Business View Magazine November-December 2018
10 11 S ears declared bankruptcy this week, bringing the company to a new low after several years of steady decline. In order to avoid going out of business altogeth- er, Sears will close at least 142 Sears and Kmart department stores by the end of 2018, which– along with 46 closures already planned for No- vember –will bring the company’s total number of stores in operation to fewer than 500. Many of the remaining locations have so far been profitable, so a scaled-down Sears could conceivably go on indefinitely. However, the com- pany is currently seeking a buyer for these stores in order to preserve their long-term viability and the thousands of jobs they provide across the U.S. The bankruptcy could threaten these stores’ profit margins if vendors and creditors avoid the strug- gling retailer as a financial risk, so it’s not yet out of the question that Sears goes the way of Toys ‘R’ Us and RadioShack. In any case, bankruptcy and downsizing at this scale represent a monumental change for the former leader of the U.S. retail market. Sears was the equivalent of Amazon and Wal-Mart for much of the twentieth century–when mail-order cat- alogs and large department stores grew to meet the expanding purchasing power of the American consumer – and is still a staple in shopping malls. OPENING LINES SEARS DECLARES BANKRUPTCY, A NEW LOW FOR THE FORMER RETAIL GIANT - FREEDONIA ANALYSTS WEIGH IN Since 1989, when Wal-Mart surpassed Sears in domestic revenues, Sears has faced intense com- petition on multiple fronts: n Supercenters (e.g.,Wal-Mart, Target), which offer even larger selections of low-cost goods and conveniently combine the department store with the supermarket n Home centers (e.g., Home Depot, Lowe’s, Menards), which are one-stop shops for tools, building materials, appliances, furniture, and oth- er home goods and hardware n E-commerce, which is dominated by Amazon and the leading brick-and-mortar retailers As a sign of the trouble Sears has been in for the last several years, the company finally sold its Craftsman brand to Stanley Black & Decker in March 2017, and the idea of selling Kenmore came up again in August 2018. Both brands have historically enjoyed widespread recognition and approval among U.S. consumers, but have lately lan- guished under the retail chain’s poor management. The Craftsman deal promises to revitalize that brand, especially as it brings the brand into grow- ing retail channels such as Lowe’s and Ace Hard- ware. In September, Stanley Black & Decker rolled out 1,200 new Craftsman products – including hand tools, power tools, tool storage, lawn and garden equipment, and more. The deal gives Sears a perpetual license to continue selling Craftsman, so shoppers will still find these prod- ucts where they’ve always been, but the brand is now under Stanley Black & Decker’s manage- ment, which will help to maintain the brand’s strong name.
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