Better Isn't Happening at Sears

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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This Christmas, I made my first-ever purchase from Sears: a capacious upright freezer for our basement. Sears had a great price, much better than I saw anywhere else. Unfortunately for Sears, I hopefully will not need to purchase another freezer for decades. And it doesn't seem to sell much else that I want.

That right there is the core problem with Sears Holdings Corp.'s business model. It used to be the "everything" store for people who couldn't shop in town. You wanted a dress shirt? Sears had a dress shirt. How about a cream separator? Of course. And would you like to add a piano to your order? It had that, too. It was the Amazon.com of its era: not only comprehensive, but -- because of its enormous scale -- also able to offer bargains that no one else could match.

As the country urbanized, Sears changed its strategy, opening a series of department stores, which had begun dotting the postwar landscape. Instead of cream separators and buggies, it sold appliances and autos. But otherwise, while the format changed, the strategy was still the same: Sears had everything that the nation's hard-working, aspiring, lower middle class needed to outfit their lives. At very good prices. Sears anchored lower-middle-class shopping malls in virtually every sizable community.

But that anchor is now more like a weight around their necks. Malls are struggling. So is the middle class. The Internet is commoditizing core business areas such as appliances, while cheap-and-cheerful chains steal its clothing and housewares businesses. And all that pricey mall real estate makes it hard to compete the way it once did: with low costs and huge economies of scale.

In 2001, Sears reopened a flagship store in downtown Chicago, after an 18-year absence. It left the Loop in the 1980s, when everyone knew America's urban downtowns were dead. Now downtown is back -- but Sears is closing its store once again, leaving the center of the city, where the company was born more than 100 years ago. It seems sadly unlikely it'll be back a third time.

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To contact the author on this story:
Megan McArdle at mmcardle3@bloomberg.net