It’s been something the general public has been expecting for years and late Sunday, it finally happened: Sears, the Amazon of the 20th century, a leading brand for decades, filed for bankruptcy. Some say that the demise of Sears along with Kmart is just part of creative destruction. Both brands were on the way down when Sears and Kmart merged in 2005, so chalk it up to Amazon and move along.
While it’s true that both Kmart and Sears were struggling when former Sears Holdings CEO Eddie Lampert brought them together, Sears would not be in the desperate position it’s in if not for the malpractice of Lampert. Ethan Epstein of the Weekly Standard described Lampert to a T:
If Warren Buffett is the cuddly grandfather of American capitalism, investing in solid, well-managed businesses so they can prosper in the long run, Lampert is the sleazy uncle who shows up to the family reunion each year with a different girlfriend and new sports car.
I’ve written about Lampert’s mismanagement before. Lampert was a hedge fund manager and as such saw Sears more as something to get profits from without investing much. Like Toys R US before it, Sears is the victim of “Vulture Capitalists.” Lampert kept talking about a turnaround, but there was never any vision. Stores were never updated. I’ve been in Sears and Kmarts over the last few years and they’ve become sad forlorn places. This story from CBS News shows how terrible Lampert’s leadership was:
Lampert, a devotee of the novelist Ayn Rand, reportedly made division heads compete for resources and money, believing that the competition would ignite innovation and sales. Instead, according to Bloomberg, the result was managerial infighting.
At the store level, shoppers weren’t happy, either. Sears failed to upgrade stores and keep shelves stocked with enticing merchandise, leading to customer defections.
The kicker of the article states that Sears, once a trusted name, became dirt. In 2016, women shoppers had given up on the brand and preferred to shop at Goodwill. Yes, Goodwill. When a thrift store is beating Sears, you know the situation is terrible.
Lampert has stepped down as CEO, and the hope is that chapter 11 will give the company time to restructure and retool. The company has added a restructuring expert to the board which is a good sign.
But is it too late to save Sears? The company has closed so many locations that there are parts of the country that have no Sears or Kmart at all. If it restructures, what will Sears and Kmart look like? Could they grow again?
I’d love to see these businesses grow back to some sort of prominence, but after cutting off so many parts of the company, what’s left may not survive.