This American company was ruined – 24/7 Wall St.

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Special report

Businesses disappear with great regularity. Within five years of their creation, about 50% of American companies go bankrupt. During the first months of the COVID-19 pandemic, thousands of bars and restaurants closed. It’s rare, however, for organizations that have been around for decades — and grown into huge operations — to disappear. But this American company, Sears, was ruined.

Businesses that fail after many years often do so because of poor management. Another major reason is new and unexpected competition. This has increasingly become a factor in business failures in today’s US economy. The advertising industry has been turned upside down by Google. TV viewership has been eroded by streaming services led by Amazon Prime and Netflix. Slowly, but surely, the gasoline car sector is being challenged by electric cars.

No industry has been more disrupted by new competition than retail. Physical stores have dominated the industry for centuries. Eventually people could order items by mail from catalogs, but this way of reaching the customer was still only modestly successful, except for Sears, which had a large mail-order business.

The in-store retail industry has collapsed in many cases because of one company – Amazon.com. It could overtake Walmart as the largest US company by revenue this year. (Speaking of Walmart, in terms of customer satisfaction, it’s the worst retailer in america.)

The growth of e-commerce has been aided by the COVID-19 pandemic. Since people were staying at home, they were ordering online. Entire national chain stores have also been forced to close all their stores. (These are brands that have disappeared over the past decade.)

The Sears department store chain was founded by Richard Warren Sears and Alvah Curtis Roebuck in 1892. Sears, Roebuck and Co. was the largest retailer in the United States for several years before being overtaken by Walmart. Sears merged with Kmart in 2005 to form Sears Holdings. Sears Holdings went bankrupt in 2018. According to the most recent information, there are 29 stores left. No one would be surprised to see them disappear.

What happened to Sear? Some of them could have been predicted. Entire industries have already been disrupted by new business models. Any industry leader who doesn’t invest in “the next big thing” may be overwhelmed by this. In the case of Sears, that “thing” was e-commerce. A pioneer in distance selling via the catalogue, Sears should have been at the forefront of off-store sales.

Plus, there are plenty of indications that Sears has gotten greedy. He let his stores grow old and shabby. It didn’t branch out into new lines of merchandise like Walmart did. In the final analysis, Sears was caught off guard and took hit after hit until he could no longer survive.

To find 10 established US companies that have gone bankrupt, 24/7 Wall St. editors selected US companies founded before 1950 that have declined sharply in size, stature and market share.

Click here to see which American company was ruined

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