In October 2016, Hurricane Matthew poured seawater over the dunes behind my house in Palm Coast, Florida, and deposited about 18 inches of it into our garage.
The house’s electric water heater happens to live in the garage, and when the power was restored a few days later, I was surprised to find the heater still worked. But given the heater’s saltwater exposure, I knew it was a matter of time – probably not too much – before I needed to replace it. Sure enough, at the end of my stay in the house this August, the water heater gave up the ghost.
Like many people my age, I grew up buying appliances at Sears. In fact, we’d renovated the house’s kitchen in 2009, and the Whirlpool refrigerator and cooktop were both Sears purchases, as were the KitchenAid electric oven and dishwasher. Like many Sears locations in rural America, my local Sears outlet is a family-run franchise, and I know and like the people who run it. So it seemed natural that Sears would be my first stop.
Our Palm Coast home is a vacation property, where my wife and I often entertain multiple guests. I assume that they, like me, are not fans of cold showers. So in replacing my water heater, I wanted a capacity of at least 50 gallons to keep everyone comfortable. I was surprised when I found out that Sears couldn’t deliver such a heater until the fifth – not of September, but of October. All available heaters were apparently going to Texas, which had just been pummeled by Hurricane Harvey. Or so I was told.
While such a long wait would have typically been a deal breaker, I did not expect to be back in the area until early October anyway. So I said OK. Unfortunately for my plans, Hurricane Irma arrived to batter Florida, so I spent the better part of September in Palm Coast, repairing the storm damage (and taking hot showers elsewhere).
On Oct. 4, I called Sears and they verified that they had my heater and would install it the following day as planned. However, when a store representative and an installer arrived on Oct. 5, they did not have a 50-gallon heater in tow. The store’s system had been unable to verify their inventory correctly. They offered to install a 40-gallon heater – just what I didn’t want.
I cancelled my Sears order and went to Lowe’s, which had plenty of water heaters in stock. They had a selection of straight electric models, and also modern hybrid systems that use heat pumps to take warmth from the air to heat the water (sort of like a refrigerator in reverse). Although I was tempted by the heat pump setup, these models generate condensation, which requires a drain, making them impractical for my garage. I bought a straight electric model and Lowe’s arranged to have a local plumber install it the next business day.
My story illustrates a growing trend: Sears is no longer the default place to buy an appliance. My adult children would probably have never even considered it. So when Sears loses people in my demographic, then another key prop of its business has gone missing – something appliance makers have clearly noticed, since they have decided that there is more risk than opportunity in selling through Sears except with the utmost care.
The Wall Street Journal recently reported that many suppliers have stopped dealing with Sears or have insisted on cash upfront for merchandise. Sears ended its century-long partnership with Whirlpool in late October, meaning it will no longer stock Maytag, KitchenAid or Jenn-Air products either, since Whirlpool owns all three. Sears told the press the dispute was over pricing; Whirlpool declined to state the cause of the disagreement. And earlier in 2017, Sears sued two of the manufacturers of its Craftsman tool line to try to force them to keep shipping tools to stores. Sears once owned Craftsman, but sold it to Stanley Black & Decker in January.
No outsider can know Sears’ future. But when Sears Holdings said outright in March 2017 that it was unclear how long the retailer could stay in business, we can hardly blame suppliers for worrying about Sears’ ability to pay eight months later.
Not long ago, I told a young staff member at my firm that Sears was Amazon 100 years before Amazon was. A recent college graduate, he had never even seen the Sears catalog that once brought seemingly limitless choice to rural Americans, who had few other options. You could order anything from a gun to a dress to, at one time, a house. Pretty much whatever you ordered would arrive in due course by what we used to call parcel post.
By the end of the 1960s, Sears’ sales were just under 1 percent of the American gross domestic product, and at the height of its powers it owned not only a chain of stores, the Kenmore appliance brand and Craftsman, but also Allstate Insurance and the Discover credit card. In 1973, the company’s Chicago skyscraper was the world’s tallest, and Sears’ future seemed just as exceptional.
But everything changes. Enterprises that can’t change along with the world around them eventually end. The tower that many people still call by the retailer’s name was officially renamed Willis Tower in 2009. But perhaps the more symbolic illustration of what a different world Sears occupies today is this summer’s announcement that the Kenmore brand, long available only at Sears, would go on sale through Amazon.
Sears has not made a graceful transition to the internet age. Many of its store locations were anchors of traditional malls, another model that is largely going extinct; malls that are hanging on are largely upscale, a descriptor Sears would be hard-pressed to compete for. Many of the Sears stores that remain open need refurbishment or lack inventory. And Kmart, which Sears has owned since 2005, still can’t come close to Walmart in sales. S&P Global Ratings recently downgraded Sears’ debt further into the junk category, largely on concerns over its ability to pay or refinance $1 billion in loans coming due in 2018.
Sears may yet course correct, but when its local outlets sport bare shelves and fail to fulfill even the most threadbare delivery promises, you have to wonder what will be left once the upcoming holiday season ends.
Posted by Larry M. Elkin, CPA, CFP®
photo by Mike Kalasnik
In October 2016, Hurricane Matthew poured seawater over the dunes behind my house in Palm Coast, Florida, and deposited about 18 inches of it into our garage.
The house’s electric water heater happens to live in the garage, and when the power was restored a few days later, I was surprised to find the heater still worked. But given the heater’s saltwater exposure, I knew it was a matter of time – probably not too much – before I needed to replace it. Sure enough, at the end of my stay in the house this August, the water heater gave up the ghost.
Like many people my age, I grew up buying appliances at Sears. In fact, we’d renovated the house’s kitchen in 2009, and the Whirlpool refrigerator and cooktop were both Sears purchases, as were the KitchenAid electric oven and dishwasher. Like many Sears locations in rural America, my local Sears outlet is a family-run franchise, and I know and like the people who run it. So it seemed natural that Sears would be my first stop.
Our Palm Coast home is a vacation property, where my wife and I often entertain multiple guests. I assume that they, like me, are not fans of cold showers. So in replacing my water heater, I wanted a capacity of at least 50 gallons to keep everyone comfortable. I was surprised when I found out that Sears couldn’t deliver such a heater until the fifth – not of September, but of October. All available heaters were apparently going to Texas, which had just been pummeled by Hurricane Harvey. Or so I was told.
While such a long wait would have typically been a deal breaker, I did not expect to be back in the area until early October anyway. So I said OK. Unfortunately for my plans, Hurricane Irma arrived to batter Florida, so I spent the better part of September in Palm Coast, repairing the storm damage (and taking hot showers elsewhere).
On Oct. 4, I called Sears and they verified that they had my heater and would install it the following day as planned. However, when a store representative and an installer arrived on Oct. 5, they did not have a 50-gallon heater in tow. The store’s system had been unable to verify their inventory correctly. They offered to install a 40-gallon heater – just what I didn’t want.
I cancelled my Sears order and went to Lowe’s, which had plenty of water heaters in stock. They had a selection of straight electric models, and also modern hybrid systems that use heat pumps to take warmth from the air to heat the water (sort of like a refrigerator in reverse). Although I was tempted by the heat pump setup, these models generate condensation, which requires a drain, making them impractical for my garage. I bought a straight electric model and Lowe’s arranged to have a local plumber install it the next business day.
My story illustrates a growing trend: Sears is no longer the default place to buy an appliance. My adult children would probably have never even considered it. So when Sears loses people in my demographic, then another key prop of its business has gone missing – something appliance makers have clearly noticed, since they have decided that there is more risk than opportunity in selling through Sears except with the utmost care.
The Wall Street Journal recently reported that many suppliers have stopped dealing with Sears or have insisted on cash upfront for merchandise. Sears ended its century-long partnership with Whirlpool in late October, meaning it will no longer stock Maytag, KitchenAid or Jenn-Air products either, since Whirlpool owns all three. Sears told the press the dispute was over pricing; Whirlpool declined to state the cause of the disagreement. And earlier in 2017, Sears sued two of the manufacturers of its Craftsman tool line to try to force them to keep shipping tools to stores. Sears once owned Craftsman, but sold it to Stanley Black & Decker in January.
No outsider can know Sears’ future. But when Sears Holdings said outright in March 2017 that it was unclear how long the retailer could stay in business, we can hardly blame suppliers for worrying about Sears’ ability to pay eight months later.
Not long ago, I told a young staff member at my firm that Sears was Amazon 100 years before Amazon was. A recent college graduate, he had never even seen the Sears catalog that once brought seemingly limitless choice to rural Americans, who had few other options. You could order anything from a gun to a dress to, at one time, a house. Pretty much whatever you ordered would arrive in due course by what we used to call parcel post.
By the end of the 1960s, Sears’ sales were just under 1 percent of the American gross domestic product, and at the height of its powers it owned not only a chain of stores, the Kenmore appliance brand and Craftsman, but also Allstate Insurance and the Discover credit card. In 1973, the company’s Chicago skyscraper was the world’s tallest, and Sears’ future seemed just as exceptional.
But everything changes. Enterprises that can’t change along with the world around them eventually end. The tower that many people still call by the retailer’s name was officially renamed Willis Tower in 2009. But perhaps the more symbolic illustration of what a different world Sears occupies today is this summer’s announcement that the Kenmore brand, long available only at Sears, would go on sale through Amazon.
Sears has not made a graceful transition to the internet age. Many of its store locations were anchors of traditional malls, another model that is largely going extinct; malls that are hanging on are largely upscale, a descriptor Sears would be hard-pressed to compete for. Many of the Sears stores that remain open need refurbishment or lack inventory. And Kmart, which Sears has owned since 2005, still can’t come close to Walmart in sales. S&P Global Ratings recently downgraded Sears’ debt further into the junk category, largely on concerns over its ability to pay or refinance $1 billion in loans coming due in 2018.
Sears may yet course correct, but when its local outlets sport bare shelves and fail to fulfill even the most threadbare delivery promises, you have to wonder what will be left once the upcoming holiday season ends.
Related posts: