The Sad and Self-Inflicted Demise of Sears
The recent news that Sears Holdings will be entering into Chapter 11 bankruptcy will come as no surprise to those who will be impacted the most—the workers, of which I am one. Sears Holdings is owned by billionaire investor Eddie Lampert, and oversees the operations of Sears, K-Mart, Kenmore, and other properties. Craftsman, the tool brand synonymous with Sears, was sold last year to Stanley Black & Decker in a desperate bid to raise capital. The decline and fall of Sears has been an ongoing saga since Lampert first acquired a bankrupt K-Mart in the early 2000s and nestled it together with Sears under the newly formed Sears Holdings. It was Lampert who put Sears on the slow track to where it finds itself today.
What began in the 1890s as a mail order catalogue shipped out to the homes of Americans by two titans of the retail industry, Richard Sears and Alvah Roebuck, had by the 20th century turned into the go-to location for middle-class shoppers. At one point, Sears owned the tallest skyscraper in the world, as well as other companies that continue to function today, such as Discover and Allstate. Sears was Amazon before Amazon, a retailer where customers could order items remotely and then pick them up without having to wait in the check-out line. But being on top is no guarantee that you will stay there. By the 2000s, Sears was falling behind as other retailers emerged and posed challenges on both the brick-and-mortar front and the rapidly developing world of e-commerce.
Enter Eddie Lampert, the undisputed chief of Sears. If Lampert wanted Sears to succeed, it would have done so. But he wasn’t interested in the retail business; he was interested in the real estate business. That’s why he purchased property-rich K-Mart out of bankruptcy and acquired Sears: what those giants lacked in retail performance they more than made up for in real estate potential. Since taking over, Lampert has done little to improve the physical condition of any of the stores. He has also committed little to no resources to Sears’ online presence. He has, however, done quite a bit of work to spin off properties to a real estate trust known as Seritage, allowing him to sell the properties outright or lease them to other companies at higher rents than Sears provides. All the while he would bail out Sears when the bills came due from his own hedge fund, ESL Investments. It’s comparable to running a giant life support system while you extract the patient’s most valuable organs.
I first started working at Sears in 2015 as a part-time backroom associate before becoming an assistant manager. I could see right away that the company and the physical store lacked any kind of real capital investment. The location where I worked was one of the oldest free-standing Sears stores in the country, still proudly displaying the original name “SEARS AND ROEBUCK CO.” on the outside of the building. Hours for employees were in short supply. Many times a single cashier would be required to work two or more departments, which led to long lines and frustrated customers. Employees were constantly required to haggle customers to apply for Sears credit cards and memberships in Lampert’s Shop Your Way program, in which customers earned points from their Sears or K-Mart purchases. I thought it was telling that when Lampert launched the Shop Your Way credit card, the name “Sears” did not appear on the front.
The condition of the building was appalling. Any significant rain flooded the sales floor. The building itself was falling apart: cracked floor tiles, leaking air conditioner pipes, hanging ceiling panels, you name it. The sales infrastructure tools were just as bad. Employees carried around antiquated PalmPilot-like devices known as SNCs (“Sears Network Communicators”) manufactured in the late 1990s and early 2000s. They resembled first-generation Game Boys, and were capable of even less. The devices constantly froze and turned into bricks at the most demanding times. This is how employees were expected to process online orders and customer pickups, as well as complete basic tasks such as stock replenishment.
Sears and K-Mart are sister stores. That means a customer can purchase an item from the K-Mart website and pick up said item from their local Sears. Only the customer can’t return it to that same Sears. Sears and K-Mart sell a lot of the same merchandise, but the stock numbers are often different, which results in inaccurate stock counts and missed online orders because the SNC cannot process the two systems at the same time. The SNC also can’t display images, so an item that is ordered online must first be looked up on the Sears website by the associate tasked with finding it and shipping it to the customer. The associate had only one hour in which to process the request, and with short staffing, there sometimes was only one associate handling the department for online order fulfillment—a department that also covered handling customer repair requests, helping customers pick up their merchandise, and unloading trucks, among other responsibilities.
Associates and managers at the store level were hardworking and did the best they could with what they were given. The old saying is that a fish rots from the head down, and as you moved up the chain of command the stink became worse. Sears suffered from a bloated command structure where conflicting demands and commands flowed from above, but no feedback or suggestions made it back up—sort of like a Soviet tank regiment.
I began a part-time job at another local Sears after my original store went out of business in September 2017. The once-proud building that dominated the busiest intersection in town now stands empty and rotting. During the closing process, many customers came back to the store to share their memories: a time when Sears sold popcorn and the shoe department looked like the lobby of a beautiful hotel. I began this new tenure with Sears in the summer, and the first thing I noticed was the thermostat, which let me know that the temperature on the sales floor was a balmy 82 degrees. I learned that the air conditioning was down and had been down since at least the last summer. Sears provided a temporary AC unit attached to a trailer that did its best to cool down the store. Still, if one approached from the mall and entered, it felt as though one passed through a curtain of heat. The engineers who installed the temporary unit also placed the thick power wires on the floor directly in front of the freight elevator. About two weeks later I was notified that this location would be closing as well.
Lampert likes to blame everything under the sun for the demise of Sears. He blames the media. He blames the shrinking retail sector—even though people continue to shop at physical locations; they just don’t shop at Sears. He blames the internet. He blames the pension fund. He never blames himself. He declares that he only closes stores because they are “unprofitable,” but he is the main reason that profits are nowhere in sight. This Chapter 11 bankruptcy is just another smoke and mirrors exercise that will allow him to keep dismantling one of America’s proudest companies. Maybe Sears is destined to go the way of the dodo bird, but it would be nice to see it have a fighting chance with a CEO who isn’t destroying the company from within. Lampert continues to declare that he would like to see Sears return to glory, but his nearly 20-year track record suggests that this is just fool me once, fool me a dozen times.
Ronald Reagan once quipped that a recession is when your neighbor loses his job, a depression is when you lose yours, and a recovery is when Jimmy Carter loses his. Replace “Jimmy Carter” with “Eddie Lampert,” and you might just save Sears.
Joseph Russo is a former consultant to Governor Sarah Palin of Alaska. He has worked for Sears since 2015 and lives in New Jersey.