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    The History And Future Of Sears

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    Fantasy Finance

    You don't have to be a sophisticated investor looking at balance sheets and listening to investor conference calls to see what's happening in the retail space. Look no further than your own shopping habits.

    If you're like most, you're doing much more shopping online and for purchases more suited to local stores, you're spending your money at the modern, bargain conscious, in-style stores. What was popular when your parents were your age isn't popular now.

    That, at least in part, may sum up what is causing retailers like Sears, JC Penny (NYSE:JCP - News), and most bookstores to be on financial life support going in to 2012.



    The History of Sears
    You might best know Sears as the department store where your grandparents shopped, but the company has a long and storied history. Sears can trace its origins back to 1886, when Richard Sears began selling watches at a train station in Minnesota. He was so successful that he moved to Chicago and published an 80-page mail-order catalog.

    Although he wasn't the first to make such a catalog, Sears and his partner, Alvah C. Roebuck, eventually had more than 500 pages of products for sale, making them the largest mail-order retailer in America, the amazon.com of their day. In 1925, Sears and Roebuck opened their first retail store and by 1973, the company they founded had built the largest building in America: the Sears Tower.

    By the 1990s, Sears wasn't the iconic mail-order brand that it once was. Since the 1930s, they had purchased companies like AllState Insurance, Dean Witter Financial Services (which subsequently merged with Morgan Stanley), Kenmore Appliances and the internet services provider, Prodigy.

    By 1992, Sears was facing crippling competition from Wal-Mart (NYSE:WMT - News) and Kmart, forcing it to cut 47,000 jobs and post a loss of $2.3 billion. Slowly, the retail side of the business became a smaller part of their revenues. By 1993, Sears had stopped publishing its catalog. In 2004, Kmart purchased Sears and formed Sears Holdings (Nasdaq:SHLD - News), making them the third largest U.S. retailer behind Walmart and Home Depot (NYSE:HD - News).

    Since the merger, the company has continued its downward spiral, losing 83% of their stocks' value in the past five years. Sears Holdings recently announced that it will close up to 120 Sears and Kmart Stores to shore up its finances, further proving that its retail arm may soon be lost.

    The Future
    Few people are betting on a revitalization of the retail arm of Sears; not even the company itself. In 2010, Sears announced that it would sell its Craftsman and Kenmore brands in other retail stores like Costco (Nasdaq:COST - News) and Ace Hardware. However, there's another side of Sears that isn't as apparent: Sears Holdings owns a lot of real estate.

    In 2011, Sears announced that it was going to open up its 3,800 retail properties to other retailers. This could include smaller outlets on the property, in store kiosks and a retail presence next to a Sears or Kmart store.

    Becoming a real estate investment trust (REIT) may not seem like the mark of a healthy company, but consider this: Sears has a market cap of nearly $3.3 billion. Simon Property Group (NYSE:SPG - News), one of the best known property leasers, is worth $37 billion and Sears owns a lot more retail property than Simon Properties. Sears' real estate may represent an untapped, highly lucrative potential revenue stream.

    Sears is still investing a lot of money into becoming a leading online retailer, but many investors believe that monetizing their properties and building their brands outside of their retail stores is their best hope.

    The Bottom Line
    If you have shopped at a Sears or Kmart recently, you may know firsthand that the brand is in trouble; however, Sears is larger than its highly visible retail presence. Still, investors are largely unconvinced that the company will survive without a major restructuring and even that may be too late.



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    76 comments

    • SoDone  •  4 months ago
      1886-1974- How to spend hundreds to make millions
      1975-2004- How to spend millions to make hundreds.
    • .  •  4 months ago
      It doesn't take a rocket scientist to figure out what went wrong with Sears. First Sears tried "The Softer Side" and didn't have a clue what brands to carry or what styles to have made by their manufacturers. The few women that would "shop" at Sears went elsewhere.

      Then Sears closed the stores where their strongest customer base resided. They closed all the small "catalog" stores in rural America. These stores catered to the needs of the local community HOWEVER the rural customers would also go to "the city" Sears store to make additional purchases.

      Then the only time that women would shop at Sears was when their guy said that he was going to Sears to purchase something.

      Next Sears put each generation of tools out for bid from manufacturers. Obviously the low bidder got the contract to make the tool. As everyone knows, you get what you pay for. As a result, the guys don't go to Sears to buy tools and hard stuff either.

      Does it surprise anyone that when a company alienates their customer base, their customers leave and shop elsewhere.
      • markleaman50 4 months ago
        You should take a look at the Newmarket(Upper Canada Mall) location, you might just change your comment, Women flock that store every single day, and I see many of the same faces returning week after week and making multiple purchases!
    • Bill  •  4 months ago
      "Sears is still investing a lot of money into becoming a leading online retailer"
      Sears missed a tremendous opportunity when they closed their catalog operations in 1993, just before e-commerce took off. Although the catalog business was outdated, its infrastructure should have made it an easy transition to on-line sales. Now, 15 years too late, they are spending a lot of money to get back in the game.
      • markleaman50 4 months ago
        Again, the catalogue dept. is alive nad well in the Newmarket store .
      • G_Fo 4 months ago
        Even "consistently great" business in their Newmarket location isn't going to save Sears though... I'm sure you must also see that logic Markleaman50. The big picture should dictate their next move, not what a particular retail location is capable of generating due it's specific demographics/consumers' habits.

        I have to agree though, that Sears definitely missed the boat on transitioning their Catalogue sector into the potential for dominance in online retail. It would seem all of the pieces were in place but that their foresight was certainly lacking. Their timing could not have been worse, in hindsight.
    • D  •  Edmonton, Canada  •  4 months ago
      Would also help if they stood behind their brands. Bought a Kenmore washer - completely dead in 3.25 years. They couldn't send a tech out for 2 1/2 weeks. WTF Called a different company - they came to check on washer the next day. The ballist had sheared off and broke into 3 pieces. Would have cost in excess of $800. Better to buy a new machine. Did I go Sears. God NO. Sears does not stand behind their products at all. It will be a cold day in hell before I go back to Sears. Sears has lost my business forever. Thanks for nothing Sears. Maybe you should go back to what made you famous, great quality, good price, great customer services. None of that exists in the current Sears.
      • mike 4 months ago
        Top of the line Kenmore is actually just junk that they over charge for. My Roper brand items have lasted 3 times longer than Kenmore did. Yet cost a little more than 1 / 4 of the Kenmore.
      • A Yahoo! User 4 months ago
        Haven't shopped at Sears in 7 years! After purchasing a $10,000 livingroom set (two leather reclining sofas and lazy boy chair), the stitching started to seperate from the leather on all the cushions after only 4 months. Went into Sears expecting our full money back only to be told "90 days".. sorry about your luck basically. After weeks of arguing with everyone we could, they finally agreed to take the furniture back but with 2 catches... we would have to pay an $1800.00 "restocking fee" and we had to spend the same amount of money as before (another $10,000). We told them to get lost and have never looked back, unfortunately for us... the furniture that we thought would last 25 years looks like crap aftre 4 months!!
      • G_Fo 4 months ago
        These comments all sound uncannily familiar! :D After a distinctly similar experience as the first poster (anonymous from Edmonton, Alberta) I've taken the same hard-line attitude about Sears and any services they might offer.

        Aside from my own consumer experiences w/ Sears, I am a painter and once worked for a company who garnered a contract for work on behalf of "Sears Painting" department. At that time I was able to see some of the contracts that were drawn up. The general rule was that The contractor for whom I worked as a painter would quote a job at $1200 (a hypothetical example), and Sears' contract to the customer would exceed double the original quoted amount!

        it was so absurd that needless-to-say, that relationship didn't fare well, though I'm unsure as to whether their Painting division still persists... I doubt it.
    • Mike  •  Kansas City, Missouri  •  4 months ago
      I know the wonderful history of Sears. It was, that is, WAS, a great company. They muddled it for me 30 years ago, after they refused a cash purchase. I wasn't allowed to do the cash purchase unless I gave them my name and address for their records I respectfully declined to give them the information, after all this was only a $60. cash purchase. After trying to convince the sales clerk and a manager that I was using cash, not my Sears credit card, and the receipt would be my record of purchase, should I need to invoke a guarantee, they still insisted on the information. Finally, I just walked away. To me it was a matter of their attitude and my principles. I wrote the CEO of Sears, the next day, and filed my complaint. I received an answer from Sears saying a regional manager would contact me soon. The regional manager never called even though this time, they had my name, address and telephone number. I've been waiting now for thirty years and the manager still hasn't shown up. That is why, I'll continue not doing business with Sears, a once great store.
      • mike 4 months ago
        i know too well what your saying. but rather than wait for the reply they said i would get. I called them back , over and over. I called them without a lie 75 times before i finally got to speak with the manager.
    • Jason  •  Everett, Washington  •  4 months ago
      Too bad. Use to be an American icon and now like the rest who dont manage the change needed to perform with the market, they must go under-NO BAILOUT PLEASE! IT is sad but this is the true nature of how our system works and we should allow it to rightfully follow this process.
      • run rapide 4 months ago
        Ya but Obammy needs the votes and its our money so he doesnt care.
      • G_Fo 4 months ago
        Run Rapide, it's funny that I'm Canadian and still seem to be more in-tune w/ what's happening in the American political and economic forums than yourself. Let me guess, you're an unquestioning and devout Republican... Surpriiiiise!!!

        Dude, get your facts straight before you go spouting off about things you're ill-informed at best. I dare you to speculate for the rest of us, what would President John McCain have done in place of "Obammy" to avoid the US's current economic state?... Do you assume McCain would not have acted in exactly the same manner, if not worse, costing more average Americans their jobs and investments?

        Please, I urge you to enlighten the rest of us... go on now...
    • Jennifer  •  4 months ago
      sears' problem is that it needs updating. Their fashion is out of style. Their stores are old. They need someone like what Bonnie Brooks did for the Bay - they need a visionary. They can make it work but a lot of work needs to be done to get there.
    • AIber  •  Norwich, Canada  •  4 months ago
      Sears clothes belong to past century.
    • Ex-European  •  Biloxi, Mississippi  •  4 months ago
      I have stopped shopping at Sears years ago. They were always more expensive than any other store for exactly the same merchandise. The last straw was a cooking pot they sold for $99 when everywhere else it was available for $75-80. All I can say - I want miss them.
    • Sunshine  •  Edmonton, Canada  •  4 months ago
      Had trouble with a washer from Sears , They said they would get back to me in two working days . That was three weeks ago . Still haven't
      heard from them . A lot of stuff looks cheap when you get it for a high price . Made in China !
    • Barby  •  4 months ago
      I personally like Sears, they have such a wide variety and unlike Walmart they provide better quality and you can actually find North American made goods. The downside to Sears is that their prices have been way above the competition. To purchase something made in Canada or the US I have no problem paying a little bit more but to buy those goods that are made in China I am sure going to look around other than Sears.
    • Pat  •  4 months ago
      Sears was one of the best and now one of the worst. I asked the corp. office personally if they were interested in fixing the rep they now have - answer - thank you for your comments ! I have not and will not spend another dime there.
    • BOG  •  Toronto, Canada  •  4 months ago
      I use to shop at Sears with my mom when I was little and it use to be a good store back in the 80's. Now it has bad service and is way over priced. You can usually find the same items at other stores for 10-15% less. In 2007 I purchased a plasma TV from Sears, and 6 months later volume button on it stopped working. When I went in the store to exchange it they told be sorry but you only have 90 days to exchange items so you are out of luck. I haven't gone back to a Sears store ever since.
    • commenter  •  4 months ago
      To all the Canadian readers.....it is Sears in the US that is in trouble and not Sears here in Canada (although it, too, is facing difficult times). Recent Business news (not Yahoo scare headlines) was clear on this and outlined the steps Sears Canada was taking to mitigate the economic problems it is facing.
    • peps  •  Edmonton, Canada  •  4 months ago
      We still get 3 Sears mailorder catalogues per year in Canada - spring/fall/christmas wish book. I think the mailorder/online store is fairly healthy here, relatively speaking.
    • ...mouse  •  Georgina, Canada  •  4 months ago
      I hope sears survives, I am not buying walmarts out of the container direct from china
    • ..  •  4 months ago
      Sears are dying a slow death........or perhaps sooner than expected. Items on sale at the Bays are of better quality and price.
    • THX-1138  •  4 months ago
      Only item i bought was a battery for my watch at Sear's Watch Repair other than that...Nothing.
    • 2011golfchampion  •  Boston, Massachusetts  •  4 months ago
      let them fail they too expensive anyway.
    • oldgoat  •  4 months ago
      Sears was a good company. Their prices are too high and moving their call centres to the Philipines and India were a big mistake ... thousands of people laid off

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