Amazon Did Not Kill Sears
We keep hearing that Sears was killed by Amazon. Sadly this isn’t an accurate summary of what happened to the former retail giant. The truth is that the fall of Sears started long before Amazon was even incorporated in 1994, let alone becoming the most valuable retailer in the world since 2015. There are 3 lessons here for retail business leaders and entrepreneurs to take heed to. If you don’t, then there is no doubt you may repeat some of the poor actions that led to Sears fall from being one of the top retailers in the world.
- Sears did not stay true to its core offer.
Sears created Kenmore and Craftsmen known for reliable home appliances and tools. But as the company grew, at one point Sears owned Coldwell Banker…why? Sears had a financial services division…why? Owning a piece of Discover Financial Services clever, but trying to operate with growing retail chain is a stretch. Is Amazon becoming another one of these retailers getting into every industry it can just because it can? The only difference is they started online. But will they learn from Sears? More importantly, will you? The ambitious, forward-thinking child of the 90s and millennium, are you learning what to look out for before you get that too big to fail mindset of doing business. If you do something well, and your brand is synonymous with a particular way of life or service, develop new methods of doing what you do at a high level and provide that level of service in a better way.
Innovate on what you do well. Don’t abandon it and offer something to try to stay relevant. In attempts to stay afloat, Sears owners sold Craftsmen brand, after purchasing clothing lines like Structure and Lands End. Craftsmen, when it was sold in 2017 was and still is one of the best selling lines of hardware tools in the world. Selling one of the products your brand is most known for..is that even a short-term win?
2. Not building on their strengths.
Don’t focus on what you don’t do best, innovate the products and services that are at your core offer. Did you know in 2012 you could sell your products on Sears.com and use their distribution as a fulfillment service? Yeah, most people didn’t, especially young ambitious designers and product makers. But those are the people that Amazon has tapped into. But imagine, if in 2012 you told someone that your fashion line was available on Sears website that was actually saying something. Sears was an established retailer that wouldn’t carry just any product. While the idea of selling products on Amazon, most people didn’t even know how this worked. Amazon’s business service customers are a core reason their revenue from AWS and fulfillment services is greater (26% combined of Amazon’s revenue) than that of revenue from Prime, credit cards, film ventures, and app store sales combined is barely 11%.
Yet, they will never stop pushing their consumer offerings. Why? Because this is at the core of their brand. The moment a company abandons key aspects of its brand identity, the consumers that follow that brand will lose loyalty. The goal and idea behind Amazon are that they want to be the largest retailer in the world. And services such as Prime or ventures like purchasing Whole Foods supports that brand image positioning. Sears had this position not long ago, what if they had focused on being a significant player in the growing e-commerce market. It’s still retail, it’s still all about consumer loyalty developed from their experience with your products and services.
This would have been a smart pivot in the 10 years of the millennium for Sears. Now if Amazon decides to get lean, and only sell books and music strictly online this would not support the largest retailer goal Jeff Bezos has. Dominant in books and entertainment potentially, but not the largest retailer to rival the likes of Walmart or Alibaba Group. Amazon is always developing new methods to reach their goal. The path may change, but the goal remains the same.
3. Forgetting that a brand is more than a logo and a name.
Remember the Sears Tower, it is there and then it’s not. Now called the Willis Tower, no relation to Bruce Willis, the 1,450-foot tower was renamed in 2009 by risk advisory and insurance brokerage Willis Group Holdings that became the building’s primary tenant. This place was once a symbol of Chicago’s economic success and importance in the business world. Not only was this the global headquarters of Sears for almost 25 years but from 1974 to 1998 the Sears Tower was the tallest building in the world. And it was in Chicago! Not New York, not London, or even Los Angeles nope, the tallest building in the world was in Chicago. And it was named after one of the world’s largest retailers, also from Chicago. This was a brand symbol better than any logo. The tallest building in the world, an Internationally known tourist attraction, is the global headquarters and named after your company! That’s branding baby.
Take for instance the Macy’s Thanksgiving Day Parade. What if after being acquired in 1994 by FDS the parade was renamed, the Federated Department Stores Thanksgiving Day Parade? Not the same ring, right. The identity of a city is its heritage and culture. This goes for local businesses as well, they are symbols of a cities culture. The Sears Tower, like Soldier Field, Navy Pier, and Wrigley Field are pieces to the city of Chicago’s identity.
Sears represented the enduring entrepreneurial spirit of a city in many ways. It was the middle-class family’s store for quality, yet inexpensive products. Wal-Mart is all about low prices, for years Sears focused on quality products at low prices without having to leave the city. A midwest way of retail. This was the brand Sears built and promoted successfully for years. But as they entered more businesses with less expertise and sold off the brand assets; the Sears Tower and Craftsmen, the logo loses its equity with consumers.
Nothing last forever and the fate of Sears has not been sealed completely just yet. But the truth cannot be ignored, the current situation of Sears cannot and should not be solely attributed to the growth of Amazon. The strategic decisions the leadership at Sears made years before Amazon came about, steered the company down a path where they lost substantial brand equity. They failed to innovate on what they did best. Instead, they tried the old “grow by acquisition” strategy and putting bandaids on financial problems for decades.
Sears was not killed by Amazon, Sears committed brand suicide.
Ehren Muhammad, The Brand Builder®
Follow the journey as me and my team small business owners all over the world. Connect with me on Instagram and Twitter!
References:
https://www.cnbc.com/2018/10/12/timeline-the-rise-and-fall-of-sears.html
https://en.m.wikipedia.org/wiki/Amazon_%28company%29?wprov=sfla1
http://www.visualcapitalist.com/breaking-amazon-makes-money/
https://en.wikipedia.org/wiki/List_of_tallest_buildings?wprov=sfla1
