e-Tailing Update: Learn from Sears. Really!

This is an excerpt of the original article. It was written for the September-October 2017 edition of Supply Chain Management Review. The full article is available to current subscribers.

September-October 2017

When it comes to the next generation of supply chain management, the future just may be now. That’s one of the conclusions reached by Greg Gorbach, an analyst at the research firm ARC Advisory Group, after surveying supply chain executives, including subscribers to Supply Chain Management Review, on the digitization of their supply chains. In “The Great Digitization of Industry,” Gorbach notes that while it may take years for the widespread adoption of new technologies such as machine learning, additive manufacturing, smart factories and advanced analytics to become commonplace, digitization across verticals is happening faster than many of us…

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Here is a sentence I never thought I would write: Sears may go out of business. Indeed, last April, The Wall Street Journal ranked the American retailing icon at the top of a list of the 10 retailers “most at risk to default within the next 12 months.” Yet while brick-and-mortar retailers like Sears are teetering on the brink, the Journal later reported that pure e-tailers like Greats are opening brick-and-mortar stores. Another case in point is Amazon’s acquisition of Whole Foods, demonstrating that the e-tail leader is getting serious about invading the brick-and-mortar store chain markets, at least when it comes to groceries.

Clearly, we are at an e-tailing “inflection point.” The question for e-tailers jumping into the brick-and-mortar game, or for traditional retailers looking for the right supply chain formula to answer to the threat from e-tailers, is: What lessons can we learn from Sears to avoid the same fate?

A short history of mass-market retail*

Given all of the dire news, it’s easy to forget that Sears was the Wal-Mart of its day, the highest grossing merchandizer, with revenues equal to about 1% of the gross domestic product (GDP). When I look back over my life and career, it seems like I see the Sears name everywhere. Whenever I wanted to purchase something for the house, like an air conditioner, refrigerator, lawn mower, car battery or hand tools, I went to Sears, which was one of the most popular suppliers of hard goods, in contrast to soft goods such as apparel. When I started my career at a consulting firm back in 1976, Sears Catalog was one of my largest clients.

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