Doing the Wrong Thing at the Wrong Time

In USA Today’s lament for Sears, I don’t honestly think the editors sound exactly the right note:

Sears, like other companies, is failing in part because it did not understand that this is an age of visionaries, not administrators. The wildly successful companies of today, including Amazon, did not merely ride the waves of change that swamped the likes of Sears. They created them.

They succeeded by thumbing their noses at conventional wisdom. That has meant pouring vast resources into good ideas, sometimes not knowing how they’d make money. It has also meant cannibalizing existing lines of business on the understanding that if they didn’t do it, someone else would.

Sears is slowly disappearing because of catastrophically bad management over a period of decades. Here’s how the USAT editors characterize Sears’s first try at world domination:

Like Amazon, Sears used its retailing strength to expand into related industries. It launched its own merchandise brands, such as Kenmore and DieHard, created Allstate Insurance, and even ventured into the stock brokerage and real estate brokerage businesses.

That isn’t exactly what happened. What Sears actually did was capture its private label vendors by making excessive demands, accompanied by ultimata. Eventually Sears was their vendors’ only customer and they’d acquire the companies, proceeding to drive them into the ground and destroy whatever had been good about them to begin with. Just because you can run a successful retail operation doesn’t mean that you can manufacture furniture or design and produce garments.

But they’re right in one respect: Sears should be ruling the roost. The company cut its teeth on the catalog business, the 19th and early 20th century equivalent of online sales. What happened? They repeatedly did just the wrong thing at just the wrong time. Rather than cultivating their vendors, they acquired them in a bid to gain a horizontal monopoly. Rather than focusing on the growing suburbs and suburban shopping malls, stocking products that would appeal to that clientele, they concentrated on their inner city stores. When name brands were just gaining steam they doubled down on their store brands. Rather than creating an online catalog and payment operation, in the early 1990s they got out of catalog sales to concentrate on those brick and mortar brick and mortar stores. Basically, they did just the wrong things at exactly the wrong times. The only explanation I have for that is incompetent management.