The Stable Strategy and Downfall of Sears
Last week, the last Sears Store in Toronto closed. As a result, Sears, unrivaled in the North American distribution industry since the 1950s, disappeared into history. In truth, the signs have been showing for several years, and perhaps it hung on for longer than expected.
Sears was a large distribution store that grew in an extraordinary way, through catalog sales. Even in the 1960s, it always held the top spot in the distribution business, and even with its many products and price competitiveness, it was the top distributing business in North America. However, since the 1970s, they were unable to clearly set their colors in the rapidly changing distribution market, and when the late-comers such as Wal-Mart and Costco expanded their territories, instead of reading into the trends of that time, Sears started losing their distinctness.
There is a person saying that goes as such: “if you spread out a folding screen and a business too much, it will fall. This is what you must be cautious of most when you are in the top position and brimming with passion”. Sears, however, rather than responding to the changing trends, expanded its business excessively, and while it expanded the Sears brand, it was also the cause of many failures and weakened the brand value. By proceeding to expand in this way while ignoring the trends, this excessiveness eventually returned to them like a boomerang.
On the other hand, Wal-Mart was in a position as a discount store that sold good products at low prices, and they were able to identify consumer trends in a rapidly changing distribution market, strengthening their brand value and quietly encroaching into the market. While Target and Costco were also expanding their territory in their own way, Sears, rather than responding to changes, were ignoring the changes, believing that they were secure in their pride and superiority.
With the introduction of the era of online sales in the 1990s, Sears may have been given their last chance to make up for their failure to change and be innovative in the last few decades. This time Sears really needed to quickly identify the rapidly changing trends and actively respond to these changes, but once again, they ignored the changes and did not react. At that time, the online retail business Amazon quietly infiltrated the market, a gap formed with Wal-Mart, which had been growing for the last few years, and Sears had slowly begun to lose their identity and gradually started their decline.
For me, someone who had worked with Sears for most of its offline related business, its downfall feels like such a pity. I have expressed a regretful attitude for the past few years as Sears only used the strategy of delivering products and attempting its sustained effort to survive merely by pricing. Instead of managing the quality of the product, they chose the extremely stable way of competing with other companies simply through low prices. As a result, it became a desperate attempt to satisfy only the middle class who were, insensitive to change, rather than focusing efforts on customer satisfaction, warranties, or delivery. In the end, as they were, reluctant to face its reality. Their existing customers were taken away by Wal-Mart and the household appliances store Best Buy. They were unable to recover in the offline distribution market, leading to their fall.
“To succeed dramatically, you must be prepared to fail brilliantly.”
Sears’ conceit that they would continue to receive overwhelming support from their consumers because they were in the top position and their stable strategy that was insensitive to change eventually resulted in their failure.
There is no easy success in the world. Everything we do is part of the process of enlightenment; we grow through failure and can ultimately succeed. However, if you choose the stable path because you are afraid of failure, rather than growing, you will quietly disappear from this rapidly changing world, just like Sears.