The end to Sears’ long downward spiral could be nigh.
On Tuesday, Reuters reported that the bankrupt retail conglomerate would ask a federal judge for permission to liquidate after failing to reach an agreement on chairman Edward Lampert’s $4.4 billion takeover bid to keep it going as a smaller company, signaling the strong possibility of a likely ignominious end to the iconic Sears and Kmart chains, the two largest U.S. retailers only a generation ago. The Wall Street Journal later reported the court would hold a bankruptcy auction next week, conditional on Lampert submitting a deposit.
Of the many takeaways for other retailers in the sad saga, one stands out more than most: even in the era of Amazon.com and e-commerce, no retailer can expect to close hundreds of stores, or worse yet, tolerate their neglect and decay, and expect to thrive. Lampert, who created Sears Holdings in 2005 when he merged Kmart and Sears, has closed hundreds of each chain’s stores in the last decade, paring weaker locations, and yet business at remaining locations kept collapsing.
Lampert long maintained that Sears Holdings was early to see the importance of e-commerce and made clear that to him brick-and-mortar stores were secondary, positing that any investment in their upkeep and any investments would have to quickly pay off. Indeed, in 2007, he told investors that absent a clear return, “we will not spend money on capital expenditures to build new stores or upgrade our existing base simply because our competitors do.” So no one should have been surprised by the poor state of many Sears and Kmart locations in recent years. Instead, his focus would be almost exclusively on e-commerce.
On some fronts, Sears led rivals like Macy’s, (m, +3.01%) J.C. Penney (jcp, -4.69%) and Kohl’s (kss, +1.72%). It was years ahead of those chains in offering in-store pickup for online orders. On Lampert’s watch, Sears’ e-commerce site vastly improved its search capability, and ease of use, was an early user of online dynamic pricing, a real-time capability that in theory should have helped it compete with Amazon.
And yet, that didn’t help: Sears Holdings has never once since its create thirteen years ago had a year of comparable sales (a metric that strips out the impact of new or…