What Sears’ bankruptcy could mean for retail industry
It’s heartbreaking to see the once mighty Sears being reduced to seeking shelter from creditors and shareholders as it faces bankruptcy after 125 years of operations.
Sears, a long-time icon of retail sales, has filed for bankruptcy.
What does that mean to the world of retail sales?
Can the implementation of blockchain technology save the company?
Was their loyalty to longtime employees their downfall?
Has the downfall of Sears given rise to a new employment model?
All the commentary surrounding the bankruptcy filing of Sears has been centered around bad decisions made at the executive level. It was almost heartbreaking to read the news of how Sears, the retail giant of the 20th century, has been reduced to seeking shelter from its creditors and shareholders through the bankruptcy court after 125 years of operations. It was even more disheartening to think about losing one of the last employers that gave unskilled long-term employees retirement benefits. There is a strong possibility that as a concession to debt holders, Sears may not be able to pay benefits to its retirees. This is another potential outcome of the bankruptcy filing that adds more pain to the misery of former employees.
Eddie Lampert, the former CEO, has said publicly he expects the firm to continue paying out benefits, and then there is the reality. The fact that the person making that statement is no longer the day-to-day boss takes away much of the power behind those words. Then there is the bottom line, the retirement fund is underfunded to the tune of $1.5 billion. This reality doesn’t go away after the soothing words from the former captain of the ship. Sad to say but after 42 quarters of business, if only one quarter gives the company positive results, things should have changed at the top a long time ago.
Does giving pension to loyal employees still hold value to the retail marketers?
Recent headlines about Amazon employees battling over six years for an increase in salary to a minimum wage of $15 an hour in the U.S. seems to suggest that it is not a priority. Before Amazon, Alibaba, Ebay and Tencent, there was Sears Roebuck & CO., standing alone, a standard of retail prowess in the world. In the early years of the 21st century, something happened. Employees say that Sears got away from the things that made them great. The company was primarily targeted toward men who shopped there for tools and high-end appliances. It was when Sears tried to expand into women’s clothing, real estate, and finance that the problems began.
The bankruptcy filing of Sears is financial history in the making.
Analyzing this event should offer lessons to retail models and warnings to the established retailers of this generation. The most important lessons for some could be knowing when to relieve an officer of his duty. It has been reported the financial backer of Sears, the former CEO, and reigning Chairman of the Board, will funnel approximately $300 million into the firm’s recovery through ESL Investments, the hedge fund that he has a controlling interest in. It remains to be seen if paying pensions and loyal-high salaried employees will still be a priority.
If Sears truly intends to be competitive in the retail sector, it may have to return to what made it great. Targeting one core product group, aimed at one demographic, was the way that got them to the mountaintop. Instead of lawnmowers, power tools, and washing machines, maybe drones and robots could pump life back into this ailing entity. It may also have to follow the path of its rivals.
Competitors like Walmart and Amazon already hold patents for blockchain technology implementation. It will be interesting to see the effect of blockchain technology applied to the Sears selling machine. Can blockchain technology resuscitate a dying business effectively and immediately? We can understand the power of blockchain technology, if it can accomplish something significant with Sears. Walmart has announced plans of building robot armies. Amazon has plans to fully automate warehouses. Somehow, these innovations don’t seem friendly to employees looking for long-term employment and pensions. Unless you know how to fix robots and program them.
If the blockchain is able to bring Sears back to life, that will clearly demonstrate the power of the technology. First things first for Sears. The bankruptcy filing and court proceedings need to take place before the recovery plans can begin. The whole world is watching, learning and waiting.
(Featured image by Phillip Pessar via Flickr. CC BY 2.0.)
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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