Small Business Retailing: Sears on the Bubble?

sears logoYahoo Finance is posting today that venerable retailer Sears may be in trouble, or at least in more trouble that we thought.  Sears posted an unexpected quarterly loss leading Barron’s to state that their stock could fall another 50%

Jeff Matthews of hedge fund RAM Partners is quoted as saying that Sears has “lost touch with its customers.”  According to Matthews, Sears CEO Edward Lampert doesn’t know how to run a retail business.

While some independent retailers may celebrate the possible loss of a major competitor, this may not be good news.  Should Sears fail, there’s no doubt that Wal Mart will jump in to fill the void.  You have to ask yourself, “Will I be better off if every Sears store is replaced by a Wally World?  I don’t think so.   Sears may be a tough competitor, but Wal Mart is tougher.  And without competition from Sears, can Wal Mart do anything but get stronger?

It reminds me of a story about two Boy Scouts confronted by a bear in the woods.  One of the young men is frantically lacing up his running shoes.  The other says, “What’s the point.  You’ll never outrun the bear.”  The first boy says, “I don’t have to outrun the bear.  I just have to outrun you.”

In this case, Sears may be the second scout with Wal Mart being the bear.  As they say, “be careful what you wish for.”

One Response

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