Sears, the once iconic and largest retailer in America, filed for Chapter 11 Bankruptcy protection today. While this bankruptcy has been long coming, the impact of Sears’ bankruptcy is profound.
Humble Beginnings at Sears
Sears & Roebuck (as it was once known) was founded in 1892 by Richard Sears and Alvah Roebuck as a mail order catalog company, and it quickly changed and revolutionized American culture. The now famous “Sears Catalog” allowed nearly every American the opportunity to take part in the Industrial Revolution. A lifestyle that was once only available to “city folk” was now just a mail delivery away. From kitchen appliances, to G.I. Joe toys to automobiles and even houses, basically every product that could be bought, could be bought through the Sears catalog. Sears & Roebuck was essentially the Amazon of mail order catalogs.
Thus, Sears’ bankruptcy is viewed as heart-breaking by many. “It’s an American tragedy and it need not have happened,” said Arthur Martinez to the Wall Street Journal, who was CEO of Sears from 1995 to 2000.
The Sears catalog tapped into the desires of a budding consumer culture, bringing items that were once the province of city life to the rural population, such as men’s suits, vacuum cleaners and a “Stradivarius model” violin. “I dreamed a lot with that catalog,” said 64-year-old Frank Szafranksi of San Diego, who scoured it for James Bond toys and G.I. Joe dolls when he was a child. “You could find anything there.”
Sears Gets into Trouble with Competing Stores
Ultimately Sears found itself struggling to compete first with Wal-Mart and then Amazon. As the Wall Street Journal reported, “Sears’s troubles were fully exposed as smartphone shopping supplanted trips to the mall and the industry slid into tumult. Earlier this year, Toys ‘R’ Us Inc. closed all of its 879 stores after filing for bankruptcy. Yet the U.S. economy is strong, and consumer spending is boosting sales at Walmart, Best Buy Co. and Home Depot Inc., chains that are thriving in part from the Sears retreat.”
In a last-ditch effort to keep Sears out of bankruptcy, Eddie Lampert, CEO of Sears, earlier this year offered to buy the Kenmore brand for $400 million and proposed a broader restructuring of the company’s $5.5 billion debt load. But the plan never gained traction, according to people familiar with the situation.
The bankruptcy filing threatens to put many of roughly 70,000 Sears employees out of work and throw the financial security of its 100,000 pensioners into doubt. It also leaves many shoppers without a go-to store.
Don Lawson is the Office Manager of the Bond & Botes Law Offices location in Knoxville, Tennessee. He holds degrees in both Accounting and Finance that he’s put to use analyzing complex business bankruptcy cases for the firm. Read his full bio here.