The effects of Sears is a big topic this week as the once-dominant retailer filed for bankruptcy. Sears doing poorly impacts more than you think.
“We knew Sears was having financial problems,” said Dr. Richard Klein from Cleveland State University’s business school as News 5 was “talking shop” with him. "People don't care so much about seeing and feeling the product as getting a product that they want quick enough."
The innovation of online shopping, or as some call it the “Amazon-ing of the world,” has had a significant impact on traditional retail.
Sears at one time was successful but then was stuck. It didn't adapt. It’s interesting because Sears had been known decades ago for its business insight.
“When they went into retailing, they were not against the idea of innovation in the slightest,” Dr. Klein explained. He used the example of customers being able to buy a home from Sears. "Early part of 20th century, they sold housing kits. You could build a house from a Sears kit."
These days, as we sit in our homes right before the holidays, the Chapter 11 bankruptcy stares customers in the face. “It will either be one of two things,” suggested Dr. Klein. “People flood the market and buy everything they can at Sears at low, low prices or people will pay very little attention to it."
Experts have said more communities should pay attention, especially if after the holidays more Sears stores close.
"When one store goes under, it affects all the neighboring businesses," said Case Western Reserve University’s Associate Professor of Economics Dan Shoag. He has specifically studied big-box store economics.
He said if a Sears store fails, those would-be shoppers won't be grabbing a bite to eat or dropping into a nearby store. “There are spill-on effects. So, one closure may lead to another which leads to another and so, that can be pretty worrying,” Shoag said.
It could be a worry for municipalities that rely on sales taxes and other revenue streams related to big box business. “Local governments that have more flexibility tend to weather these shocks a little bit better. But you do see cuts in some important services," Shoag explained.
Dr. Klein told us it will be a tough road for many in the big box store business as more will follow a fall like Toys R Us.
Reports show just last year alone, 19 big name stores filed for bankruptcy. This year, there have been 15 so far. “The few department stores that are left are fighting with each other for supremacy,” said Dr. Klein.
We have much more of our interview with Dr. Klein about Sears, what he calls was a "lack of identity" by the company, lack of advertising, and lack of insight on what to do with its assets. That video is attached to this story.
