The Downfall of Sears and Kmart: A Reflection on Accountability
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Chapter 1: The Rise and Fall of Two Icons
This piece serves as a concluding reflection for those following the "Who Killed Sears and Kmart?" narrative. Instead of a traditional essay, it takes the form of an enriched list, highlighting thoughts that may have been overlooked or deserving of deeper exploration.
Media Oversight: A Missed Opportunity
Throughout this discussion, I've pointed out that mainstream media has largely overlooked the true reasons behind the decline of Sears and Kmart. While sporadic coverage has occurred, the essential details were often buried or ignored entirely.
Why is this the case? One plausible explanation lies in the media's economic context. Both Sears and Kmart primarily catered to the working and middle classes. Having grown up in a working-class environment during the 70s and 80s, I witnessed firsthand how these stores provided affordable goods to the middle class. However, many journalists from prominent outlets like The New York Times or NPR belong to more affluent backgrounds and may not relate to the experiences of everyday consumers. As Batya Ungar-Sargon noted:
> "American journalists used to be blue-collar tradesmen... But journalism evolved into an elite profession for the highly educated."
This shift suggests that the voices of those affected by the decline of these stores were often absent from the media narrative.
Section 1.1: A Different Perspective from Canada
In contrast, Canadian media offered a more comprehensive examination of the situation. A report by the Canadian Broadcasting Corporation (CBC) on the closure of Sears Canada in 2018 effectively detailed the actions of Eddie Lampert and the board, along with their impacts on employees and pensioners.
While American media largely neglected worker experiences, Canadian coverage provided a more empathetic viewpoint.
The Architecture That Inspired Game of Thrones - YouTube: A look at how powerful narratives and structures can shape our understanding of industries and their decline.
Hedge Funds and Their Complex Role
One reason for the lack of coverage may be the complexity surrounding hedge funds and private equity. In the lead-up to the 2008 financial crisis, the intricacies of financial instruments like credit default swaps became increasingly difficult for the average person—and even journalists—to grasp.
The opacity surrounding hedge funds likely contributed to the misunderstanding of Eddie Lampert's management style. To truly comprehend how hedge funds operate, journalists must engage with these concepts and convey them clearly to the public. While some reporters have succeeded in this endeavor, the challenge remains significant.
Section 1.2: The Role of Eddie Lampert
In spring 1999, I experienced firsthand the struggle of shopping at Kmart when a faulty air conditioner led to a frustrating return. This experience underscores that both Kmart and Sears faced challenges long before their 2005 merger. However, many critiques overlook Lampert's substantial role in their eventual downfall.
Despite acknowledging past missteps, some argue that the chains were already in decline before Lampert's tenure. This narrative often absolves him of responsibility for the mass layoffs and plummeting stock prices that occurred under his watch. As journalist Warren Shoulberg stated in a 2021 interview, it is essential to scrutinize Lampert's impact directly.
Chapter 2: The Aftermath of Mismanagement
Under Lampert, the companies made drastic cuts to capital investments in an attempt to streamline operations. He implemented a structure that divided departments into competing silos, a strategy more suited for hedge fund management than retail. As a result, Sears invested less than 1% of its revenue back into the company from 2006 to 2017, leading to dilapidated stores and diminishing customer experiences.
Lampert may have succeeded in delivering significant returns to shareholders for a time, but this came at the expense of the company's long-term viability. Many shareholders appeared unconcerned with the low investments in store conditions as long as they continued to reap financial benefits.
The Bystander Effect: A Culture of Silence
A lingering question remains: why did no one intervene during this period? Investors seemed unperturbed by Lampert's actions as long as their returns were solid. This self-interest likely stifled dissent, allowing harmful practices to continue unchecked.
The narrative surrounding corporate ownership often pits community interests against shareholder profits. In the 1991 film "Other People's Money," the tension between these two perspectives becomes evident, suggesting a broader issue within corporate governance.
Who Will Be Held Responsible?
In light of the devastation caused by hedge funds, how can we prevent similar occurrences in the future? While proposals like Elizabeth Warren's legislation aim to impose stricter regulations on private equity, significant political divisions may hinder progress.
Canadian lawyer Jan Weir suggests revisiting elements of the Glass-Steagall Act to regulate hedge funds more effectively. However, without wider political support, meaningful reform remains elusive.
Missed Opportunities for Insight
Reflecting on this journey, I regret not interviewing more individuals directly impacted by the decline of Sears and Kmart. Conversations with former employees and retirees could provide valuable insights into the human side of this story.
Longshot Hopes for the Future
I still entertain hopes that an entrepreneur might revive the intellectual property of Sears and Kmart. Success stories in other countries indicate that with the right approach, these brands could potentially flourish again.
As we reflect on the legacy of Sears and Kmart, it is essential to hold individuals like Eddie Lampert accountable for their actions. The events that transpired are a cautionary tale about the potential pitfalls of capitalism when it prioritizes short-term gains over long-term stability.
In conclusion, while this marks the end of this series, the conversation about corporate responsibility and accountability is far from over. I hope this reflection encourages others to demand change and seek justice for those impacted by these corporate failures.