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Sears has another chance to avoid closing down

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Re: Sears has another chance to avoid closing down

#71

Post by SkyPuncher »

bluedino wrote: post #14
erickhill wrote: post #3

Sears was my go-to place for tools for years. Then, at some stage, the quality noticeably changed and it started to feel like a cheap knock-off, like what happened to Stanley Tools ages ago. But I did very much appreciate their return-tool policy. I used that a few times. It was a great customer loyalty tactic.

At some point, cheaper Chinese tools became good enough. When I was a kid I remember my dad would curse cheap imported wrenches and tools. Now, he buys 75% of his stuff at Harbor Freight. Sears ended up going down in quality while trying to keep their brand names and higher prices. Surprising it didn't work out.

I'm in the same boat for non-electrical tools. It's hard to buy expensive tools, particularly sockets, that I'll probably misplace or forget somewhere before they actually break.

Re: Sears has another chance to avoid closing down

#72

Post by [deleted] »

samfriedman wrote: post #67
tjr wrote: post #53

Earlier quoted context omitted.

A few years ago, the ancient (circa 1998) microwave in my house failed. I merrily trundled off to the local appliance store and bought a new one, and had them install it. Seemed to work, but eventually I realized it must be drawing too much electricity. Like something out of Green Acres , I had to limit what lights and other appliances were on in the kitchen if I wanted to use the microwave. I had an electrician come…

I'm curious, do you remember what the difference in power draw between the old and new microwaves was?

[deleted]

Re: Sears has another chance to avoid closing down

#73

Post by alexhutcheson »

wil421 wrote: post #20
lotsofpulp wrote: post #16

Earlier quoted context omitted.

It's a good example to those that claim companies should pay employees liberally. Unless you're in a niche that people are willing to pay a margin for or serve upscale customers who also don't mind paying margins (Costco, Whole Foods, Nordstroms, Apple, etc), then you're going to lose business to competitors offering lower prices. In this situation, the only way to improve the well being of those whose labor isn't as…

Costco is an upscale place to shop? I’ve never seen them lumped together with Whole Foods or even Apple. Edit: Wow I didn’t realize Costco’s profit margin was higher than Whole Foods, Wal Mart and almost a full percent above Kroger’s.

Costco's average customer is definitely higher income than the average American, although I've seen different attempts to quantify this. The first result from a Google search gives me this: https://www.fool.com/investing/2016/06/17/who-is-costcos-fav...

A couple of factors act as a "filter" that makes Costco less worthwhile for lower income shoppers:

- Buying in bulk requires a bunch of cash up front, which not everyone has.

- Buying in bulk normally works best for families, and individuals with families have higher average incomes than those that don't.

- Costco stocks almost exclusively mid- to high-quality food and products. Shoppers may be able to have a lower grocery bill by buying lower-quality store-brand products elsewhere.

There are obviously individual exceptions, but these factors drive up the average income of a Costco shopper.

Re: Sears has another chance to avoid closing down

#75

Post by reaperducer »

zymhan wrote: post #60
ams6110 wrote: post #50

Earlier quoted context omitted.

Being too early is as bad as being wrong.

The point isn't that they were too early, it's that they gave up too quickly. Buying online and picking up from a store really isn't that advanced of a concept.

Buying online and picking up from a store really isn't that advanced of a concept.

You're right. Service Merchandise build an empire around it, just by mail or phone instead of computer. Other stores did it, too. JCPenny comes to mind. Even some local and regional chains.

Amazon and others think they've invented something. But once again, it's just SV re-inventing something that worked last century.

Re: Sears has another chance to avoid closing down

#76

Post by melq »

bluGill wrote: post #32
wil421 wrote: post #20

Earlier quoted context omitted.

Costco is an upscale place to shop? I’ve never seen them lumped together with Whole Foods or even Apple. Edit: Wow I didn’t realize Costco’s profit margin was higher than Whole Foods, Wal Mart and almost a full percent above Kroger’s.

They are. You need to have a good amount of extra money to afford the membership and the cost of buying 6 months of toilet paper in advance. Those are cheap items that you will need, if you are not poor you probably don't even think about it. However when you are poor it doesn't matter if it is cheaper or not to buy in bulk because you don't have the cash to afford it. (you also are unlikely to have the storage space…

Membership at Costco is like 60 dollars a year. Not saying it's doable for everyone but its hardly something 'you need to have a good amount of extra money' to afford.

Re: Sears has another chance to avoid closing down

#77

Post by lotsofpulp »

RankingMember wrote: post #41
lotsofpulp wrote: post #16

Earlier quoted context omitted.

It's a good example to those that claim companies should pay employees liberally. Unless you're in a niche that people are willing to pay a margin for or serve upscale customers who also don't mind paying margins (Costco, Whole Foods, Nordstroms, Apple, etc), then you're going to lose business to competitors offering lower prices. In this situation, the only way to improve the well being of those whose labor isn't as…

> It's a good example to those that claim companies should pay employees liberally. Is it? Paying employees well isn't what killed Sears. Sears has been a ghost town for years, and anyone who's been in one in the past 20 years can probably tell you why. The customer experience simply sucks. Help is hard to find, checkout is slow, their warranties are garbage and a pain to exercise, and their once-great store brands h…

I should have wrote that it's just one factor, but at the end of the day, people opted for lower priced goods rather than the service that Sears offered, which I assume was partly due to the decent compensation they provided.

Another example of a low wage industry where paying employees more doesn't work in the grand scheme are hotels. People like to stay in newer, renovated, upscale hotels. Well if one hotel pays more than it has to, then it's owners save less capital with which they can purchase other land and build a new hotel on, or to renovate an existing one. So the hotel owners that pay the employees as little as possible and work them as much as possible end up with more money to invest in new builds or renovations, and customers end up going to those hotels, while the hotel that paid its employees well will lose business.

Unfortunately, good customer service only goes so far, especially when your clientele can barely afford it and they readily chose to forego it to save money.

Re: Sears has another chance to avoid closing down

#78

Post by tracker1 »

Tsubasachan wrote: post #18
wombatpm wrote: post #5

Sears had everything. Global supply chain, check. Top notch distribution operation, check. System and infrastructure to take orders and handling billing, check. Name recognition and established customer base, check. They threw it all away, ending catalog operations in 1993 a year before Amazon.com opened in 1994. They owned part of Prodigy in 1984! Yet somehow thought it was a better move to expand into bigger box re…

Those who are first will later be last for the times are changing... Is there anything people don't buy online these days?

Clothes are probably one of the bigger things. General grocery items, especially produce. Things that are a pain to return (large appliances). Things you usually need now (hardware/auto store parts).

I will say, I try to never buy monitors online... I've just experienced too many that die prematurely and would rather have someplace I can take back to the same day. My current monitor is actually a 42" UHD TV. I had bought a monitor in that size (40") but it was DOA, and didn't want to wait the round-trip for a replacement. Not the first time I've had monitors die young either. At least they don't weigh over 70 pounds anymore.

Re: Sears has another chance to avoid closing down

#79

Post by rhino369 »

wil421 wrote: post #20
lotsofpulp wrote: post #16

Earlier quoted context omitted.

It's a good example to those that claim companies should pay employees liberally. Unless you're in a niche that people are willing to pay a margin for or serve upscale customers who also don't mind paying margins (Costco, Whole Foods, Nordstroms, Apple, etc), then you're going to lose business to competitors offering lower prices. In this situation, the only way to improve the well being of those whose labor isn't as…

Costco is an upscale place to shop? I’ve never seen them lumped together with Whole Foods or even Apple. Edit: Wow I didn’t realize Costco’s profit margin was higher than Whole Foods, Wal Mart and almost a full percent above Kroger’s.

The membership fee keeps away many poor and lower-income shoppers. They just aren't going to pay to shop somewhere. They go to wal-mart, aldis, dollar stores, etc.

Re: Sears has another chance to avoid closing down

#80

Post by nwhatt »

bluedino wrote: post #11

How much of Sears's demise was due to Walmart? It's not like retail completely died. The home improvement chains hurt them too, once they started selling tools and appliances. We bought everything at Sears in the 80's. Electronics (including computers), appliances, toys, clothes, tools, lawn and garden... Was Sears too 'friendly' with their suppliers? When I worked at Sears at the end of the 1990's (the store was a g…

I've always heard it explained as a problem of margins and inventory. Sears would turn over their inventory 4x a year with a 30% margin. Walmart would turn it over 8x a year with a 15% margin. The "discount retail" approach worked really well because customers saw the lower prices. Walmart had a world class logistics organization, and made smarter decisions about what products to stock.

I'm not sure where I read this but it may have been Clayton Christensen, or Shark Tank ^_^. In the context of disruption, Sears was making the right decision in chasing the higher margins.

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