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CAUSES OF “TOP” BUSINESSES FAILURE

Sears, a once-dominant retailer has showed unmistakable indicators of ultimate collapse

after 146 years in business. Sears formally filed for bankruptcy in 2018, and while there are still

locations in many neighborhoods, the business plans to close hundreds of stores in the next

years. According to Hokkanen et al. (2020) Sears and Kmart had roughly 3,500 stores when they

originally amalgamated in 2005, when Kmart bought Sears for $11 billion. Both businesses now

have just approximately 30 sites left in the United States. This is concerning, particularly for

people who recognize Sears as the industrial behemoth it once was. While the downfall of Sears

is mainly ascribed to intense competition from ecommerce juggernauts like Amazon and

Walmart, lack of focus and a failure to keep innovating also played a part.

Sears' demise may be traced back to circumstances that ensured its success. Sears

originally introduced their famous Sears catalog in 1888, at a period when most Americans were

still manufacturing their own clothes and furnishings. Sears aided in the introduction of mass-

produced commodities as well as labor-saving devices such as washing machines, dryers, and a

variety of other items that helped customers save time when completing ordinary home tasks.

Sears stores were also important in the development of suburbs around the United States, as

neighborhoods sprang up around malls that housed their stores. In 1985 Sears introduced credit

card as a means of payment in its business operations and also gave cash rewards depending on

the number of purchases made by the cardholder. A Discover card was issued to 20 million

consumers in just four years. With all of this innovation, Sears was actively involved in setting

trends for other companies and consequently active in redefining and restructuring itself to take

control of the market. However, as time went by Sears stopped being active in innovation an
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element that had been key to its success. Sears lack of innovation in its later days could have

been as a result of fear of taking on new risks.

Stiff competition in the retail industry as a result of the rise of Amazon and Walmart is

greatly related to Sears’ demise. While competition is a must in any thriving industry Sears failed

to establish powerful tools that would have kept it ahead of other competitors since it was a

pioneer in the retail industry. For instance, Sears and Walmart were nearly equal in size in 1990,

with revenues of $31.9 billion and $32.6 billion, correspondingly (Tokosh and Chen, 2021).

Walmart has been able to thrive because it realized that the larger United States demographics

preferred cheap and affordable commodities, Walmart therefore drew most of Sears customers

who saw Sears assortment as highly priced compared to other retail shops. Most mid-priced

stores, such as Sears or Gap, are suffering owing to consumer economics, not just inadequate

variety. It was less costly to pay for important expenses like housing, healthcare, transportation,

and education in 1985, but it is significantly more expensive in 2022. In the United States, the

majority of citizens live below the poverty level. According to Palladino (2021) real earnings in

the United States have declined by 9% since 2006, implying that a typical worker's pay now buys

less than it did in 2006. Since most commodities are now more expensive than decades ago

consumers are forced to choose lower-cost merchants over mid-cost businesses. Walmart, like

Sears, does not have the finest selection, but it has succeeded to become the leading clothes shop

in the United States, until lately unseated by Amazon, another retailer with a limited selection of

clothing, a vital department store cornerstone. Both shops, on the other hand, provide good value

for money to their customers.

Sears began as a small retailer of watches and jewelry. Then, years later, it began to sell a

range of goods. Because Amazon and Walmart operate under the same business model, a lack of
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concentration was not the primary reason of Sears' demise, although it did play a role. Sears had

become so large that it was impossible to operate the company properly at one point. It is really

easy to offer a variety of options online, but it is much more difficult to create a shop experience

that works. In 1993, Sears introduced the "The Softer Side of Sears" a marketing strategy to

reach out to more women (Miller,2021). However, the marketing strategy was interpreted by

consumers as complete overhaul of assortments sold in the Sears shops. Secondly, other

consumers saw the move of focusing on “soft” commodities as an ulterior motive of increasing

the number of times consumers visit the shops and therefore taking a huge amount of consumer

spending. This enraged Sears' current consumers, who considered Sears as a centralized retail

shop for appliances, beds, and gadgets at the time. Sears vision when it began was to ensure that

customers buys cheap and affordable commodities, however as it expanded from one category to

another this vision was lost.

In conclusion, Sears downfall can be attributed to both internal and external factors. As

external factors such as competition from other retailers such as Walmart and Amazon emerged,

Sears failed to restructure its internal factors such as focus and innovation to become ahead of

the competition. Factors that have contributed to Sears downfall could have been corrected to

save the company since some companies such as Walmart and Amazon have found success in

the same industry. By embracing ecommerce and understanding consumer economics Sears

would still be competing favourably with retail giants such as Amazon and Walmart.
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References

Hokkanen, H., Walker, C., & Donnelly, A. (2020). Business model opportunities in brick and

mortar retailing through digitalization. Journal of Business Models, 8(3), 33-61.

Miller, M. E. (2021). Creating an Ethical and Trustworthy Business to Consumer Experience

within the Global Automotive Repair Industry (Doctoral dissertation, Arizona State

University).

Palladino, L. (2021). Financialization at work: Shareholder primacy and stagnant wages in the

United States. Competition & Change, 25(3-4), 382-400.

Tokosh, J., & Chen, X. (2021). Did the Macy’s in my mall close? Revisiting the closures of

Macy’s, Sears, and JCPenney stores. GeoJournal, 1-25.