11th-Hour Bailout Offer May Not Save Outmoded Sears, Says Texas Economist

by Morgan Montalvo

WOAI News

Last  week, iconic but long-suffering retailer Sears escaped dissolution when  a hedge fund manager and former CEO stepped forward with a last-minute,  $4.6-billion-dollar bailout package. 

But  the company’s continued  inability to adapt to changing consumer  habits, not a lack of sympathetic investors, could still spell the end  for the onetime commercial giant, News Radio  1200 WOAI reports.

Texas  economist Prof. M. Ray Perryman predicts extinction for any big-box  chain that cannot offer what today’s tech-savvy shoppers want: a limited  brick-and-mortar presence that showcases  selection while also offering easy, responsive online ordering. 

Those  physical features, Perryman says, include “a more open-air type  experience, a more specialized type of experience, more personal type of  experience than what you sometimes have  seen in the past.”

 Perryman  is president and CEO of The Perryman Group, a Waco-based research firm  that has worked with more than 2,000 businesses and government agencies.  He is a former faculty member  at both Baylor University and Southern Methodist University and  currently is a research fellow at the University of Texas.  

Critics  of Sears say the chain has not developed nimble online shopping  platforms, and an antiquated telephone product inventory inquiry system  does not allow customers to contact individual  stores, or phone representatives to see what products each store has in  stock.  

“Part  of what’s happened in the evolution over time is immediacy of  response,” Perryman says, “and Sears did not adapt to that like a lot of  other companies have.”

Sears’ detractors also say the company also has not updated its locations to increase visual appeal.

Creditors  and a review panel this week will decide if the offer from former  company head Eddie Lampert is sufficient to address the chain’s debt,  keep the doors open at Sears’ remaining  locations and save about 50,000 jobs. 

Lampert’s proposal covers both  Sears and sister discount chain Kmart, which, like Sears, has closed  hundreds of stores across the country. KMart employs another 18,000  employees, also covered in Lampert’s offer. Sears’  parent company, Sears Holdings Ltd., filed for Chapter 11 bankruptcy in  October 2018.

The petition listed $6.94 billion in assets and almost  double that amount in liabilities.

 About  3,500 Sears and Kmart stores were in operation when the two brands,  or“nameplates,” merged ownership in 2005 under Lampert's stewardship.  

The last year Sears reported a profitable  earnings quarter was 2010. Less than 700 Sears and Kmart locations are  still open. 

Perryman  says if the review panel does not green-light Lampert’s offer, there is  some good news: in a near full-employment economy that boasts more  retail job openings than candidates,  most Sears and Kmart employees possess skills and experience that  should prove attractive to other big-box chains or online sales  operations.

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