Sears and Amazon cross paths at opposite ends of the same trajectory
A giant company crushes an outmoded and overpriced retail industry by pioneering a new mode of shopping in which people never have to leave their homes.
Yes, that narrative applies to Amazon, but it is a trail blazed by a far older companySears.
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The crossing of their paths this weekAmazon announced it will now sell Sears’ Kenmore appliancespaints a stark picture of two transformational businesses on opposite ends of their business lives. Sears is now a life-support husk of an American industrial titan, while Amazon’s on a seemingly unstoppable tear reminiscent of the 124-year-old department store’s own mid-century reign.
It’s easy forget that Sears was young and bold once too. Starting in the tail end of the 1800s, the company built an empire on the back of a then-revolutionary home catalog hundreds of pages thick. The tome was so influential it was nicknamed the “Consumer Bible” and often paired with the genuine article as the only two books in many American households.
Sears became so ubiquitous that traditional rural general stores withered in its shadow as farmers ditched their spotty inventories and high prices for the ease of mail delivery.
Like Amazon, Sears also funneled its profits into a diverse portfolio of business endeavors. By the 1980s, giants of insurance, real estate, and credit cards orbited the country’s biggest retail operation. Sears ruled over all of it from the world’s tallest skyscraper in the heart of the industrial Midwest.
It even partnered with IBM and CBS to launch an internet-like computer portal in 1984 called Prodigy.
Alas, Sears did not in fact go on to invent the commercial internet. Prodigy was sold in 1996 for a fifth of the collective $1 billion Sears and IBM had sunk into it.
By that time, Sears’ business had been slipping for years as Walmart ushered in the big-box era with a fanatical focus on low costs. The catalog had ended in 1993. A sale to K-Mart in 2004 didn’t staunch the bleeding.
Meanwhile, a Wall Street exec named Jeff Bezos quit his high-paying job back in 1994 to go build an online book shop out of a Seattle garage. A year after its 1995 launch, the company was already growing at a pace the New Yorker called “remarkable even by the heady standards of Seattle’s software startups.”
Two years later, it began to branch out into CDs and DVDs, then toys and electronics, kicking off a now-familiar forward march that would eventually shake much of the retail industry to its core.
Amazon passed up Sears in global revenue in 2010, number of employees in 2014, and number of stores last month when it announced its purchase of Whole Foods, according to an analysis from the Wall Street Journal.
Sears is now a zombie. Despite a spike welcoming the Amazon news this week, it’s lost 85 percent of its stock value in the last half-decade, shuttered nearly a third of its stores, and racked up so much debt that its credit score is deep in junk territory.
Until Thursday, investors were just counting down the days until the company finally keeled over.
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But its newfound rally shows the power of the Amazon brand these days. The company can rattle entire industries with just a feint in their direction. Now it’s raising the dead.
That’s an exaggeration, of course. Sears is still in deep trouble, no matter how many washers it animates with Amazon’s Alexa voice assistant.
Still, after dragging Sears further underwater for years, Amazon has given its forerunner a rare gasp of breath.
Read more: http://mashable.com/2017/07/21/sears-amazon-of-its-day/