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How Sears Became the Worst Retailer, and Company, in America

Leon Kaye | Monday July 22nd, 2013 | 10 Comments
Sears, Eddie Lampert, retail, John DePodesta, Kmart, Leon Kaye, bankruptcy, Chicago, CEO of Sears, corporate governance

Not much grand about Sears these days

Once upon a time, before Amazon.com, much of America and Canada shopped at Sears. Folks with access to little more than the local general store could comb through its catalogs and buy everything from, well, combs to stately do-it-yourself houses. For decades, its brick-and-mortar stores were the only place to shop, including in my hometown of Cupertino. The tallest building in the world once hosted the firm’s headquarters and shared its name. Before Walmart’s agenda to keep workers and communities in poverty with “low prices” swept through much of the land, Sears offered decent wages for employees and a place to buy solid appliances, have your car filled up and serviced, take awkward family photos at the portrait studio, buy insurance and yes, purchase clothes.

But the last 20 years have not been kind to Sears: in 1992 the retailer suffered its first quarterly loss since the 1930s, and the company has been stuck in its ways as its competitors adjusted to shifting consumer habits. In stepped in Edward “Fast Eddie” Lampert, a financier who had already swooped up Kmart while that flailing company was mired in bankruptcy. In 2005, Kmart acquired Sears, and Lampert christened the combination of two losing retailers Sears Holdings. What has followed for eight years is a story of cost-cutting and employee turnover so sordid that even Wall Street’s most heralded publications, from Forbes to Fortune, have savaged Lampert’s performance as CEO of Sears.

A decade ago, BusinessWeek suggested he was the next Warren Buffett, which at a superficial level made sense. Both have invested in companies that were seriously underperforming and undervalued. Only Buffett has a strong track record and is widely respected as a sage, rational and respected investor. The reclusive Lampert, however, has turned Sears into a joke, but Sears’ employees, from top executives to the clerk and mechanics who assisted me when I visited the local automotive center to have a couple of parts replaced, are not laughing.

Walk into a Sears and you see the results of Lampert’s warped leadership and mismanagement. Sears and Kmart have all the charm of a dollar store without the prices, nor even the service, and with even more disengaged employees. Bright fluorescent lights highlight the drab floors, peeling paint and sad displays of merchandising that are reminiscent of department stores in the communist Soviet Union. Some employees carry iPads, others do not: Lampert’s affection for technology led to a policy of employees required to use tablets on the shop floor, even though most clerks said they were unnecessary. Queue at the automotive department and plan to wait: the clerk with whom I dealt with explained that hours are hard to come by for employees. Depending on how a department fared over the previous four weeks, sales figures determined the budget for hours the next four weeks. So employees were either standing around bored, or were harried and embarrassed like the clerk who assisted me at the Manchester Mall location. So, call a manager? “We don’t really have any,” said Zach (not his real name). We tried to call the store manager, but only heard a busy signal when he called human resources or employment. “Yeah,” said Zach, “that’s normal.” Dismissive management and the lack of hours make for a toxic work environment, even for retail. “Lots of infighting here,” said Zach, “so thank God I’m finishing my degree in two years.”

My two days at a Sears was just a microcosm of what has unfolded at this once proud retailer for years. So what happened?

The Ayn Rand-loving Lampert hastened Sears’ decline by dividing up the company into over 30 business units. A lover of data, he brought John DePodesta, a statistician who was part of the baseball team Oakland Athletics’ number-crunching, over-achieving winning ways a decade ago, onto Sears’ board. Lampert’s faith in laissez-faire capitalism and data would push each individual business unit to slash costs and maximize profits. Such an approach would work fine among 30 different companies—but not within a company of $21 billion revenues and falling.

The problem: the invisible hand of the market is not enough to guide any business to prosperity and maintain brand trust. That is why they engage in what we call strategy; it is why companies innovate; and of course, that is why they influence policy in DC (lobbying) or in states and municipalities (beg for tax credits or favorable zoning). Oddly enough, the free market-loving Lampert threatened to move Sears out of Illinois, which the company has called home since 1893, if the company did not receive a preferred tax rate. And while competition is great for the marketplace and consumers, within the company, Lampert’s vision has become disastrous. In order to boost profits, business unit managers brought in other brands such as LG and Stanley, cannibalizing Sears’ iconic brands such as Kenmore appliances or Craftsman tools. Search on Yelp for any local Sears, and the reviews are so vicious they make other Yelp reviewers appear compassionate. And for a Sears employee, a living wage is hardly the reality.

Many commentators accuse Lampert, who became CEO of Sears earlier this year, of simply holding out to pick Sears apart for its assets. After all, Sears either owns or has incredibly cheap long-term leases on land across the country. One quarter of the Cupertino store, for example, is now a high-end health club. But many of Sears’ properties are also in decaying shopping areas retailers and customers avoid, such as the Manchester Mall location in Fresno or Santa Monica Boulevard in Little Armenia. Lampert’s irrational, micro-managing and imperious ways have been compared to Michael Douglas’ Gordon Gekko, though in reality Lampert makes the Wall Street character look like Mr. Rogers.

Sears’ competitors should send fruit baskets to Lampert’s Florida mansion daily, for he has become a gift that keeps on giving, allowing other retailers to shine. After all, skinflint Walmart has achieved some impressive sustainability achievements and enacts capital achievements per square foot over six times the rate of Sears; Target’s foundation has a half-century record of community giving; and Kohl’s keeps expanding while encouraging employees to volunteer within their communities. Whatever you may think of Sears’ competitors, they are, for the most part, formidable, well-run businesses.

But with Lampert at the helm, Sears does zero for a country and the communities that once made this one of America’s most successful companies. And with a rubber-stamp board of directors, Sears is still well on its way to oblivion, earning scores as the country’s worst and most embarrassing retailer—and company.

Based in Fresno, California, Leon Kaye is the editor of GreenGoPost.com and frequently writes about business sustainability strategy. Leon also contributes to Guardian Sustainable Business; his work has also appeared on Sustainable Brands, Inhabitat and Earth911. You can follow Leon and ask him questions on Twitter or Instagram (greengopost).


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  • Sonia Koetting

    I live in Fort Collins, where the way out-of-date mall was finally rescued by a developer (no one was willing during the recession). Holding out is Sears, an anchor to the old indoor mall; Sears owns their footprint property.

    Many citizens don’t want to lose Sears and scoff at the upscale logos to come, but I now see that the protracted fight is more likely because Sears can play blackmail with their property. This could be the ultimate money-maker for Lampert… searching for the highest bidder on all those town center locations Sears has across America. That’s why he’d care less if the shoppers’ experience sucks!

  • http://nerdychick1983.blogspot.com/ nerdychick

    I worked for about a year at a sears in ohio and I have to tell you how accurate this story is about how my management was as well. I was a cashier so we had the brunt of the responsibility of doing credit card sign ups, which they rely so heavily on the cashiers to get their quota that is given to us every day, but the problem with having a quota and working at a dead sears location is that I was very lucky when I met my quota, meaning it was almost impossible to met the deadline of credit card sign ups we had to do. If you didn’t meet your quota the management would seriously cut your hours, and by the way cashiers are the only group in the whole store that this happens too. I went from getting 33 hours one week, to 16 hours the next week simply because I could not get the credit card sign ups. You would be amazed how many family and friends on a daily basis we would all call in to sign for credit just so that we could meet the quota and we wouldn’t get our hours cut. While I understand the importance for sears to get credit card sign ups, I do not see why the employees should be penalized for that when it is not our fault that the powers that be are running sears into the ground.

    • http://nerdychick1983.blogspot.com/ nerdychick

      by the way, the only reason why I worked their so long was that it took me that long to find another job, I didn’t live in a big area.:-)

    • Annonymos

      I feel for you . My wife lost her 18yr fltm commission sales position with Sears. She was pushed out by mgt. She never failed to exceed her sales goals in major appliances. The infighting got to be the best of her though. She says it was at one time the most pleasant place She’d ever worked. They want all associates with fltm contracts OUT!

  • Richdee Coe

    great journalist facts over facts! love this article. Former Sony Chief Editor

  • DD

    Sears Pasadena calif. Why the hell do employees expect to make $200 a week! Can’t they see I’m trying to remodel my $40,000,000 house! And you customers that have been coming here since 1960s, can’t you find somewhere else to go! And yes, Kmart knows theirs a drought. We honor that by mopping floors, monthly!

  • James

    I wanted to support Sears by buying a weed whacker there. It looked like a good unit. They touted a full two year warranty. It broke almost immediately and they charged me to get it out of their service “hock” nothing but poor attitudes,service and quality. Hung up on repeatedly. NEVER again will I buy anything from Sears; do so at your own risk!

    • Nelson Phillip

      Best part is they don’t even have 1 for English 2 for Spanish 3 for Islam because they only speak spanish and if you don’t tough crap and they is how they treat you.

  • Nelson Phillip

    I purchased numerous sears items when I purchased a new home in April and already the refer has stoped and everytime I call I have to go through 20 questions and then get some one who does not speak English an when you espres the fact you can not understand them they get a BIG attitude. Finally I was forwasred to Tech support and I could not understand ONE word from this mexican, I asked numerous times to talk to some one who spoke English. He hung up, guess that answered that. I called back and wnet through the same old stuff and was walked though all sorts of troulb shooting things they wanted me ot do on a 5 month old 1800 dollar appliance, then I was told it would be 2 weeks before a technecian could get to my home. Good-By Sears and I wall completely understand why they are becomming like Montgomery Wards, and rightly so they only employ bottom ot hte barrel employees. They deserve to close. I went to sears as did my parents and for over 40 years all my applainces and tools and lawn equipment but no MORE.

  • BlogZilla

    What kind of store:
    —Has cheap mannequins that look like ghosts from the early 1960s facing dark corners with the legs “chopped” off or facing haphazardly arranged clothes and crowded racks or better yet, empty racks?

    —Has dim lights all over the place so the merchandise isn’t displayed in a flattering way?

    —Thinks it’s a good idea to have empty shelves all over the place?

    —Has an auto department that takes 7 hours just to change TWO tires? PATHETIC!

    — Has the nerve to sell $1500 clothes washing machines that explode and cause death, injury and property damage and then give customers a hard time if they want a refund or exchange?

    —Has the nerve to sell $1500 clothes washing machines that stink to high heaven, malfunction constantly with error codes due to bad electronics, even when used as directed?

    —Has the nerve to spit on their own most famous brand name (Kenmore) that once used to stand for quality? Now it stands for very low quality

    —Doesn’t even know it’s identity and and redesigns its store floor plans to look like Walmart?

    —Has strange dark empty areas in its stores?

    —Thinks it’s smart to suggestive sell and have customers wait in line while every person that doesn’t have one of their caca credit cards sign up in the check out line? This takes a lot of time. People don’t want to wait for that

    —Decides to have all of its flagship Craftsman tools made in China, cheapening the quality, but oh, they want just as much money or more for them? Hmm Brilliant.

    — Doesn’t even stand by their warranties and sells crap that falls apart in 6 months or a year

    Yes people. Sears has all this and more. LOL! Don’t you want to go shopping there? LOL! :)

    Their major problem is that their merchandise and service has become dreadful and they think people should be okay with that