Sears, Roebuck and Co., leading retail company in the United States through most of the 20th century (see Retailing). In November 2004 the Kmart Holding Company announced plans to acquire Sears for about $11 billion. Sears sells a wide range of consumer goods, including apparel, appliances, tools, automotive supplies, and household items. Sears, Roebuck and Co. is based in Hoffman Estates, Illinois, near Chicago. If the merger with Kmart is approved by shareholders and government regulators, the new company will be headquartered at Hoffman Estates.
In 1886 Richard W. Sears, a railway station agent in North Redwood, Minnesota, bought a shipment of watches and sold them at a profit to other station agents. He soon quit the railroad and formed the R. W. Sears Watch Company in Minneapolis, Minnesota. In 1887 Sears moved to Chicago and hired Alvah Roebuck to repair watches.
In 1887 Sears published his first mail-order catalog, offering watches and jewelry. In 1893 the company officially became Sears, Roebuck and Co. By that year the expanded catalog contained advertisements for a wide range of products, such as women’s garments, jewelry, furniture, and other household goods. The catalog, which featured flamboyant advertising, targeted farmers and other rural customers who had limited access to traditional retail outlets. Offering reasonable prices and an unconditional money-back guarantee on all merchandise, Sears, Roebuck and Co. expanded rapidly.
In 1895 Roebuck sold his shares in the company, and Sears brought in two more partners. One of the new partners was former clothing manufacturer Julius Rosenwald, who reorganized the company to more efficiently handle orders. Rosenwald became president of the company when Richard Sears resigned in 1908. Although the company’s mail-order business was very successful, the introduction of the automobile and the movement of people to cities convinced Rosenwald of the need to increase the company’s business in urban areas. In 1925 Sears opened its first retail store in Chicago. By 1929 Sears had opened 319 stores. Retail sales exceeded catalog sales for the first time in 1931. That year Sears launched Allstate Insurance Co., which grew into one of the nation’s leading insurance companies.
Sears boomed after World War II (1939-1945). Sales grew from $1 billion in 1945 to $3 billion in 1954. Sears was by far the nation’s leading retailer in the 1960s. Some surveys found that 20 percent of American consumers shopped regularly at Sears. In 1974 the company opened its new Chicago headquarters, the 110-story Sears Tower—the world’s tallest building at that time.
In the 1980s Sears began an ambitious program of diversification. In 1981 Sears bought Coldwell Banker Company, a real estate brokerage firm, and Dean Witter Reynolds Inc., a securities company. In 1984 Sears formed a partnership with International Business Machines Corporation (IBM) and CBS Inc. to launch Prodigy, a computer online service. Sears’ Dean Witter Financial Services group introduced the Discover credit card in 1985.
Beginning in the late 1970s, Sears’ core retail business faced increasing competition from other companies. Discount stores, such as Kmart and Wal-Mart, attracted customers with lower prices. Clothiers and electronic stores lured away other consumers with high-end products. Sears posted a $2 billion loss in 1992.
Sears began to revitalize itself by refocusing its energies on retail operations. In 1993 Sears spun off Dean Witter as an independent business and sold Coldwell Banker. Sears also discontinued its catalog sales in 1993. The next year the company sold the Sears Tower and moved its headquarters to Hoffman Estates. In 1995 Allstate became an independent company. In 1996 Sears sold its interest in Prodigy.
These moves left Sears focused squarely on retail. In the late 1980s the company began focusing more on clothing and accessories, increasingly selling national brands alongside established Sears brands. In the early 1990s, the company spent $4 billion to remodel its stores, expand its lines of apparel, and open new stores that specialized in consumer electronic products, appliances, and furniture. In 1993, the year after its heaviest financial losses, Sears had profits of $2.3 million on $50.8 billion in sales. At the close of its 2000 fiscal year, Sears operated 863 mall-based retail stores and an additional 1,200 retail specialty outlets. It reported annual revenue of more than $40 billion. In 2002 the company acquired the Lands’ End specialty catalog and introduced Lands’ End apparel at its stores.
The proposed merger in 2004 with Kmart was expected to help the new company compete with Wal-Mart and Home Depot, Inc., the nation’s two leading retailers. A number of Kmart stores were expected to become Sears stores. Many retail business analysts believed that Sears had jeopardized its business by having too many stores at shopping malls. The trend in recent years has been for major retailers to locate away from malls at single store locations. Many Kmart stores have such locations, and because Sears offers a wider variety of goods, Sears was expected to take over these stores.
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