Brand-new reports today on the retail front show that traditional retailer Sears is going to ask a bankruptcy judge about liquidation.
This comes after some years of management by Eddie Lampert, a former Goldman Sachs executive running a hedge fund called ESL investments – Lambert’s $4.4 billion takeover bid was apparently not well received, and the alternative is for the company to fold its hand in bankruptcy proceedings.
Business Insider notes that last October when Sears originally filed for bankruptcy, 687 stores were still open.
Walk through these stores, and you’re likely to see high-quality tools and other consumer goods at relatively low prices as managers try desperately to remain afloat. In the end, that’s not enough to keep the doors open at Sears, a company that has withstood all sorts of challenges throughout the original Great Depression, two world wars and the 2008 financial crisis. Front-line reports show stores suffering from an under-investment in physical infrastructure such as walls and bathrooms as leaders try to conserve capital.
“Some stores have suffered severe decay, such as crumbling walls, cracked floors, collapsing ceilings, and a lack of working toilets for weeks on end, according to store visits and interviews with Sears employees over the past two years,” wrote Hayley Peterson in Business Insider today. “Critics have blasted Lampert for not investing more in stores, but he has defended his strategy.”
In this context, some of Lampert’s previous enthusiasm tends to ring hollow.
“I feel like we’re ahead of J.C. Penney, we’re ahead of Macy’s, we’re ahead of Target, in some aspects of where the world is going,” Lampert reportedly said in a 2017 interview – but the facts have not borne out that sentiment.
Now with reports that Sears sales went from $53 billion in 2006 to under $17 billion in 2017, it seems that Sears is one of those many firms suffering from competition with online retailers like Amazon that are grabbing market share and leaving brick-and-mortar stores holding the bag and hemorrhaging money.
The Sears liquidation is likely to create waves in retail, but it’s also going to affect commercial real estate in a big way – you’ll see a lot of empty gaps in shopping malls and shopping centers all over the country.
It’s worth keeping an eye on what will fill the gap after the departure of an iconic retail hallmark that just shows how “the times they are a’ changing.”