Goodbye, Sears. Now Chicago needs to nurture its next great company

Holiday traditions come and go, but for many Chicagoans of a certain age, Christmas started when the “Wish Book” arrived in the mailbox from Sears, Roebuck and Co.

This fat catalog usually came on a fall day, as the weather grew chilly, and the leaves turned colors. At its peak, the toy section alone ran for a couple of hundred thrilling pages. Alas, the Wish Book folded in 2011, and by the time the holidays roll around again later this year, the rest of Sears might be gone as well.

For retailers, the chilly period immediately after the holiday selling season brings a reckoning. Chain operations will use this time to clear inventories, revise merchandising strategies, shutter underperforming stores and otherwise get ready for what promises to be a tough new year, as inflation and the threat of a recession put a damper on shopping. Some chains are bracing for the worst: Bed Bath & Beyond announced that it might be forced to liquidate.

The latest news about Sears is, in a word, grave. When Sears and Kmart merged in 2005, they counted 3,500 stores in the U.S. In 2023, it would be no surprise if the store count finally hit zero.

When the chains combined, both were already spiraling downhill to the point that one business analyst compared the merger deal to conducting a transplant with a bad heart and a bad liver and expecting the outcome to be a healthy body.

Wall Street counted on Eddie Lampert, a wealthy investor, to cut costs and squeeze profits from the vast real estate holdings of the two companies. There was talk at the time about the fresh-faced financier becoming the next Warren Buffett.

Lampert promised moneymaking synergies, such as offering Sears’ popular Kenmore appliances and Craftsman tools at Kmart, and Kmart’s Martha Stewart line of housewares at Sears. But a costly effort to attract women shoppers to the “softer side” of Sears fizzled out and the stores became hollow shells, bereft of merchandise.

To make matters worse, a business that was the Amazon of its day back in the catalog-shopping era failed at moving its operations online. Though Lampert used financial maneuvers to keep the business going much longer than his critics anticipated, he never managed to compete against juggernauts like Walmart and Target, let alone Amazon.

Lampert was still running Sears in 2018, when it filed for bankruptcy to shed debt, bad leases and unprofitable stores. He brought the remains of the business out of bankruptcy in 2019. It had just 223 Sears and 202 Kmart stores remaining nationwide.

Today, operating under a shell company, it retains at most a handful of full-line stores. A chain of small, franchisee-owned stores known as Sears Hometown is going out of business and Sears Auto Stores are kaput. The site does appear to be functional, albeit with most items actually coming from other sellers. And Sears Home Services, which offers appliance repairs and maintenance, is still operating.

No one from what’s left of Sears responded to a request for comment. Lately, this one-time bellwether of the retail industry has done most of its talking in courtrooms — including a dispute argued before the U.S. Supreme Court last month that pits the Mall of America against Sears over the rights to a former store at the Minnesota retail mecca.

In Chicago, Sears has no stores, but it lives on in other ways. Thousands of Chicagoans worked at Sears and still rely on retirement benefits that have been threatened along with the rest of the company’s financial obligations. Young people often don’t know that the large, locally based companies, Allstate and Discover, were among the businesses spun off from the retail giant in its heyday, as was the highly successful Coldwell Banker real estate franchise.

The old Chicago main post office, recently renovated and reopened with high-profile new tenants, was originally needed to occupy its huge footprint in order to accommodate Sears’ and rival Montgomery Ward’s booming mail-order operations.

To aging Chicagoans, the Willis Tower will always be the Sears Tower, even though Sears moved its headquarters out of the iconic skyscraper to suburban Hoffman Estates 30 years ago, opening a sprawling new campus alongside Interstate 90, replete with a 2.3 million-square-foot corporate office and 273 acres, including 100 acres of undeveloped land. As recently as 2017, Hoffman Estates remained home to some 4,000 Sears employees.

And no one should forget that Sears took public money with its move to the suburbs: Illinois taxpayers will never see a return from the fortune in tax breaks and incentives promised to Sears when it moved. Such a folly.

What hurts most is the realization that Chicago nurtured one of America’s great companies and then watched it die a slow, painful death — self-inflicted to the extent that it failed to innovate and capitalize on its successive generations of market power.

The demise of Sears is a reminder that Chicago can give birth to commercial greatness. The city needs to prove it can do so again.