Honestly, walking into a Sears in 2018 felt less like shopping and more like visiting a ghost town that happened to sell refrigerators. The lighting was always weirdly dim. The floors were scuffed. If you actually found a human being to help you find a wrench, it felt like winning the lottery. It’s hard to believe this was the same company that once literally built the tallest building in the world and basically invented the way Americans bought things.
So, why did Sears fail?
If you ask the average person, they’ll say "Amazon." They’ll tell you the internet killed the department store. But that’s a lazy answer. It's also mostly wrong. Sears didn't die because people started buying stuff on their phones; it died because of a twenty-year slow-motion train wreck involving ego, bizarre management theories, and a total refusal to fix its own leaky roofs.
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The Financial "Wizardry" That Backfired
When Eddie Lampert took over in 2005, he was supposed to be the smartest guy in the room. He was a hedge fund billionaire who had just rescued Kmart from bankruptcy. He merged them, created Sears Holdings, and Wall Street cheered. But Lampert wasn't a retailer. He was a numbers guy.
He had this radical idea inspired by Ayn Rand. He divided the company into thirty separate units—things like appliances, tools, and clothing—and made them compete with each other for resources. It sounds like a "survival of the fittest" masterstroke on paper. In reality? It was a disaster.
Division heads started hiding data from each other. They fought over floor space. The guy running the tool section didn't want to help the lady running the appliance section because they were essentially playing for different teams. While Walmart was streamlining its supply chain to be a well-oiled machine, Sears was busy in a civil war.
Neglecting the "Four Walls"
You can't sell $2,000 washing machines in a store that smells like a damp basement. For years, Sears basically stopped investing in its physical locations.
Experts like Mark Cohen, the former CEO of Sears Canada, have been vocal about this for a long time. While competitors like Target and Best Buy were spending $8 to $15 per square foot to keep their stores looking fresh and modern, Sears was spending pennies—sometimes less than a dollar.
It showed.
Handwritten signs started appearing where digital displays should have been. Shelves sat empty because vendors were terrified they wouldn't get paid, so they stopped shipping the good stuff. By the time 2016 rolled around, a survey actually found that more women preferred shopping at Goodwill for clothes than at Sears. When a thrift store is beating a legendary department store on brand appeal, the game is already over.
The Great Asset Strip-Off
Instead of fixing the stores, the strategy shifted to selling off the family silver. Sears owned some of the most trusted brands in American history:
- Craftsman: Sold to Stanley Black & Decker in 2017.
- DieHard: Sold to Advance Auto Parts.
- Lands' End: Spun off as its own thing.
- Kenmore: Left to wither without the R&D budget it needed to stay relevant.
Every time they sold a brand, they got a temporary cash infusion to keep the lights on for another six months. But they were also killing the only reason people still visited the stores. If you can buy a Craftsman drill at Lowe’s, why would you bother navigating a dilapidated Sears parking lot to find one?
The Real Estate Trap
There was also this theory that Sears wasn't actually a retail company—it was a real estate company. Lampert created a Real Estate Investment Trust (REIT) called Seritage Growth Properties. Sears sold its best properties to Seritage and then leased them back.
This moved cash to the investors, but it saddled the struggling retail stores with massive rent bills they couldn't afford. It was financial engineering at its most aggressive, and it effectively squeezed the life out of the actual shops.
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Why did Sears fail to beat Amazon?
The irony is that Sears was Amazon before Amazon existed. Their mail-order catalog was the original "everything store." They had the infrastructure, the customer data, and the trust.
But they were too early, and then they were too late. They shuttered the famous catalog in 1993, right before the internet took off. By the time they tried to get serious about e-commerce with "Shop Your Way," the platform was clunky and confusing. It felt like a desperate attempt to bribe customers with points rather than giving them a reason to actually shop there.
The Legacy of a Collapse
Sears finally filed for Chapter 11 bankruptcy in October 2018. At its peak, there were over 3,000 stores. Today, there’s just a handful of full-line locations left, mostly acting as placeholders.
The fall of Sears is a cautionary tale for any business that thinks its "legacy" is a shield. Brand loyalty has an expiration date. If you stop innovating, stop cleaning your floors, and start treating your business like a spreadsheet instead of a service, you’re just a ticking clock.
What businesses can learn from the Sears disaster
If you’re running a company or just watching the market, the Sears saga offers a few "must-dos" to avoid the same fate:
- Reinvest or die: You cannot cost-cut your way to growth. If you don't put money back into your infrastructure, your customers will notice—and they will leave.
- Culture is everything: Internal competition can be healthy, but turning departments into enemies kills the "omnichannel" experience customers expect today.
- Core values matter: Sears' core value was being the reliable middle-class hub for the American home. When they sold off their private labels and let the stores rot, they lost their "why."
- Listen to the floor: Corporate leadership often gets insulated by "yes-men" and financial models. The people on the store floor knew Sears was dying years before the bankruptcy filing. Listen to them.
Keep an eye on current retailers who are cutting staff to the bone or ignoring store maintenance. Those are the early warning signs of a "Sears-style" decline.
To see how modern retail is actually winning, look into how companies like Best Buy managed to pivot and survive the "Showrooming" crisis of the early 2010s by doubling down on customer service and floor experience.