How Sears Killed Sears
Headline this week: Sears Files for Bankruptcy
Shocking, right? Well, not really. Who didn’t see that coming? (Literally no one raised their hands, right? Except maybe readers younger than 20 who have no idea what “Sears” is unless they’ve seen signs on the outside of malls…often right next to the words “Store Closing”!)
It’s a bankruptcy that has seemed inevitable for at least the last 20 years, and perhaps more like 30 years. We’ve all been watching the slowest moving train wreck in history.
Sears was Walmart and Amazon before Walmart and Amazon. Sears was an industry disruptor 100 years before anyone knew what a “disruptor” was. At the end of the 1800’s Sears reinvented retailing in the US. It opened doors to both mass production and mass merchandising.
If you view Amazon as just a massive catalog of everything you want to buy, the Sears catalog was the “Amazon” of its day. People, many without ready access to Sears or other stores, waited for the Sears catalog (introduced in 1888) to come and made long lists of everything they wanted to buy. Then, they would buy them “virtually” (well, by mail or over the phone…after the widespread adoption of the phone!).
In spite of that huge head start, some would argue that Amazon and Walmart killed Sears. They would be wrong. Sears killed Sears.
A Bad Plan Poorly Executed
Sometimes organizations fail because of a bad strategy. More often, they fail because of poor execution of a good strategy.
Sears hit the failure Trifecta – bad strategy AND bad execution and then compounded that with a seeming lack of understanding of the depth of change required to save the organization.
And, they managed to hit this Trifecta every year for 30 consecutive years.
Fail #1: Strategy
Start with the strategy…if you can figure out what it was! It never appeared that Sears had any clue about what would cause customers to choose them over the competition. In spite of what once were incredibly strong brands – Craftsman, Kenmore, DieHard batteries, Lands End – it’s been years since anyone could figure out what buying choice would cause someone to choose Sears versus any of the other available choices. There literally seemed to be no attention paid to how Sears might create competitive advantage – location, merchandise, in-store or on-line experience, convenience, price, anything!
Fail #2: Translating Strategy-to-Execution-to-Results
Then, they topped off that bad strategy with horrible execution. Admittedly, it’s hard to execute a plan that either doesn’t exist or is so opaque and secret that no one knows what it is. But, let’s pretend for a minute that there might have been a plan that revolved around taking advantage of the apparent strengths that Sears had in the recent past – great brands, anchor locations in hundreds of malls. IF there was any kind of strategy, the execution was horrible…
• Minimal investment in the stores…most of them look like they looked 20 years ago
• Confusing store lay-outs
• Shelves barren of merchandise
• “Ghost stores” – being able to shop in a store for 10-15 minutes and never being approached by a sales associate
• An online presence that paled in comparison to Amazon or Walmart
• And, certainly no apparent ability to combine on-line with bricks and mortar retailing in a way that created value for customers
Fail #3: Completely Under-estimating the Transformational Change Required
When the ship is beginning to leak, it’s almost always worse than you think it is…and the changes you have to make are almost always more drastic and urgent than you think they are. Rather than recognize the depth of changes required, Sears seemed to merely compound their challenges with a lack of urgency in undertaking the radical transformation necessary to position the company for success in a radically changing retail landscape. Sears hit the proverbial stall point and never fundamentally changed its Thinking (assumptions, beliefs, perceptions) about what it needed to do to survive and prosper in that environment. The effort has seemed to be more about real estate plays and much less about radically fixing the failing retail business at the center of the mess. Sears retailing needed radical open-heart surgery and it got a few band-aids. They merely delayed the inevitable crash.
Given all that, the only surprising aspect of this is that it took as long as it did…which is really a tribute to the brand equity that Sears built up over the first 100 years.
Most of us aren’t operating on Sear’s scale, but any business is at risk if it can’t define a way to create competitive advantage and then drive the execution of that strategy to results.
A few questions to consider:
- What is your strategy? How do you create unique value for your customers that is sustainable and defensible?
- What are the choice factors customers use to make decisions about whether to buy from you or your competitors? How do you perform on those choice factors versus your competitors? Do you know from your customers’ (or potential customers’) point-of-view, or are you just guessing?
- What do you explicitly choose NOT to do that doesn’t create value, even if that helped make you successful in the past?
- What strengths, like Sear’s brands, do you have that you can take advantage of?
- What weaknesses – like Sear’s lack of store level execution – must you overcome to be successful?
- To what extent do you have the right people in the right roles with the right capabilities to be successful?
- To what extent do your goals, performance drivers (critical actions and behaviors) and Follow-up/Follow-through process for creating accountability align your strategy-to-results from senior leaders all the way to the frontline team members?
Let’s continue the conversation…if you had been leading Sears over the past 20 years, what would you have done differently to avoid the downfall?