Sears’ Downfall: 4 Hard Truths to Learn from the Struggling Retailer


It’s no secret that the Sears legacy, once a cornerstone for the American middle class, has been flagging for years. In the past decade, the retailer has shuttered half of its locations and cut over 137,000 jobs.

As Business Insider reports, employees are now predicting that it’s only a matter of time before Sears’ complete demise.

Whether their predictions are right or not, much can be learned from what they say is going horribly wrong, both at a corporate and store level. Read on for the top 4 things you can learn from Sears’ downfall, according to past and current employees.

As per Business Insider, employees say that many Sears locations are severely understaffed with some “operating on less than half of the employees they need.” Furthermore, according to these employees, when people aren’t being fired, labor hours are being cut.

Understaffed stores (or those with too high of a turnover) tend to make for some pretty unhappy employees which can cause considerable damage to morale. While keeping employees happy may seem like an elusive goal, employee happiness is a key contributor to how satisfied workers are with their jobs and ultimately, how well they perform. Andrew Oswald, professor at Warwick Business School discovered that happy workers were 12% more productive than their unhappy counterparts, overall.

In short, hire right the first time and you won’t need to fire quite so often. Firing staff in an effort to cut costs is simply not an option, as understaffed businesses lead to overworked employees and tired, unhappy employees negatively impact your bottom line.

A former Kmart employee of 41 years told Business Insider that the lack of employee appreciation at her store made it difficult to hire and retain experienced workers.

In a survey conducted by Harris Interactive on behalf of Glassdoor in 2013, over half of the 2,044 employees surveyed said they would stay at their company longer if they felt more appreciated by their boss. 81% said appreciation for their work made them feel motivated to work harder. “Everyone wants to feel appreciated and everyone values a simple ‘thank you,’” says Allyson Willoughby, Glassdoor’s Senior Vice President of People and General Counsel. “This doesn’t happen enough in the workplace, but showing simple forms of appreciation can really go a long way in motivating employees to work harder and be more productive.”

A current Sears employee informed Business Insider of the many issues within his store, from broken walls and escalators to frequent roof leaks. He went on to say that the merchandise on display was often torn open, making it undesirable to consumers. Several other workers claimed that the quality of the products that Sears and Kmart sell has declined and that some stores are being inundated by shipments  several times a week but lack the manpower needed to move the merchandise from the trucks to the shop floor in a timely manner.

The fact of the matter is, poor store layout and an unkempt environment can have a debilitating affect on conversion rates. Bad signage, a cold, sterile atmosphere, terrible lighting, poorly laid out visual displays – all of these can have a serious impact on foot traffic and ultimately, sales. Structural issues aside, merchandising is an essential part of the retail landscape as it is the first thing to impact a shopper’s in-store experience. To put it simply; a well-maintained, properly merchandised store with an easy-to-navigate layout equals steady sales.

A former Kmart manager of 12 years said that “the company really started going downhill” at least partially due to Sears’ “confusing” and “poorly executed” loyalty program. “Items scanned per minute decreased from 18 to 5 items per minute because the program was littered with exclusions and confusion,” he explained. “Several items didn’t ring as advertised or generate the points as expected. This resulted in long lines and angry customers. Abandoned carts meant utilizing payroll to return those items back to stock.”

A poorly designed loyalty program can be damaging to your bottom line and Sears isn’t the first retailer to learn this the hard way. The main things to keep in mind when putting together a good loyalty program are:

  • Give high value customers the VIP treatment – Not every shopper will necessarily care about being rewarded for how much they choose to spend at your store. However, if those who do invest a lot in your company feel like they won’t be rewarded or even acknowledged for their efforts, they’ll simply shop with someone else who does.
  • Make sure policy rules are clear and easy for everyone to understand – The former Kmart manager above admitted that eventually, he and his whole family began shopping at Walmart, simply to avoid Sears’ confusing set up. Loyalty programs are meant to be fun; if customers feel like it’s too complicated to figure out, they simply won’t bother.
  • Be generous about payout – Understandably, different companies have different margins and are able to offer different types of rewards. Again, it’s all about making customers feel as though their participation in your program is truly worth it.
  • Customers shouldn’t have to jump through hoops to reap rewards – Not only will making redemption difficult put shoppers off of your program entirely but this has potential to damage the relationship between you and your customer. No one likes to get to the finish line only to feel like they’ve been mislead.

In short, these programs should be easy to understand, points should be easy to earn and rewards should be easy to redeem.