery and even grocery pickup service, effectively competing with Amazon’s Prime Pantry.

2) Nordstrom has proven to have a very loyal customer base that has helped the company thrive even in the current challenging retail market. Their net sales grew last year by 2.7 percent. Comparable store sales did fall by 0.8 percent, but the company now does an impressive amount of its business—about 25 percent—through its website. In addition, total customer counts rose during the quarter.

3) TJ Maxx and Marshalls have gimmicks that keep customers coming back. They constantly change their merchandise so a consumer will never know what he or she may find, encouraging them to go out and shop. This chain includes HomeGoods, also a discounter with revolving merchandise. They have increased sales overall by 10 to 12 percent over the last year.

4) The best example of a turnaround may be Best Buy. At one point the chain was basically left for dead. It had fallen victim to the shop-in-store, buy-online trend.

The Best Buy CEO brought the company all the way back by refocusing their stores and cutting expenses. He said recently, “We believe we are uniquely positioned to help our customers in a meaningful way with our combination of multi-channel assets—including our online, store and in-home capabilities.” Announced in April of this year, they’ve also launched a partnership with Amazon to bring the next generation of Fire TV Edition smart TVs to customers in the United States and Canada.

Best Buy is repositioning and refocusing its advertising as well, with the emphasis on customer service. Their new campaign highlights how the company can enrich the lives of its consumers with technology. Their new tagline, “Let’s talk about what’s possible,” is featured on billboards and television ads. Paid hours of in-house employee training is a must, with training videos rated by employees as world class, helpful and up to date.

L. Ron Hubbard says, “Thus if an organization is well established so that each staff member is doing his exact function, statistics will go up and the organization will prosper because it has been handled internally.”

Using these principles based on natural laws, it seems that Best Buy has adapted to the new retail environment and is keeping its staff and customers motivated. 

Isidore, Chris. “Here’s What’s Killing Sears.” CNN Money. Cable News Network, 12 February 2018.

Bennett, Karen. “Great American Companies in Serious Danger of Disappearing Forever.” CheatSheet, 6 June 2018.

Brumley, James. “8 Companies That Could Disappear by 2019.” InvestorPlace. InvestorPlace Media, 13 February 2018.

Isidore, Chris. “Sears Has ‘Substantial Doubt’ That It Can Survive.” CNN Money. Cable News Network, 23 March 2017.

La Monica, Paul R. “Sears Sells Craftsman to Stanley Black & Decker.” The Buzz, CNN Money. Cable News Network, 5 January 2017.

Kline, Daniel B. “These 6 Retailers Are Actually Thriving.” The Motley Fool, 13 June 2017.

Skrovan, Sandy. “Why Many Shoppers Go to Stores Before Buying Online.” Retail Dive. Industry Dive, 26 April 2017.

“Best Buy Employee Benefit: Job Training.” Glassdoor, n.d.

oOo

Let us hear your feedback. E-mail prosperity-magazine@wise.org

Issue: 18071201INT

Prosperity Editor