Sears, Roebuck and Co. and its Effect
Today, many people think of Sears as a company with stores in many malls across America. More than a hundred years ago, however, Sears started out as a catalog company. As the years progressed, cities grew more populated, and Sears shifted its emphasis to retail stores in large cities and some rural areas.
America in the late 1800s consisted of thirty-eight states, and a population of nearly sixty million people. Approximately 65 percent of the population lived in rural areas. These are the conditions in which Richard Sears, the founding father of Sears, Roebuck and Co., began his company. In 1886 Richard Sears was an agent of the Minneapolis and St. Louis Railway Station in Redwood Falls, Minnesota. His status at the railroad station left him plenty of time to do other things to earn extra money, and one such chance came when he was twenty-two years old. Sears received a shipment of watches unwanted by a Redwood Falls jeweler. Sears took advantage of the opportunity, purchased them from the jeweler, and sold them to other station agents along the railroad for a bargain price of $14 each. The same watch was sold by stores for $25 each. He sold all the watches and ordered more for resale. After selling watches for only six months, he had earned more than five thousand dollars, enough money to get him out of the railway business. Sears then began the R.W. Sears Company in 1886 in Minneapolis, Minnesota. The next few years were prosperous, but Sears decided that if he moved to a larger city he could reach more customers, and more customers would equal better profits. Sears moved his company to Chicago, and published an advertisement in the Chicago Daily News on April 1, 1887, that read: "Wanted—Watchmaker with reference who can furnish tools. State age, experience, and salary required. Address T39. Daily News." A young Indiana lad named Alvah Roebuck answered Sears's ad. Roebuck told Sears that he knew watches and even brought him a sample of his work to prove it. Sears hired him. On September 16, 1893, the company became formally known as Sears, Roebuck and Co.
From 1887 to 1892, Sears and Roebuck repaired and sold watches in the small building that was their headquarters. In 1893 Sears decided to start producing a catalog that would contain only watches and jewelry. In 1895 Alvah Roebuck retired from Sears because of illness. His successor, Julius Rosenwald became vice-president of Sears and became very involved with the catalog. However, even though Roebuck resigned, the company retained his name. In 1896 the first Sears, Roebuck and Co. general catalog was produced, and it guaranteed low prices, money-back guarantees, and free rural delivery, which appealed to farmers. Also that year, Sears moved his business to a new six-story building in Chicago, vacating the five-story building he had rented on Dearborn Street. Due to the introduction of new merchandise, the catalog was enlarged from 322 pages to 507 pages in 1898, a move that appealed to a larger number of customers. The catalog usually was sold for fifty cents, but it was sometimes given away. During the early 1900s, people began purchasing from companies who offered not only fair prices, but those who sold quality goods.
Around the turn of the century, Sears customers were mainly from rural areas. Since Sears did a large amount of business in rural areas, the company began calling the catalog the "farmer's friend." Country storekeepers were very opposed to the catalogs, because when Sears first published its catalog people were delighted that a company could actually deliver merchandise to people's homes. Country storekeepers lost sales as a result of Sears's policy. Because of these problems, storekeepers began taunting Sears and Roebuck with the nicknames of "Rears and Soreback" Rural newspapers refused to print Searsis ads, and children were even given ten cents or a movie admission pass for every catalog that they turned in. The catalogs were then sometimes publicly burned. In response to this problem, Sears began mailing orders without the name of the buyer on the package, and even reprimanded storekeepers in one of their catalogs: "As a rule, the merchant from whom you buy, adds little profit to the cost of goods as he can possibly afford to add. For example, a certain article in our catalog is quoted at $1.00, while your hardware merchant asks for $1.50 for that same article...."
In 1906 Sears opened an office in Dallas, Texas, that six years later blossomed into a mail-order business plant. This plant offered customers in the Southwest advantages, including lower freight rates, faster delivery, and reduced damage to merchandise. Sears wrote after he opened the office in Texas: "If with this trail we can get any success, the next place will get the kind of preparation that will insure success, and encourage us to cover the United States rapidly with 10 or more branches." In 1906 construction started on a forty-acre, five-million-dollar mail-order plant and office building on Chicago's west side. When it opened that same
year, the mail-order plant, with more than three million square feet of floor space, was the largest building in the world. That same year, Sears wrote:
"We do comparatively very little business in cities, and we assume the cities are not our field—maybe they are—but I think it is our duty to prove they are not." The people who lived in cities were not very good catalog shoppers, because they shopped in city stores close to them. That is why the people who lived in rural areas were good catalog shoppers, because the catalog brought the luxury of store shopping to their own homes.
Between 1908 and 1940 Sears sold "mail-order homes." The kits were sold with more than thirty thousand parts, including manuals for plastering, plumbing, electrical work, and heating. These houses, priced between $2500 and $4650, were the dream houses of most customers of that time, because of the high price of homes in overcrowded cities. By 1910 Sears was marketing more than one hundred thousand items through its general catalog and some seventy special catalogs. A year later, Sears opened a testing laboratory to insure the quality of materials. This laboratory eventually became known as the "watchdog of the catalog."
In 1913 Sears sold his share of stock and retired from the business. On September 28, 1914, Richard Sears died at the age of 51. Julius Rosenwald became the president of Sears. In 1922 Robert E. Wood arrived at Sears. He told his new colleagues he saw new opportunities for Sears because of the change in population from rural to city.
When Rosenwald passed the management of Sears to Robert E. Wood, the usefulness of the catalog had already begun to decline because of the population shift from rural areas to cities. Wood and his colleagues at Sears saw the change of population reflected in the lower numbers of customers; therefore, in 1925, Sears opened the first of many retail stores in cities under vice-president Wood. The retail stores eventually began to appear in rural communities.
In 1931 retail sales for Sears topped mail-order sales for the first time, when store sales accounted for 53.4% of total sales. In 1932 Sears established the store planning and display department, a notable event in the history of retailing. Traditionally merchandise had been fitted into the building, but now the buildings were built around the merchandise. This practice of building the structure around the product continues today. Companies measure the number of square feet needed to fit a certain product, and they build the store using those figures.
About 1932 Wood recognized the need for affordable auto insurance. Allstate Insurance was his answer. Originally, Allstate only operated by mail, but in 1933 management discovered that most sales were being made in smaller towns where the catalog business was big. Also in 1933, Sears sponsored the World's Fair in Chicago, Illinois.
World War II stopped retail expansion and even forced some stores to close. During the war, Sears lost many customers because many men and women were fighting in the war. After the war, expansion resumed, and in 1945 sales exceeded $1 billion. In 1953 Sears opened its first branch in Canada, known as Simpson-Sears Limited. In 1969 Sears announced plans to build a new national headquarters building in Chicago. The landmark 110-story building opened in 1973 and is one of the tallest buildings in the world.
Sears held the title of largest retailer in America until about a decade ago when Wal-Mart surpassed it. Even though Sears has declined in popularity through the years, many companies today still use retailing methods established by Sears. In 1989 Sears announced plans to move from the Sears Tower to Prairie Stone in Hoffman Estates. In 1993 Sears closed its catalog operating distribution plants, and in 1997 Sears sold most of its majority interest in Sears, Roebuck de Mexico. At the close of that same year Sears operated 833 department stores, mostly located in the nation's malls.
Sears has changed the way America retails very drastically. It started as a catalog retailer with many rural customers. The catalog retailing industry was a tough business to work in because at that time country storekeepers in the rural areas did not like the idea of mail-order business at all. Word also got out that Julius Rosenwald was Jewish and that he supported causes for blacks. The storekeepers jumped on this opportunity to taunt Sears even more. Sears ignored this and went on retailing as before. During the 1900s, Sears became a symbol of America, known for the quality and quantity of the items offered. Sears always promised that a customer did not have to pay for an item until it was delivered and the customer was satisfied with it. That is why Sears adopted the motto "Send No Money." Even though Sears has declined in popularity through the years it still offers the same things it did one hundred years ago, a money-back guarantee and low prices. The Sears way of living may be gone, but its imprint on retailing in America remains.—[From Frederick Asher, Richard W. Sears; Barbara Brackman and Merikay Waldvogel, Patchwork Souvenirs of the 1933 World's Fair; Louis E. Asher and Edith Heal, Send No Money; Boris Emmet, Catalogs and Counters; Cecil Hoge, Sr., The 1st Hundred Years Are the Toughest; Tom Mahoney and Leonard Sloane, The Great Merchants; Sears, Roebuck and Co. Sears, Roebuck and Company History, http://www.Sears.com/pub-aff/historyl.html; Gordon L. Weil, Sears, Roebuck USA; M. R. Werner, Julius Rosenwald; James C. Worthy, Shaping an American Institution.]