DEATH OF A RETAIL ICON
The following is my column that appeared in the Daily Memphian on October 19, 2018. It is reprinted with the permission of the Daily Memphian.
It began on a winter day in 1886, when a retail jeweler in Redwood Falls, Minnesota received a package of watches that had been shipped to him by a Chicago company. The jeweler refused the package. He did not order the watches, and he had no interest in them.
The package ended up in the hands of a 23 year old railway agent named Richard Warren Sears. Sears managed the offices of Minneapolis and St. Louis Railroad in North Redwood, Minnesota, where he operated the telegraph and handled the Minneapolis and St. Louis Railroad’s business. There wasn’t much of it, and young Sears had a lot of time on his hands.
When Sears received the package of watches that had been refused by the local jeweler, he immediately came up with a plan. He contacted the Chicago Jewelry Company that had manufactured and shipped the watches, and he told him that he would buy the watches for $12.00 each. The watches retailed for $25.00 each, and so Sears contacted his network of fellow railway agents along the line and offered to watches to them for $14.00 each with everyone profiting in the transaction.
The package of watches sold quickly, so Sears contacted the Chicago wholesaler and ordered more. He then contacted the station agents and the transactions continued.
Within six months, Sears’ trade in watches had earned him $5,000, in those times a small fortune.
Richard Sears then quit his job at the railroad, moved to Minneapolis, and opened the R. W. Sears Watch Company.
Sears began to advertise his watches throughout the country. Orders began to arrive, and then more orders arrived, and soon there were too many orders to handle in the one-man office in Minneapolis.
In March of 1887, Sears moved his new company to Chicago, the center of the rail network which Sears believed would facilitate speedy service to the entire nation.
In 1889, Sears and his new partner, Alvah Roebuck, developed an innovative marketing plan. It was a book. It was a book that literally changed the retail landscape of America, a book that became second only to the Bible as the most widely-read book in America.
It was a book about hopes and dreams. And more important, it was a book about the fulfillment of those hopes and dreams.
It was the Sears & Roebuck Catalog, but it soon became known by another and very fitting name: The Wish Book.
By 1894, The Wish Book was a whopping 522 pages, literally giving millions of Americans a chance to shop without ever leaving their homes, and have their products delivered directly to them.
Profits soared, even during the depression of 1893-1894. By 1894, Sears & Roebuck was raking in profits approaching a half million dollars a year.
In 1927, Sears came to Memphis building a gleaming new structure—The Sears Crosstown Building—that would serve as Sears’ distribution center throughout the southeastern United States.
For decades thereafter, Memphis and Sears prospered as retail brothers.
In the spring of 1973, Sears built another skyscraper … in Chicago. At 108 stories, the Sears Tower was the tallest building in the world, a soaring monument to “the Colossus of American retailing.” Sears was both literally and figuratively at the peak of its power.
By the early 1970s, Sears had sales of over a billion dollars a month, leading to the profits that totaled over 1% of the American gross national product. Two out of three Americans shopped regularly at Sears, and more than half the households in the nation had a Sears credit card.
Sears Crosstown in Memphis had become one of nearly 900 Sears retail stores, over 2,600 catalog outlets, and over 100 warehouse and distribution centers.
But by the end of the decade of the 70’s, Sears was in trouble. A Fortune Magazine cover story in 1979 renamed the Sears Tower “The Leaning Tower of Sears.” As a corporate civil war raged between executives a top of the tower and thousands of retail sellers and distributors around the country, the Sears Tower could have been compared to the Tower of Babel.
There were three reasons for the precipitous decline of the Sears icon in the decade of the 1970’s.
First and foremost, Sears suddenly found it had competitors. They were serious competitors who were attracting Sears’ loyal American middle-class customer base. Among the new retail giants competing with Sears were K-Mart, Target, and most significantly, an emerging new retail enterprise from tiny Bentonville, Arkansas—Walmart.
The second reason for the decline of Sears in the 1970’s was a prolonged recession that plagued the American economy for most of the decade.
In October, 1973, just months after the opening of Sears Tower, the Organization of Arab Petroleum Countries (OPEC) imposed an oil embargo on the western world, dramatically driving up energy costs. America entered into a recession, but it wasn’t the ordinary cycle for a recession. It was “stagflation,” an alarming combination of reduced demand, increased unemployment, and soaring inflation. By the end of the decade, American interest rates were at an all-time high, further pushing up the cost of business for the massive corporation. The result was a perfect storm for Sears: increased competitors, declining sales, declining profits, and soaring costs.
And the third reason for the decline of the Sears icon was a crisis of leadership. Throughout most of the 20th century, Sears had been led by two visionary and dynamic leaders, Julius Rosenwald and General Robert Wood.
Rosenwald used his personal wealth to support the Sears workforce during the great depression. General Wood had used his dramatic suburban retail strategy to make Sears “America’s Thrift Stores” during tough times.
But in the closing years of the 20th century, both these corporate executive giants were gone, leaving Sears’ leadership to a series of board chairmen and CEOs. Ironically, these new executives in the corporate suites of the Sears Tower struggled with the very management system that Rosenwald and Wood had created, and began laying off workers and closing stores.
In August of 1983, Sears announced it was closing the Memphis Sears Crosstown retail store due to years of steadily declining sales.
Four years later, in March of 1987, a second announcement came from the Sears Tower in Chicago. Sears was going to reorganize its distribution operation around the country, and part of that reorganization was closing the Memphis distribution center.
In 1993, the decade-long painful death of Sears Crosstown came to an end. The last remaining vestiges of Sears Crosstown, the retail center, was closed and the doors to the building were shuttered.
In that same year, Sears not only closed Sears Crosstown, but also discontinued the publication of its Christmas Catalog.
For Memphians and mid-southerners, both The Wish Book and The Wish Building were gone.
The decline of the retail icon continued over the next three decades, and this week death finally came. Sears filed for bankruptcy.
Sears last retail store in Memphis will soon close.
But thanks to the incredible and creative new development, Crosstown Concourse, the Memphis Sears Tower is alive and well. The Wish Book may be gone, but The Wish Building is here, housing tenants, healthcare, not-for-profit corporations, restaurants, and even a new high school.
As a Memphian who grew up shopping at Sears and anxiously looking forward to the arrival of The Wish Book (Christmas edition) each November, I will miss the once-dominate retail giant.
But I will enjoy the spirit of Sears I experienced during my childhood, as I visit and dine at Crosstown Concourse and experience the very-much-alive Wish Building.