In short: Sears rose from a mail‑order catalog founded in 1892 to become America’s largest retailer by the 1980s, but a series of strategic missteps, a poorly executed merger with Kmart, and failure to adapt to e‑commerce led to its Chapter 11 filing in 2018 and a reduction from 2,705 stores in 2011 to five by 2026.
Rise: From Rural Catalogs to a National Brand
Description: The Catalog — Wikimedia Commons
Sears began in 1892 when Richard Warren Sears, a railroad station agent, partnered with watch repairman Alvah Curtis Roebuck. Their mail‑order catalog offered rural Americans access to a wide range of goods that local stores could not stock. The catalog’s success rested on reliable credit, extensive product lines, and a promise of “the best goods at the lowest prices.” By 1906 the partnership had reincorporated, bringing Julius Rosenwald into the leadership team and securing the capital needed for expansion.
The first physical Sears store opened in 1925, marking a strategic shift from pure catalog sales to brick‑and‑mortar retail. This hybrid model allowed customers to see and touch products before purchasing, while still leveraging the catalog’s nationwide reach. Throughout the 1930s and 1940s, Sears became synonymous with American middle‑class life, selling everything from appliances to automobiles. Its catalog was a cultural touchstone, delivering hope and convenience to isolated households during the Great Depression and World War II.
Post‑war prosperity amplified Sears’ growth. The company opened flagship stores in major cities, added automotive service centers, and introduced the “Sears Tower” of credit—its own credit card that further entrenched customer loyalty. By the 1960s, Sears operated hundreds of stores, employed hundreds of thousands, and generated revenues that eclipsed many competitors. The brand’s authority was such that the Sears name alone could guarantee a product’s credibility.
Peak: The Largest Retailer in America
Through the 1970s and into the 1980s, Sears solidified its position as the nation’s largest retailer. Its aggressive store expansion, diversified product mix, and continued reliance on the catalog network gave it a distinct advantage over regional department stores. In 1985, Sears reported annual sales exceeding $20 billion, a figure unmatched by any other U.S. retailer at the time.
The company’s dominance was also reflected in its cultural imprint. Sears sold the first television sets to millions of households, introduced the popular Kenmore appliance brand, and operated the popular “Sears Auto Center.” Its “Sears, Roebuck and Co.” branding appeared on everything from watches to mortgages, creating a one‑stop shopping experience that resonated with a growing suburban middle class.
However, the very size that made Sears powerful also made it vulnerable. By the late 1980s, competitors such as Walmart and Target began to challenge Sears on price and convenience. Walmart’s low‑price, high‑volume model, underpinned by sophisticated supply‑chain logistics, began to erode Sears’ market share. In 1989 Walmart overtook Sears as the largest U.S. retailer, signaling the first major crack in Sears’ empire.
Turning Point: The Kmart Merger and Strategic Drift
Subjects: Nursery stock New York (State) Rochester Catalogs; Fruit trees Seedlings Catalogs — Wikimedia Commons
The early 2000s marked a decisive turning point for Sears. Eddie Lampert, founder of ESL Investments, had taken control of Kmart and, in 2005, engineered a merger between Kmart and Sears. The resulting entity, Sears Holdings, was intended to combine Kmart’s discount‑store footprint with Sears’ brand equity and catalog heritage. In practice, the merger created a sprawling, debt‑laden conglomerate that struggled to find a coherent retail strategy.
Lampert’s approach emphasized financial engineering over operational investment. Sears Holdings took on billions of dollars in debt to fund the merger, then relied on asset sales—particularly real‑estate holdings—to service that debt. Store renovations were postponed, inventory systems remained outdated, and the company failed to invest in a robust e‑commerce platform. Meanwhile, competitors such as Amazon and an increasingly tech‑savvy consumer base demanded seamless online experiences that Sears could not provide.
Leadership turnover added to the chaos. Frequent changes in CEOs and senior executives prevented the development of a long‑term vision. The once‑innovative catalog was reduced to a nostalgic footnote, and the brand’s core promise—wide selection at low prices—became increasingly hollow as inventory shrank and store conditions deteriorated. By the time Sears filed for Chapter 11 bankruptcy on October 15, 2018, the company’s revenue had fallen dramatically, and its store count had plummeted from a peak of 2,705 in 2011 to under 800.
Fall: Bankruptcy, Store Closures, and Asset Stripping
The Chapter 11 filing in 2018 marked the formal end of Sears as a viable operating retailer. The bankruptcy court approved a plan that allowed the company to shed most of its debt and close thousands of underperforming locations. Transformco, the entity that emerged from the bankruptcy, shifted focus to managing and selling off remaining real‑estate assets rather than revitalizing the retail operation.
Between 2018 and 2026, Sears closed the vast majority of its stores. From 2,705 locations at its 2011 peak, only five remained open in the United States by 2026. The remaining stores operate with reduced staff, limited inventory, and a heavy reliance on the legacy “Sears” name as a marketing tool rather than a functional retail platform. The company’s online presence, once a modest extension of its catalog, now serves primarily as a portal for liquidating excess inventory.
Financially, Sears’ collapse illustrates the danger of overleveraging. The debt incurred to finance the Kmart merger never translated into revenue growth, and the company’s inability to adapt to digital retail left it with an unsustainable cost structure. The loss of brand relevance, combined with deteriorating store conditions, drove longtime customers to competitors who offered better price points, more convenient shopping experiences, and stronger online ecosystems.
Lesson: Prioritize Adaptation Over Legacy
The Sears story offers a clear lesson for modern businesses: heritage and scale are insufficient without continuous adaptation to market realities. Companies must invest early and consistently in the channels their customers are moving toward—whether that is e‑commerce, mobile platforms, or data‑driven inventory management. Financial decisions, such as taking on large debt for mergers, should be weighed against the ability to fund innovation and maintain operational excellence.
For a leader today, the practical takeaway is simple: conduct a quarterly “future‑fit” audit. Assess whether your core products, distribution methods, and customer experience align with emerging trends. If gaps appear, allocate resources to bridge them before legacy assets become liabilities. By treating adaptation as a core strategic pillar rather than an optional upgrade, companies can avoid the fate that turned Sears from America’s retail champion into a handful of ghost stores.
Frequently Asked Questions
When was Sears founded and what was its original business model?
Sears was founded in 1892 by Richard Warren Sears and Alvah Curtis Roebuck as a mail‑order catalog company, later incorporating in 1906 with Julius Rosenwald.
What event caused Sears to lose its position as the largest U.S. retailer?
In 1989 Walmart surpassed Sears, ending its decades‑long reign as the nation’s biggest retailer.
Who led the merger that created Sears Holdings?
Eddie Lampert, founder of ESL Investments, orchestrated the 2005 merger of Kmart with Sears, forming Sears Holdings.
How many Sears stores remain open as of 2026?
From a peak of 2,705 locations in 2011, only five Sears stores remain open in the United States in 2026.
