Upside-Down Thinking by Patric Fransko
by Patric Fransko
October 17th, 2018

Three Lessons to Learn From Sears’ Bankruptcy

This past week, it became official that Sears was filing for bankruptcy protection. When things like this happen to iconic brands it’s smart to take a moment to reflect on some things that may have led to their decline. With that in mind, I wanted to offer three lessons I believe you can learn so your company doesn’t make the same mistakes.

  1. Failing to Recognize Market Trends– The beginning of the end for Sears began before the internet and e-commerce really began to have an impact. When large physical retailers like Walmart, Kohl’s, Home Depot and others began to show up in suburbs around the country, they been siphoning revenue from Sears. Consumer’s preference for going to a local mall for most shopping needs began to change to locations in stand-alone plazas. Meanwhile, most Sears locations where anchor stores at malls. Sears made an attempt to open smaller locations, but they were late to the game and had already begun losing significant market share.
    Lesson– Never get complacent. Consumer trends change and you need to identify what’s happening and evolve your business to stay relevant.
  2. Being a Jack of All Trades and an Expert at None– Another way consumer purchasing changed was the demand for more specialized expertise of retailers. Sears continued trying to be relevant in too many segments. They wanted to be solid in appliances, tools, clothing, electronics, etc. The reality was, they weren’t the best option in any of these categories. By spreading themselves across too many areas, they became merely ok at all of them. This led to many consumers not considering Sears as a first option when making these large purchases.
    Lesson– It’s better to focus on being the best in a few categories than being adequate in many.
  3. Failing to Address Real Issues – As revenues began to drop the management team looked for ways to cut costs. Unfortunately, they chose to cut staff instead of upgrading their stores. Just when consumers had fewer reasons to shop there, they made the stores a less attractive option. This accelerated the decline, which led to more cost cutting, and the downward spiral continued.
    Lesson – Sometimes, when business is declining it’s the result of a company losing sight of what made them successful in the first place. Make sure you analyze what’s causing the decline and make moves to address those issues rather than have a knee-jerk reaction.

It’s always sad to see an icon fail. However, having your business fail is even sadder. Hopefully this offered some lessons to help avoid some of the pitfalls that caused a household name like Sears to go out of business.

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  1. Bottom line……If you don’t change with the times you get caught with your pans down….Leon Levy..Klingshield South Africa

  2. Bottom line……If you don’t change with the times you get caught with your pans down….Leon Levy..Klingshield South Africa

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