With the fate of two iconic American retailers — Sears and Kmart — set to be decided in the coming days, a look back at where Sears stood several decades ago suggests that the retailer’s struggle isn’t as new as it may seem to the millions of people tracking the story today. In his 1987 book “The Big Store: Inside the Crisis and Revolution at Sears,” Don Katz, the founder and CEO of audio book and entertainment company Audible, which became a unit of Amazon in 2008, discusses the challenges the retailer faced in the 1970s that may sound similar to the ones that have led it to bankruptcy court.
“For me the historical symmetry between Amazon and Sears is profound. As a professional writer during my first career, I spent six years of my life with near-carte blanche access to what was arguably the 20th century’s great American corporation, delivering people the wants and needs that defined the look and feel of their daily lives, Katz says in a new introduction. (Audible is offering an audio version of the book at no charge at audible.com/thebigstore.) “And now I am working daily with the key leaders at Amazon and bearing close witness to the corporation of the 21st century that almost instantly delivers people’s stuff and does so in a way that has created customer loyalty and measurable success on a level rarely achieved.”
“Themes that have drawn students of corporate culture and leadership to “The Big Store” regularly since it was published in 1987 — including those seeking to avoid the pridefulness and myopia that can come with institutional success, which in turn diminishes a positively disruptive capacity to change and can kill the formative spirit that calls for invention before anyone asks for it — are very much alive in current popular discourse,” Katz says.
From “The Big Store”:
For all of a century Sears, Roebuck has resided within history’s most advanced society of producers and consumers as a central warehouse for the culture. Each year, the current sum of American invention was collected and distributed as material portions of a national dream.
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Americans rocked in Sears cradles, played with Sears toys, wore the company’s plain clothing, lined their homes with its ponderous furniture, learned to enjoy something called leisure by virtue of its time-saving machines, and were eventually buried in its coffins and remembered to eternity by offerings from its special tombstone catalog. Time and again surveys confirmed that Sears was the most trusted economic institution in the country.
Even as it grew to become one of the seven or eight largest corporations in the world, Sears continued to command the sort of fealty normally reserved for nations and churches. It was a private enterprise ennobled and made powerful by its perceived dedication to a public purpose.
By 1972, as the Sears Tower began to rise high above Chicago, it seemed that a great number of the institutions and ideals that meant something in America had been severely injured. Patriotism, the military, organized religion, big business—all of them seemed to have been taken down a notch.
But Sears remained unhumbled. The Tower rose up into the firmament like a great bar graph, a lasting monument to the invincibility and boundlessness and extreme profitability of a company that now accounted for fully 1 percent of the gross national product.
Two of every three Americans shopped at Sears within any three months of 1972, and more than half the households in the country contained a Sears credit card. One-third of the families in America—some twenty-five million of them—owed the company an average of $256 for past purchases.
There were now almost 900 big Sears retail stores, over 2,600 smaller retail and catalog outlets, and well over 100 warehouses, catalog plants, and other distribution facilities. A single share of original Sears, Roebuck stock was now worth over $20,000, and because of a generous, half-century-old profit-sharing plan, individuals who worked among the half-million employees of the corporation as secretaries and elevator operators were able to retire with stock valued at upward of $500,000.
But then, quite suddenly, Sears began to fall apart. Within five years the seemingly invulnerable company would appear so badly injured and so lacking in direction that it verged on paralysis. Corporate profits from retailing had either stagnated or declined each year since 1972. Interest expenses had fully doubled because of the monetary inflation since 1972, and the general cost of running the massive business had plainly run out of control.
The Sears stock price, adjusted for an intervening split, had collapsed from a 1972 high of $61 per share to $24 and it was headed much lower. A spate of lawsuits, government investigations, and adverse publicity had shaken the company.
Once-loyal customers had begun to stay away from Sears stores and to avoid the company’s venerable catalog in such numbers that it appeared the American middle class, which Sears had decorated and lent physical definition over the years, had given up on the floundering company altogether.
Nobody at Sears was able to fathom what had happened, and nobody had any idea what to do. Nothing decided or decreed at the top of the empire of stores inspired direction or even activity at the bottom.
For the first time in modern memory there were layoffs at Sears, and the elan that had characterized life inside the company since World War II had turned into despair and fear. An organization that only five years earlier had seemed utterly unstoppable was now a crippled leviathan, and by 1977 many of those who depended upon Sears, who studied it or loved it, had come to believe that if something was not done very quickly, the company was doomed.
Don Katz is founder and CEO of Audible, Inc., the leading provider of premium digital spoken audio information and entertainment. Prior to founding Audible, Katz was a journalist and author for twenty years. the audio version of his 1987 book, “The Big Store,” narrated by actor Brian Sutherland with a new introduction by Katz, is available for download free here.