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.
References:
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.
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