Sears

Sears, Roebuck and Co.

Type	Subsidiary
Industry	Retail
Founded	1886 (1886) Chicago, Illinois
Founders	Richard Warren Sears Alvah Curtis Roebuck
Headquarters	Hoffman Estates, Illinois, U.S.
Number of locations	793 (US; 2014)[1]
Area served	United States Canada Mexico
Products	Clothing footwear bedding furniture jewelry beauty products appliances housewares tools electronics
Revenue	US$ 17.036 billion (2014)[2]
Operating income	US$(0.92 billion) (2014)[2]
Parent	Sears Holdings
Subsidiaries	See below
Slogan	Shop Your Way
Website	sears.com

Sears (officially Sears, Roebuck & Co.) is an American chain of department stores. The company was founded by Richard Warren Sears and Alvah Curtis Roebuck in 1886; it was previously based in the Sears Tower in Chicago, and is currently headquartered in Hoffman Estates, Illinois. It began as a mail order catalog company, and began opening retail locations in 1925. The company was bought by the American discount store chain Kmart in 2005, which was in bankruptcy at the time and renamed itself Sears Holdings upon completion of the merger. In terms of domestic revenue, Sears was the largest retailer in the United States until October 1989, when it was surpassed by Walmart.^[3] It is the fifth-largest American department store company by sales as of October 2013 (behind Walmart, Target, Best Buy, and Home Depot),^[4] and it is the twelfth-largest retailer in the country overall.^[1][5] It operates divisions in Canada and Mexico, among several subsidiaries within its brand.

History

Mail order catalog

Richard Warren Sears

Richard Warren Sears was a railroad station agent in North Redwood, Minnesota, when he received from a Chicago jeweler an impressive shipment of watches which were unwanted by a local jeweler. Sears purchased them, then sold the watches for a considerable profit to other station agents, then ordered more for resale. Soon he started a business selling watches through mail order catalogs. The next year, he moved to Chicago, Illinois where he met Alvah C. Roebuck, who joined him in the business. Farmers did business in small rural towns. Before the Sears catalog, farmers typically bought supplies (often at high prices and on credit) from local general stores with narrow selections of goods. Prices were negotiated, and depended on the storekeeper's estimate of a customer's creditworthiness. Sears took advantage of this by publishing catalogs offering customers a wider selection of products at clearly stated prices. The business grew quickly. The first Sears catalog was published in 1888. In 1893, Richard Sears and Alvah Roebuck renamed their watch company Sears, Roebuck & Company and began to diversify. By 1894, the Sears catalog had grown to 322 pages, featuring sewing machines, bicycles, sporting goods, automobiles (produced from 1905 to 1915 by Lincoln Motor Car Works of Chicago, no relation to the current Ford line),^[6] and a host of other new items. By 1895, the company was producing a 532-page catalog. Sales were greater than $400,000 in 1893 and more than $750,000 two years later.^[7] By 1896, dolls, stoves and groceries had been added to the catalog.

The exterior of the Sears Merchandise Building Tower.

The company had sales of $800,000 in 1895, but the national Panic of 1893—a full scale depression—caused a cash squeeze and large quantities of unsold merchandise. Roebuck decided to quit (though he later returned in a publicity role). Sears offered Roebuck's half of the company to Chicago businessman Aaron Nusbaum, who in turn brought in his brother-in-law Julius Rosenwald, to whom Sears owed money. In August 1895, they bought Roebuck's half of the company for $75,000. The new Sears, Roebuck and Company was re-incorporated in Illinois with a capital stock of $150,000 in August 1895. The transaction was handled by Albert Henry Loeb of the Chicago Law Firm of Loeb & Adler (now known as Arnstein & Lehr, LLP). Copies of the transaction documents are now displayed on the walls of the Law Firm.^[8] Sears and Rosenwald got along well with each other, but not with Nusbaum. Sears and Rosenwald bought him out for $1.3 million in 1903.^[9] Rosenwald brought to the mail order firm a rational management philosophy and diversified product lines: dry goods, consumer durables, drugs, hardware, furniture, and nearly anything else a farm household could desire. From 1895 to 1907, under Rosenwald's leadership as Vice President and Treasurer, annual sales of the company climbed from $750,000 to upwards of $50 million. The prosperity of the company and their vision for greater expansion led Sears and Rosenwald to take the company public in 1906, with $40 million in stock. After Sears resigned the presidency in 1908 due to declining health, Rosenwald was named president and chairman of the board and had full control.^[10] Sears's successful 1906 initial public offering (IPO) marks the first major retail IPO in American financial history and represented a coming of age, financially, of the consumer sector.^[11]

In 1906, Sears opened its catalog plant and the Sears Merchandise Building Tower in Chicago.^[12] Also, by that time, the Sears catalog had become known in the industry as "the Consumers' Bible". In 1933, Sears issued the first of its famous Christmas catalogs known as the "Sears Wishbook", a catalog featuring toys and gifts, separate from the annual Christmas Catalog. The catalog also entered the language, particularly of rural dwellers, as a euphemism for toilet paper.^[13] From 1908 to 1940, the catalog even included ready-to-assemble kit houses.^[14] Novelists and story writers often portrayed the importance of the catalog in the emotional lives of rural folk. For children and their parents, the catalog was a "wish book" that was eagerly flipped through. It was not a question of purchasing but of dreaming; they made up stories about the lives of the models on the pages. The catalog was a means of entertainment, though much of its magic wore off with the passing of childhood.^[15] The company was badly hurt during 1919-21 as a severe depression hit the nation's farms after farmers had overexpanded their holdings. To bail out the company, Rosenwald pledged $21 million of his personal wealth. By 1922, Sears had regained financial stability. First he oversaw the design and construction of the company's first department store within Sears, Roebuck's massive 16-hectare (40-acre) headquarters complex of offices, laboratories and mail-order operations at Homan Ave. and Arthington St. on Chicago's West Side. The store opened in 1925. In 1924, Rosenwald resigned the presidency, but remained as chairman until his death in 1932; his goal was to devote more time to philanthropy.^[16]

Retail stores and diversification

Sears Tower

The mail order market was based on rural America, with a slow-growing population and far less spending power than urban America. Rosenwald decided to shift emphasis to urban America, and brought in Robert E. Wood to take charge. The first Sears retail stores were opened in conjunction with the company's mail order offices, typically in working-class neighborhoods far from the main shopping center. Sears was a pioneer in creating department stores that catered to men as well as women, especially with lines of hardware and building materials. It deemphasized the latest fashions in favor of practicality and durability, and allowed customers to select goods without the aid of a clerk. Its stores were oriented to motorists – set apart from existing business districts amid residential areas occupied by their target audience; had ample, free, off-street parking; and communicated a clear corporate identity. In the 1930s, the company designed fully air-conditioned, "windowless" stores whose layout was driven wholly by merchandising concerns.^[17]

From the 1920s to the 1950s, Sears built many urban department stores (apart from, but not far from, existing CBDs), and they overshadowed the mail-order business. Starting in the 1950s, the company expanded into suburban markets, and malls in the 1960s and 1970s. In 1959, it had formed the Homart Development Company for developing malls. Many of the company's stores have undergone major renovations or replacement since the 1980s. Sears began to diversify in the 1930s, adding Allstate Insurance Company in 1931 and placing Allstate representatives in its stores in 1934. Over the decades it established major national brands, such as Kenmore, Craftsman, DieHard, Silvertone, Supertone, and Toughskins. The company became a conglomerate during the mid-20th century, adding Dean Witter and Coldwell Banker real estate in 1981, starting Prodigy as a joint venture with IBM in 1984, and introducing the Discover credit card in 1985. In March 2009, Sears purchased the social search engine Delver.

Sears made history in 1974 when it completed the 110-story Sears Tower in Chicago. The tower became the world's tallest building upon its completion, a title it took from the former World Trade Center towers in New York. Sears moved to the new Prairie Stone Business Park in Hoffman Estates, Illinois, between 1993 and 1995.^[18] The Sears Centre is a 10,001-seat multi-purpose arena located in Hoffman Estates adjacent to the Prairie Stone campus.^[19] Even though its naming rights to the building expired in 2003 it remained the Sears Tower through early 2009. In March 2009 London-based insurer Willis Group Holdings, Ltd., was given the building's naming rights to entice the occupancy of the building. The official renaming as the Willis Tower took place on Thursday, July 16, 2009, during a public ceremony hosted by Willis Group Holdings.^[20]

In the 1990s, the company began divesting itself of many non-retail entities, which were detrimental to the company's bottom line. Sears spun off its financial services arm which included brokerage business Dean Witter Reynolds and Discover Card. It sold its mall building subsidiary Homart to General Growth Properties in 1995.^[21] Sears later acquired hardware chain Orchard Supply Hardware in 1996 and started home improvement store The Great Indoors in 1997.^[22]

Decline and Sears Holdings

In 1993, Sears terminated its famous general merchandise catalog because of sinking sales and profits. Sears Holdings continues to produce specialty catalogs and reintroduced a smaller version of the Holiday Wish Book in 2007. In 2003, Sears sold its retail credit card operation to Citibank.^[23] The remaining card operations were sold to JPMorgan Chase in August 2005. In 2003, Sears opened a new concept store called Sears Grand. Sears Grand stores carry everything that a regular Sears carries, and more. Sears Grand stores are about 175,000 to 225,000 square feet (16,300 to 20,900 m²). On November 17, 2004, Sears announced it was being acquired by Kmart. As a part of the acquisition, Kmart Holdings Corporation would change its name to Sears Holdings. The new corporation announced that it would continue to operate stores under both the Sears and Kmart brands. In 2005, the company began renovating some Kmart stores and converting them to the Sears Essentials format, only to change them later to Sears Grands.^[24] Sears has spent much of 2014 and 2015 selling off portions of its balance sheet; namely Lands’ End and its stake in Sears Canada. Sears Canada is one of the biggest e-commerce players in Canada, with $505 million in sales last year — more than Walmart and others who have begun pushing aggressively into online sales, such as Canadian Tire.^[25] Sears states that the company is looking to focus on becoming a more tech-driven retailer. Sears’ CEO and top shareholder said the sell-off of key assets in the last year has given the retailer the money it needs to speed up its transformation.^[25] Sears Holdings has lost a total of $7 billion in the last four years. In part, the retailer is trying to curb losses by using a loyalty program called Shop Your Way.^[25] Sears believes the membership scheme will be a long-term play for the company, and it will enhance repeat business and customer loyalty.^[25] Sears stopped offering items in the Kardashian Kollection in its stores in early 2015 in what was a mutual decision, a spokesman told Fortune, confirming an earlier report by celebrity news site TMZ. The split-up ends an exclusive department store collaboration begun in 2011 that had been intended to raise Sears’ fashion quotient and bring in much-needed new shoppers.^[26]

Subsidiaries

Current

• Sears is a chain of department stores that are usually located in shopping malls, however, some freestanding stores exist; they carry clothing, jewelry, home appliances, household hardware, lawn and garden supplies, lawn mowers, paint, sporting goods, automobile repair, office supplies, electronics and school supplies. Sears stores are usually multi-level. There are 926 full-size Sears stores^[27] in the United States. There are also 301 Sears locations in Canada and 66 in Mexico.^[28]
• Sears Grand is a chain of hypermarkets typically located away from shopping malls (with the exception of Gurnee Mills, Gurnee, Illinois, and Pittsburgh Mills, Tarentum, Pennsylvania, the latter closing in January 2015). Many Sears Grand locations are retrofit remodels of existing Kmart supercenter stores. They carry everything a Sears department store carries, plus health and beauty products, a pharmacy, toys, baby care, cleaning supplies, home décor, pet food, cards and party supplies, books, magazines, music, Little Caesars Pizza Station, movies, and a selection of groceries which is limited mostly to dry goods. Sears Grand stores range from 165,000 to 210,000 square feet (15,300 to 19,500 m²).^[29] The first Sears Grand opened at Jordan Landing in West Jordan, Utah in 2003. At 225,000 square feet (20,900 m²), the Jordan Landing store is currently the largest in the chain.
• Sears Optical is a chain of off-mall optical shops which carries all the same products and services as the optical department at regular Sears stores.
• Sears Outlet is an outlet version of Sears department stores located in various retail locations across the United States. The stores carry new, one-of-a-kind, out of carton, discontinued, used, scratched and dented merchandise at 20–60% off regular retail price. While a wide variety of products are available, appliances make up a large majority of available merchandise. Sears Outlet stores were once known as Sears Surplus. Many former Kmarts have been converted to serve as Sears Outlets, though these often take up less than half the floorspace. Sears Outlet was part of a spin-off with Sears Hometown Stores and Sears Appliance and Hardware Stores to become Sears Hometown and Outlet Stores in September 2012.^[30] Sears Canada's 11 Outlet stores was not spun off and remain with the corporate owned stores in Canada.
• Sears PartsDirect is a chain of lawn & garden equipment and appliance parts stores. Some locations, branded as Sears Parts and Repair Centers, feature a carry-in point for customers to bring-in merchandise which needs to be repaired, either in or out of warranty.
• A&E Factory Service is the newest name for Sears' longstanding on-site repair service, servicing larger items such as home appliances, electronics, and garden equipment. The A&E brand name was purchased from Montgomery Ward, which used it for their home service unit, and is a joint venture held by Whirlpool and Sears Holdings.^[31] A&E Factory Service is a network of mobile service vans with a long history of performing appliance repairs.^[32]

Former

• Sears Appliance & Hardware is a chain of hardware stores that carry the whole line of Sears hardware and are usually free-standing. More than 110 Sears Appliance & Hardware stores averaging 40,000 square feet (3,700 m²) serve customers nationwide. Stores were expanded to include Sears' full line of appliances in 2005. Sears Hometown and Outlet Stores took on Sears Appliance & Hardware in a Spin-off from Sears Holdings in 2012.^[33]
• Sears Hometown Stores (formerly known as Sears Authorized Dealer Stores) is part of the retail operation of Sears Holdings and is a small-store version of Sears full-line department stores. Sears Hometown Stores, established in 1993, is a franchise formula and Sears Home Appliance Showroom, established in 2007, offers primarily appliances. The stores are located away from shopping malls and serve local communities across the United States and Puerto Rico.^[34] Sears Hometown Stores was part of a spin-off with Sears Outlet and Sears Appliance and Hardware in September 2012.^[30]
• Lands' End, Lands' End is a publicly traded clothing and home-goods producer and retailer, specializing in kids clothing, uniforms, and customized workplace products.^[35] Sears officially spun off Lands' End in April 2014 amid continuing financial distress including a 1.4 billion dollar loss in 2013.^[36]
• Sears Essentials was a chain of discount stores that were common retrofit remodels of existing Kmart stores. Their product lines were similar to that of Sears Grand stores. In 2006, Sears dropped the brand as it tried to turn Kmart stores into free standing Sears stores. Most of 50 buildings bearing its name were turned into Sears Grand Stores or reverted to Kmarts.^[37]
• National Tire and Battery (NTB) & National Tire Warehouse (NTW) is an American brand of auto service centers. It was formerly owned by Sears until it was spun off in 2003. Sears created the brand in 1997 by consolidating the Tire America (TA) and National Tire Warehouse (NTW) brands, adding the "B" to include its DieHard brand of batteries.^[38] Sears sold the brand, which consisted mostly of stores set apart from its name brand stores, in 2003 to TBC Corporation. A Sears spokesman said "Because of the separate branding and the lack of proximity to our retail operations, we weren't able to drive growth like a TBC could".^[39] The chain of 226 stores was reported to have brought in $425 million in revenue and $60 million in profit in 2002.^[39]
• Sears Brand Central was an electronics store. The appliances departments in Sears are now known and referred to internally as Brand Central, although they are not marketed to consumers as such, except for a few locations in Puerto Rico.
• Sears Catalog Sales Stores were located in small towns. These stores were very small, even smaller than Sears' current Hometown Dealer stores. At catalog stores, some items could be ordered from the floor, such as appliances; other items could be ordered from catalogs at the store. These stores were often placed in rural markets which were far from full-line Sears stores, allowing for customers to purchase Sears products more easily. These stores were closed in 1993 when Sears closed its catalog business.
• Sears Authorized Catalog Sales Merchant was an independent business person who provided many of the same services as the Sears Catalog Sales Store. Similar operations are also found in Canada with Sears Canada.
• Sears Appliance Stores were small stores that displayed and sold (at Retail Store prices) appliances, carpeting, etc. and, in addition, provided a catalog sales department through which catalog items could be ordered.
• Sears Rent-a-Car was a car rental chain formed in a joint venture with Budget. It was sold to Avis in 2002.
• Sears HomeLife was a chain of furniture stores owned by Sears. The concept was introduced at a mall in Fresno, California in 1989, followed by a stand-alone store in Madison, Wisconsin.^[40] Sears sold the stores to Citicorp Venture in 1999, who changed the chain's name to just "HomeLife". They opened many locations inside large Sears stores or near the store depending on space available. HomeLife closed its last stores in 2001.^[41] In Puerto Rico, a few HomeLife locations are still present.
• Sears Neighborhood was a chain similar to Sears Hometown stores, except that Neighborhood stores were located in urban markets. These stores were also independently owned and operated. The concept was introduced in Atlanta in 1998, and another similar store was located in Cincinnati.^[42][43] The Neighborhood stores closed in the early 2000s.
• The Great Indoors was a chain of free-standing home decor stores that carry high-end home appliances, bedding, and kitchen and bath fixtures. The Great Indoors also offered custom kitchen and bathroom design services. Sears Holdings announced the closing of all remaining stores in 2012.
• Orchard Supply Hardware is a chain of free-standing hardware stores that carry home repair, hardware products and lawn and garden supplies. It was spun off from Sears in January 2012.^[44]
• Sears Portrait Studio Ran by CPI Corporation, all Sears Portrait Studios ceased operations on April 6, 2013. CPI Corporation, in a statement on its website, said it closed all of its U.S. studios "after many years of providing family portrait photography." The St. Louis-based company didn't explain the hasty closure, and calls to CPI went unanswered. However, the company has struggled financially, hurt by the rise of digital photography.

Exclusive brands

Employee relations

Sears building in the Edificio La Nacional building in Mexico City, across from the Palacio de Bellas Artes.

Sears has struggled with employee relations. One notable example was the shift in 1992 from an hourly wage based on longevity to a base wage (usually between $3.50 and $6 per hour) and commissions ranging from 0.5% to 11%. Sears claimed the new base wage, often constituting a substantial (up to 40%) cut in pay, was done "to be successful in this highly competitive environment."^[61]

In early October 2007, Sears cut commission rates for employees in select departments to anywhere from 0.5% to 4% but equalized the base wage across all Home Improvement and Electronics departments. In 2011, commission rates on non-base items were cut by 2% in the electronics department. In late 2009, the commission on sales of "base items" from the electronic department was cut to 1%. Appliances, vacuums, and mattresses are the only remaining departments where compensation is based entirely on commission. In many stores, jewelry department associates receive a low base salary with 1% commission on their sales.

Sears' profits dropped by 13% during the fourth quarter of 2010 but still had total assets of $26.05 billion as of the first quarter of 2011.^[62]

Gallery

• 

  Letterhead logo 1907

• 

  Logo used from 1967–84

• 

  Logo used from 1984–94

• 

  Logo used from 1994–2004

• 

  Logo used from 2004–08

• 

  Logo used from 2008–present

• 

  Exterior of the Sears at the Westfield Hawthorn in Vernon Hills, Illinois

• 

  Mall entrance to the Sears at Plaza del Norte in Hatillo, Puerto Rico

• 

  Exterior of the Sears Essentials in West Palm Beach, Florida

• 

  2013 photo of the mall entrance to the Sears Grand at Pittsburgh Mills in Tarentum, Pennsylvania. This Sears closed in January 2015.

• 

  Exterior of the Sears Parts & Repair Store in Brooklyn, Ohio

See also

• Sears Canada
• Sears (Mexico)
• Sears plc, former U.K. company.

References

Further reading

• Emmet, Boris, and John E Jeuck. Catalogs and Counters: A History of Sears, Roebuck and Company (1950), the standard scholarly history
• Israel, Fred L. 1897 Sears, Roebuck and Co Catalogue 100th Anniversary Edition, Philadelphia: Chelsea House Publishers, 1968.
• Katz, Donald R. The Big Store: Inside the Crisis & Revolution at Sears (1987)
• Worthy, James C. Shaping An American Institution: Robert E. Wood and Sears, Roebuck (1986)

External links

Wikimedia Commons has media related to Sears, Roebuck and Company.

• Official website
• Sears Archives
• Works by Sears at Project Gutenberg
• Works by or about Sears at Internet Archive