For more than a century, Sears Roebuck was one of the most dominant retailers in the United States. Even well into the 1990s, at a time that its reputation for high-quality clothing and home goods had faded a bit, and direct competition had flooded into the same retail space, Sears was able to pivot and carve out a profitable niche for itself. From appliances to hardware, footwear to home décor, Sears promised that consumers could trust it for all their purchasing needs, building on the security of a decades-long reputation for quality and affordability.

Yet by the end of 2025, only a handful of Sears locations remained, none of which were doing very well. In response, the retailer’s corporate ownership announced plans to close and liquidate the last of the physical holdings, in an attempt to pay off a $1.5 billion loan that it had taken out in its efforts to maintain operations. What went so very wrong?

Most experts agree that the company’s change in ownership in 2005 was a first major mistake. Edward Lampert took over Sears and its subsidiaries, and the initial response was promising. In particular, share prices for the company rose after the new leadership team initiated spending cuts designed to trim away any excess. But it turns out that what they trimmed was less fat and more like vital organs. Lampert implemented expansive sell-offs of once-valuable assets under the company’s umbrella, like Lands’ End, rather than investing further in attempting to turn their performance around. Instead, the executives channeled their budgets to the introduction of an expansive omnichannel program that would support order-ahead and in-store pick-up capabilities. The problem was that by that time, other retailers already had established such capabilities, such that Sears was left scrambling to catch up with the appealing offerings of competitors like Home Depot and Walmart.

In the meantime, Lampert functioned in multiple roles: Sears’ largest shareholder and chair, as well as the CEO of ESL Investments, a hedge fund that served as one of the department store’s major creditors. This status raised some ethical questions, but undeterred, Lampert also founded a real estate holding company called Seritage in 2015. Seritage then entered into a leaseback agreement with Sears, such that it purchased physical stores, infusing the retail business with much-needed cashflow, then leased those stores back to the retail corporation. Again, ethical questions about the potential conflict of interest created by these multiple roles arose, but in its publicly available financial reports, Sears painted a rosy picture. Citing its efforts to unload underperforming assets and its new influx of capital, the retailer offered a positive outlook and promise of improved operations.

Rather than a rosy future though, “there were red flags from the beginning,” according to one market analyst. In retrospect, it is evident that Sears’s financial well-being was shakier than the public disclosures revealed. Sears Canada had just cut more than 1,500 positions, and sales figures continued to plummet. Even with these alarming developments though, the company seemed uninterested in supporting and meeting the needs of its brick-and-mortar stores—an error that failed to account for the historical source of the brand’s value.

For as long as there had been a Sears Roebuck, there had been Sears department stores. Even as it introduced new e-commerce initiatives and delivery options, loyal customers still wanted to visit stores in person and shop in the ways they had long appreciated and embraced. Instead, especially in the years just prior to Sears’ bankruptcy, shoppers increasingly complained about poor store maintenance and inconsistent upkeep. With the ready availability of competitive retail offerings, shoppers chose to look elsewhere, seemingly frustrated by both the conditions of the stores and the failure to acknowledge their nostalgic desire to have the same Sears they knew and trusted.

Discussion Questions

1. Is it fair to say that Edward Lampert bears most of the responsibility for the decline of Sears? What might be some additional factors that contributed to the decline, out of ownership’s control?
2. What measures could have been put in place to stop Sears’s losses from compounding?

Sources: Lauren Coleman-Lochner, “Why Sears’s Last Great Hope Was a Promise that Never Materialized,” The New York Times, December 26, 2025; “Sears Canada to Cut More Than 1,600 Jobs,” Reuters, January 15, 2014.