Special Report

This American Company Was Ruined

Companies disappear with great regularity. Within five years of starting up, about 50% of American companies go out of business. In the early months of the COVID-19 pandemic, thousands of bars and restaurants closed. It is, however, rare for organizations that have been around for decades — and grown into huge operations — to disappear. But this American company, Sears, has been ruined.

Companies that fail after many years often do so because of poor management. Another major reason is new and unexpected competition. This has increasingly become a factor in company failures in the present American economy. The advertising business has been upended by Google. Television viewership has been eroded by streaming services led by Amazon Prime and Netflix. Slowly, but surely, the gas-powered car sector is being challenged by electric cars.

No industry has been more upended by new competition than retail. Physical stores dominated the industry for centuries. Eventually, people could order items by mail from catalogues, but this way of reaching the customer was still only a modest success, except for Sears, which had a large mail order business. 

The store-based retail sector has cratered in many cases because of one company — Amazon.com. It could pass Walmart as the largest U.S. company by revenue this year. (Speaking of Walmart, in terms of customer satisfaction, this is America’s worst retailer.)

E-commerce growth was helped by the COVID-19 pandemic. As people stayed in their homes, they ordered online. Entire national store chains were also forced to close all of their locations. (These are brands that disappeared in the last decade.)

Department store chain Sears was founded by Richard Warren Sears and Alvah Curtis Roebuck in 1892. Sears, Roebuck and Co. was the largest retailer in the U.S. for a number of years before it was passed by Walmart. Sears merged with Kmart in 2005 to form Sears Holdings. Sears Holdings went bankrupt in 2018. Based on the most recent information, it has 29 stores remaining. No one would be surprised to see those gone.

What happened to Sears? Some of it could have been predicted. Entire industries have been disrupted by new business models before. Any industry leader that does not invest in “the next big thing” may be overtaken by it. In the case of Sears, that  “thing” was e-commerce. Having pioneered remote sales via the catalogue, Sears should have been on the cutting edge of non-store sales.

Additionally, there are many indications that Sears got greedy. It let its stores get old and shabby. It did not diversify into new lines of merchandise the way that Walmart did. In the final analysis, Sears was flat footed and took blow after blow until it could no longer survive.

To find 10 established American companies that have been ruined, 24/7 Wall St. editors selected American corporations founded before 1950 that have had a sharp decrease in their size, stature, and market share.

Click here to see which American company was ruined