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

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, 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 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).

Based in Fresno, California, Leon Kaye has written for TriplePundit since 2010. He has lived across the U.S., as well as in South Korea, Abu Dhabi and Uruguay. Some of Leon's work can also be found in The Guardian, Sustainable Brands and CleanTechnica. You can follow him on Twitter (@LeonKaye) and Instagram (GreenGoPost).

18 responses

  1. 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!

  2. 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.

    1. 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!

  3. 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!

  4. 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!

    1. 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.

  5. 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.

    1. They think hiring people who can’t speak English that are from third world countries saves them money. Somehow good customer service is not a factor with these mindless corporations. It’s the very reason so many department stores went out of business in the 80’s

      When we moved we got far better service from Pacific Sales (don’t know if they have them in your area), and Lowes. We bought a new dishwasher from Lowes and refrigerator from Pacific Sales. I think our stove came from Pacific Sales as well. No need to be loyal to one retailer, that’s just silly and doesn’t work these days.

  6. 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

  7. So many have experienced this stuff and I guess you have the true answer thayjust don’t care any longer. When I was a child 50 plus years ago Everyone wnet to Sears and got good products and service. Now you get GOT!

  8. I ordered slippers online and its been a month and I still havent got a notice to go pick them up. I called last week and laura just wanted me to cancel my order and reorder them. I got them on sale during friends and family at BF price, and when you add temp points and my regular points I paid $3.40 for a $40 pair of slippers. Can you say great deal. Not is you never receive them. Any way, I kept telling her I didnt want to cancel. I eventually hung up and My husband called back, laura again, she told him that teh orer was cancelled the same day it was placed because of a problem with my paypal payment, so I went real fast and check my paypal account well they already took out the $3.40 on the day I ordered them, HHHMMMMM, so I told him to ask for someone else, after he just kept asking over and over she finally got a case manager and he told me the order had not been cancelled and there was no problem with my order and he would sent it to be investigated to see where it was and I would get a email within 24 hours, of I waited several days no email so I called again last night, guess what they have that I request a cancellation, I asked to speak to someone else again they said they seen where I called before and requested a cancellation not and investigation, I asked to speak to a boss I said unless you are CEO you have a boss, he said they will tell you the same thing that you have to cancel the order and replace it, well I said I want to speak to someone else and they placed me on hold, 30 minutes later I had my husband call on another line and the lady finally convinced me to cancel and reorder. Oh wait she said they are no longer in stock, I said I am on the site right now and just added them to my cart so I know they are in stock. No mam my system shows they are not in stock, I said ok ended the call and had my husband call and cancel both our charge card for sears. I unsubscribed to sears, kmart and shop your way emails, I am finished with sears as a whole. Sears you went from the only place I shop for my appliances and only buy kenmore to I want to go buy new appliances elsewhere and get kenmore out of my house, Sadly it wasnt the employees cause every customer service person had the same speech so sears you trained them all to be the way they are. I am sure you dont care about my one household leaving you as a customer but your future looks very short unless you make some changes to the way you run things.

  9. It’s worse than that. I just tried to buy something online and two hours later I’ve given up. There’s nobody who even cares if my “shop your way” password can’t be reset. They can’t sell anything. They won’t take my money. Can that get any worse?

  10. Why don’t they just freakin’ close these stores already? The way they’ve screwed over their customers and employees, I’m suprised no on has gone ISIS on their ass. They won’t be missed.

    Malls now fight to keep Sears stores out of their wings, because they are like giant cancer sores.

  11. So sad what has happened to sears/kenmore customer service and product quality….after years of shopping at sears, recent experiences there have taught me never to step foot in sears again.

Leave a Reply