Sears Holdings Cares More About Wall Street Than About Customers, And That’s Why It’s Doomed

Image courtesy of Nicholas Eckhart

Eddie Lampert, the manifesto-writing hedge fund manager who runs Sears Holdings, the company that owns Sears and Kmart, doesn’t understand retail. That’s isn’t always a bad thing in a manager: sometimes leaders with fresh perspective bring in fresh ideas. For Sears and Kmart, it’s meant over a decade of no investment in the company and the slowest liquidation and dismantling in retail history.

The public radio program Marketplace teamed up with Business Insider to look at how incredibly doomed Sears is right now. Their verdict after talking to former front-line employees and executives alike: a lot of things have converged to doom Sears, and a lot of them are Eddie Lampert’s fault, even as he tries to blame the wider economy and e-commerce for the company’s woes.

Stock buybacks. This can be a good way for a company to take back more control …or to artificially prop up its stock price and spend money that it should be investing in its stores, its products, and its employees. Stock buybacks were one of the thing that doomed RadioShack, and Lampert wrongly believed that they were a better investment than store remodeling.

Not investing in stores has had one advantage: the company didn’t spend any money sprucing up their stores before renting them out to other retailers or subletting space to other companies, like Primark, Dick’s, and Whole Foods.

Profit over sales. Lampert “had a perspective that the retail industry as a whole was too sales-oriented and not enough profit-oriented,” one former executive explained to the Marketplace/Business Insider team. That’s true, and it is possible to have strong sales but over-spend and not make a profit.

Customers notice despair. “The majority of stores now border on disgraceful and show a complete lack of retail standards and proper store management,” a retail consultant told the team. Sears has even lost the loyalty of women over 55, possibly the last demographic still interested in shopping there.

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