WHAT’S BEING CLAIMED:
- Despite efforts to save Sears, the company will soon file for liquidation.
- CEO Eddie Lampert has blamed the news media, shifts in spending and the introduction of e-commerce, for the company’s collapse.
- But analysts contend that the company’s implosion is failure to invest in its stores.
The reign of Sears has come to an end.
Sears was once the top retailer in the world that literally changed how America shopped and lived. Sadly, despite various measures to keep the floundering company afloat, it is now preparing to file for bankruptcy.
Its CEO, hedge fund operator Eddie Lampert has pinned the company’s seeming demise on the media, changes in consumer spending, and the entry of e-commerce. However, analysts and critics argue that the retailer’s decline is due to several years of insufficient investments in stores.
Even having survived two world wars and the Great Depression in its 125 years of operation, Sears has been collapsing over the past decade. In an attempt to improve its finances, the company shuttered hundreds of stores, cutting down jobs and securing more and more financial lifelines. The retailer now is facing a $134 million debt repayment due on Monday.
The company has been struggling to turn a profit, however, sales have fallen since 2014. At the same time, it has let its physical stores fall into disrepair. While other traditional retailers upgrade their shops, Sears locations were heavily cash-strapped leaving them uninviting and badly in need of maintenance and repairs.
According to interviews with Sears employees over the last years, some stores covered empty store areas and shelves with bed sheets and has utilized handwritten pricing signs to cut costs.
Over the years, Lampert has stepped in numerous times to help out Sears by lending the retailer hundreds of millions from its hedge fund, ESL Investments. In a ditch to turn things around and bring profits to the company, the CEO sold off chunks of real estate and dismantled Sears’ exclusivity over some American big brands.
But due to years of under-investment in stores, analysts doubt that the company can make a comeback.
Managing director of GlobalData Retail Neil Saunders bluntly said that Sears’ problem is that it “failed on every facet of retailing from assortment to service to merchandise to basic shop-keeping standards.”
All those mistakes have revealed itself in lost customers, lost market shares and an increasingly insignificant brand, he included.
Lampert’s critics with some former Sears executives have also criticized him for being a remote manager, visiting the headquarters once a year for the annual stockholder’s meeting and communicating with employees through teleconference meetings.
Lampert blamed the media in an interview in 2013. Defending his investment strategy in the stores, he said he was blasted for not investing enough. He responded by saying, “we couldn’t invest in everything.”
Loyal shoppers are saddened with the loss of the iconic retailer. One said Sears could have been the ‘pioneers in online purchasing’ instead of Amazon.
Source: Business Insider