At the present, Sears is barely surviving in bankruptcy court, But, there was a day when Sears was the Amazon of its time. It made the mail-order catalog a staple of American households, and in so doing, brought the latest and greatest products of American capitalism to people in every corner of the country at significantly lower cost.
The catalog also offered African-Americans in the rural South not just access to goods, but provided them a way to shop with dignity and equality in a world of Jim Crow. Our contemporary shopping experience with Amazon and other online retailers is a descendant of the Sears catalog.
Even when the car and suburbanization created a shopping mall culture that made their catalog secondary, Sears adapted, and its stores were omnipresent anchors across the country. But like the catalog, the shopping mall experience has fallen by the wayside. The exceptions are often high-end malls and department stores, with whom Sears could not compete.
At one end, consumers frequently prefer large specialty stores, like a Best Buy, for some of what Sears offered. And customers who want the variety of a Sears are finding it much cheaper at Target, Walmart, or even a warehouse club like Costco. As Target and Walmart, not to mention larger grocery chains, work to meet the speed and convenience of Amazon by offering pick-up or even delivery to your car or home, the old-fashioned department store has seen its market disappear. Sadly, the company that made its name on mail orders couldn’t quite figure out what to do in a world of email orders.
The big problem that Sears never solved was carving out a distinct identity in the very different retail landscape of the 21st century. It wasn’t an appliance store. (In fact, it allowed the quality of its Kenmore products to decline.) It wasn’t a clothing store. It wasn’t a discount store. It wasn’t a home goods or home improvement store. It had no distinct presence online. It tried various strategies for broadening its market, from Allstate to Kmart, but those just muddied its identity even more.
By still attempting to sell something of everything to everyone, Sears ended up selling very little to anyone.
So, is there anything positive here? I think there’s two things. First, the churn of creative destruction is alive and well in the U.S. economy. If we go back a bit, A&P was the Amazon (or perhaps Walmart) of its time, and it no longer exists. The more recent demise of firms like Borders Books and Toys R Us, and the competition that reduced the dominance of Walmart, makes clear that any firm that’s doing well now, even Amazon, cannot rest comfortably. Today’s consistent profits are tomorrow’s liquidation sales.
Second, it shows that despite the bailouts and subsidies and the general restraints on the invisible hand of the market, consumers are still sovereign and that it’s still possible to go bankrupt if you can’t please them.
As Deirdre McCloskey refers to it, “market-tested betterment” is still alive and well in some sectors of the U.S. economy. As much as discussions of economic growth focus on the ability to start new businesses, it’s probably true that our willingness to let businesses fail is a better indicator of a healthy economy.
While the demise of Sears is a sad day for the company and those associated with it, it’s good news for the U.S. economy and for the long-term well-being of all of us as consumers.
Steven Horowitz is the Distinguished Professor of Free Enterprise at Ball State University.