The Rise and Fall of Sears: Seizing One Era’s Opportunities, Then Being Replaced by the Next

A story of rising with an era, then declining as the era changes Sears founder Richard Sears was born in 1863. In his twenties, he had to support his mother and younger sister. He found a job selling tickets at a railway station, but the pay was insufficient. One day in 1886, a large crate of watches arrived. They were intended for a jewelry store that refused the shipment. Returning them to the manufacturer was troublesome, leaving them stranded at the station. Sears had a bold idea: he contacted the manufacturer and offered to sell them. The wholesale price was US$12 per watch. Retail prices were normally several times higher, but Sears charged only US$14. He advertised in a newspaper and quickly sold every watch, earning US$5,000. His success came from catching two major opportunities in American history. First, America’s railways had become a nationwide network. Goods could reach every part of the country, which is how Sears received the crate of watches. Second, railways had connected the country, creating a need for standardized time. Previously, each city kept its own time. People stayed locally and had little need for watches or a unified sense of time. Once railways spread, departure and arrival times had to be agreed upon in advance. In 1883—three years before Sears received those watches—the United States established four time zones to coordinate time nationwide. Americans were only beginning to appreciate precise time, making watches important. A few years later, Sears seized a third and fourth opportunity. The third was postal service reaching villages across the United States. The fourth was the spread of automobiles and cheaper gasoline. Sears partnered with others to establish a company and launched mail-order services. He sent catalogs to households; customers remitted payment for what they wanted, and he arranged delivery to their doors. Mail order thus became popular in America before department stores did. Previously, a small town’s jewelry store often monopolized local business, set prices arbitrarily, discriminated against customers, and even refused to admit poor people. Sears treated everyone fairly: the same price, with delivery upon payment. Mail order quickly expanded nationwide. Initially just a few dozen pages, the catalog reached 1,200 pages per edition by 1915, offering 100,000 different goods and generating US$100 million in annual revenue. In the 1920s, a fifth opportunity arrived: American urbanization. Large numbers of farmers became industrial workers, and people gathered in cities. Department stores became much more efficient than mail order, and Sears quickly opened stores in major cities nationwide… By the 1980s, Sears was America’s largest retailer. At one point, 1% of all money in the country passed through its stores. That is the power of historical opportunity. Yet Sears went bankrupt in 2018. It had failed to seize the next era’s opportunities. The “next opportunity” emerging in the 1980s involved purchasing. Traditional retailers focused on what they could do with consumers. Walmart used digital analysis to identify the most popular products, then reduced supplier prices through bulk purchasing so it could sell at extremely low prices. The strategy was highly successful, propelling Walmart upward… Amazon then seized the still larger opportunity of the internet in the 1990s. Robin: “A new retail era has long since arrived. We have moved beyond consumers actively searching online for information to meet their own needs. Merchants now need to proactively recommend products and information. In an increasingly segmented, audience-specific, and customized retail era, many new business opportunities have already appeared.”