In July, Sears announced that it is closing 43 stores--its latest in a string of 265 closures this year alone. Though Sears once reigned as America's largest retailer, the company's remaining locations are now haunted by $4.2 billion in debt and a reputation for being out of date and out of touch.
How could a pioneering organization that was so dominant for decades fail so quickly? It's a good reminder for small business owners that even the biggest, most respected companies can slip off their pedestals in a heartbeat.
Sears' disappointing losses and plummeting sales serve as a textbook for decisions that smaller companies should avoid when looking to maintain sales and meet customers' changing needs.
Sears built an empire on catalog sales, satisfying the needs of pre-smartphone consumers and building phenomenal brand loyalty. But Sears was put to the test once competitors like Walmart and Amazon began offering similar products for cheaper prices online.
With its marketing might and brand recognition, Sears could have launched its own e-commerce initiative. Instead, it took the back seat and allowed its competitors to drive consumers into the digital age.
So how can we sidestep financial turmoil and avoid Sears' mistakes? Here are three lessons entrepreneurs can learn from the once-supreme retailer:
1. Keep an eye on competitors.
Being the leader in your field doesn't guarantee you will always hold the top position. Think about it--if Sears had kept a closer eye on its competitors and recognized consumers' shifting preferences, the company could have braced for the online shopping tsunami before it was too late. Instead, Sears chose to ignore flashy startups like Amazon, confident that its century-old business model was invincible.
To avoid falling victim to this mindset, small business owners should pay close attention to new technology, evolving consumer expectations, and competitors' roadmaps. You cannot plan your own company's future if you don't understand where your industry and customers are headed.
2. Meet customers where they are.
If Sears has done one thing right this year, it was the decision to sell Kenmore appliances on Amazon--a move that increased Sears' share price 22 percent in pre-market trading when the deal was announced. Though it is an acknowledgement, finally, that many Sears customers prefer to shop online, it may be a little too late.
Small business owners shouldn't wait until they're desperate to make strategic business changes. Your sales and marketing plans should be nimble so you can adjust to economic shifts and evolving consumer preferences.
By listening to your customers and really paying attention to what they want, your business can address challenges quickly, revamp your product or service offering, and reevaluate your sales channels - before outdated practices hurt revenue or threaten relationships with loyal clients.
3. Never stop moving forward.
No matter how big (or small) your company is, business owners should regularly search for ways to reinvent their company's model and bring it into the digital era. Companies lagging behind simply won't survive long-term.
Instead of focusing on what's worked in the past, look at today's trends to figure out what will drive company growth in the future. Resist the urge to cling too tightly to your core business; even the most stable revenue streams can become irrelevant quickly due to shifting consumer tastes and expectations.
Take brick-and-mortar stores, for example. Like Sears, many small businesses rely heavily on traditional storefronts to drive sales. While this model can be successful in local markets, small business owners looking to expand their reach should create an online shopping experience that's as inviting and engaging as their physical shops while supporting their in-store customer service.
Small firms can bridge the gap between virtual and physical stores by offering customers the chance to "buy online, pickup in store" - a move that can help small businesses maintain the value of their brick-and-mortar stores while differentiating themselves from competitors.
Ironically, Sears was once the vanguard of innovation. The company pioneered the mail-order catalogue business and created a warehouse and shipping infrastructure to support it. (Sound familiar, Amazon?) Of course, that was 125 years ago. Times have changed, to say the least, and Sears simply hasn't kept up.
Sears may be paying for its failure to adapt, but small businesses don't have to. By watching competitors, meeting customers' changing expectations and adapting to industry and economic trends, small businesses will be better positioned to succeed this year and beyond.