Gongol.com Archives: October 2021
While there was an entire documentary filmed about "The Last Blockbuster", other retail sunsets have been less photogenic. In particular, the waning of the once-mighty Sears empire is at once too enormous to believe and too unreasonable to make sense. And now, the last Sears department store in Illinois is set to close in November. ■ It's generally unwise for a consumer to become emotionally attached to a retail outlet, but Sears earned a special place in American lore. Not only was it once so vast in its reach that it was the "World's Largest Store", its name was attached to what was the world's tallest building from 1973 until 1998. The Sears Catalog -- which overtook the mail-order empire of rival Chicago firm Montgomery Ward's -- was an enormous commercial success for decades. Sears even sold some 70,000 American kit homes by mail. For a good portion of the 20th Century, Sears was practically synonymous with retail. ■ Now, what's left is barely a shadow of its former self, down to just dozens of stores (at most). It's truly crazy that Sears managed to fail just as hard as it has. Having dominated catalog commerce for generations, e-commerce should have been an obvious pivot -- a next step not unlike an actor moving between television and film. We're talking about two slightly different modes of almost exactly the same thing, and unlike Amazon, Sears started with a nationwide distribution system already in place, not to mention an enviable empire of bricks-and-mortar showrooms, many of which were owned outright by the company. ■ It's not as though the company was either risk-avoidant or reluctant to embrace new markets by nature: Sears launched the Discover Card and backed the Prodigy proto-internet service. The transition to becoming a hybrid digital-and-physical retail colossus seems, in retrospect, to have been the obvious path. ■ For all the attention paid now to the massive reach of Amazon, antitrust lawsuits and regulations tend to be less effective than good old-fashioned competition. Amazon has Amazon Basics; Sears had well-regarded house brands ranging from Kenmore to Craftsman to DieHard. In practically everything that Amazon does at great scale today, Sears once had a head start. ■ Where in the Sears corporate DNA was the memory of how it was once the upstart? How many second chances could one firm drop? Having triumphed over Montgomery Ward's in one era, it slipped in another and showed no signs of durable recovery. Once the beneficiary of creative destruction, now it is the victim. And it is not only the vast number of Sears employees and investors who lost out; so did the consumer public. Healthy competition among sellers is good for the buyer. ■ The decline of a once-great firm like Sears suggests that for all the praise we lavish on "disruptors", our business schools ought to focus harder on training management in practices like preserving institutional memory and making an active discipline out of making both consistent incremental improvement and capturing the advantage in moments of punctuated equilibrium. Maintaining and sustaining what is already good ought to be just as lucrative and status-enhancing as starting something from scratch.