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SU Retail Expert says Sears Bankruptcy Sends Strong Warning to Brick-and-Mortar Retailers

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A Syracuse University retail expert believes that Sears’ bankruptcy may signal the beginning of the end for brick-and-mortar stores if they do not learn from the pioneering retailer’s mistakes.  Professor of retail practice and assistant provost Amanda Nicholson believes that this final nail in the coffin should not be a surprise to anyone.  She says that since its merger with Kmart in 2005, Sears has been on a steady decline into bankruptcy.

“The Sears story is just a story of a company that completely lost its way many years ago, have not invested in itself for years, was too bureaucratic, then got taken over by a major real-estate manager,” Nicholson said.

Nicholson says contrary to popular belief, online competition is not the primary catalyst for Sears’ failure. According to a study, e-commerce accounted for only 9 percent of total retail sales in 2017.  Rather, the larger issue comes down to years of mismanagement.

“I think we are looking at the end,” Nicholson said. “I think there is a failure to invest in the company, the merged company. They’re focused on generating growth cash flow by reducing cost, they cut capital spending then resorted to closures and asset sales.”

Nicholson says such monumental mistakes on Sears’ part over the course of the past decade should serve as a warning to other storefront retailers.  Although the road ahead is difficult, Nicholson believes these stores can survive in a post-Sears retail market if they adapt to the new consumer culture.

“It’s been a tough time in brick-and-mortar retail for everybody. That’s true,” Nicholson said. “But the stores who are really in the game have been working out other balance, brick-and-mortar, and online, and how to make brick-and-mortar more compelling… I don’t think Sears has put that much effort into trying to turn it around.”

As a result, Nicholson says Sears and Kmart have gone from about 3,500 stores when they merged in 2005 to around 900 today.  Another 142 stores will close as a result of the bankruptcy filing. With the expansion of Walmart’s reach and the emergence of online shopping, Nicholson says it’s clear that Sears just couldn’t keep up with a rapidly evolving consumer culture and retail industry.

John Smith has been waking up WAER listeners for a long time as our Local Co-Host of Morning Edition with timely news and information, working alongside student Sportscasters from the Newhouse School.