Sears, once the biggest retailer in the U.S., has struggled to stay afloat.  Unable to secure a quick cash infusion, on October 15th, Sears has widely reported its intention to seek bankruptcy protection.

Sears Holdings plans to close 142 Sears and Kmart unprofitable stores by year end 2018.  The rest will operate under Chapter 11 bankruptcy protection, and many of its 68,000 employees will be laid off.  Some of the 90,000 Sears pensioners will be eligible for federal pension protection from the Pension Benefit Guaranty Board, but Sears will retain some of the pension obligations.

It is doubtful that a company with huge existing debts and stock trading as low as $0.18 per share can be prettied up to be an attractive borrower of risk.  Sears has been losing money and shedding assets for years.  In 2011, there were 2,200 full line and specialty stores, but the company shrunk to 482 full-line department stores and 360 Kmart stores as of Aug 4th, 2018.

Burdened by $5.3 billion in debt, an unprofitable retail business, and a $134-million debt payment due on October15th, raising cash is an existential emergency for Sears.  As a tactic to sidestep bankruptcy, Sears CEO, Mr. Lampert, proposed selling Sears’ iconic Kenmore brand.  That tactic for raising cash was used before when he sold the Craftsman brand, and it could be used to sell the Sears’ DieHard Battery brand.  The Sears’ Auto Care brand seems less valuable.  The sale of Kenmore was not accomplished in time to avert the Chapter 11 bankruptcy.

Sears is not the only major retailer facing closures.  Among other big box stores, Toys R Us, Bon Ton, Sam’s Club, Macy’s, Lord & Taylor and J.C. Penney plan to close more than 1,073 of their stores in 2018.

Among smaller ailing retailers, Mattress Firm, Brookstone, H&R Block, Subway, GNC, Foot Locker, Teavana, Ascena Retail Group (AnnTaylor, Loft, DressBarn, Lane Bryant and Justice), Victoria’s Secret, Orchard Supply, Fresh Market, Chipotle, Starbucks, Kroger, J. Crew, Abercrombie & Fitch, Best Buy cell phone kiosks, Gap, Banana Republic and Michael Kors plan to close 3,811 of their locations in 2018.

Few of the retailers face the same depth of peril as did Sears, although Toys R Us suffered extinction.

Some analysts attribute Sears’ woeful condition to Sears Holdings’ refusal to make regular capital investments in its stores.  The Kmart stores seem old and stale, and Sears seems only slightly more attractive.  Sears Holdings invests just 1% of sales to keep the stores fresh and modern.  That is half of the investment norm for large retailers.  Sears’ competitor, Macys, invests about 1.9%.  That wisdom on investment is good, and should apply to Sears, but it arrives too late to avoid bankruptcy.

All retailers can learn lessons from the Sears debacle.  Part of keeping a retailer fresh and attractive comes from investing in look and feel, but also in new functionalities.  For example, Walmart, Kroger, and Target have invested in online sales and home delivery to match some of their competitors’ (e.g. Amazon) allure.  Otherwise investments can be made in cybersecurity to protect retail customers from hackers and for the retailer to stringently avoid the temptations to harvest and sell consumers’ personally identifiable information.

The loss of a neighborhood Sears store reduces one degree of choice for consumers.