Nothing lasts forever, and this is especially true in the world of commerce. As the world advances, goods and services once deemed revolutionary will inevitably become outdated and replaced by something newer and better. And each time this process of creative destruction repeats itself, consumers benefit by getting access to better goods and services.
We’ve seen it with Blockbuster when it was replaced by Netflix and other streaming platforms. And we have seen it recently with Toys R Us, which could not compete with the age of internet retail. And we have even seen this with the entire newspaper industry, which is being replaced by online news platforms. Now, we are experiencing creative destruction once again with the closure of Sears department stores.
For the last 125 years, Sears has been a staple of American capitalism. But last week, it was revealed that the once great giant of American consumerism would be filing for bankruptcy and possibly closing all 142 of its stores forever. This has caused many Americans to feel extremely sentimental about Sears. And why shouldn’t they? After all, it completely changed the way Americans shopped.
Sears: An American Institution
In the late 1900s, Sears had blown Americans minds by making household items more accessible to the growing middle class. And in addition to the low costs, Sears would deliver whatever items you wanted right to your door, and in just a few weeks. Today, waiting a few weeks for a package might seem rather archaic, but before the internet era, this was a real gamechanger.
Sears was a one-stop shop for the American family. Its catalogs were shipped to households all across the country and the pages were filled with any item you could possibly want. From clothing to kitchenware and even larger household appliances, Sears had it all. In fact, few people actually remember that at one point in time, the company also sold homes. Consumers would pick the model they wanted and send in their payment and Sears would ship them the supplies to be assembled by the buyer. In fact, many of these homes are still in existence today, further proving the quality Sears provided to its customers.
The catalog also revolutionized black America after the Civil War. When Jim Crow laws were reeking havoc and dividing the South, regular trips to the store became a nightmare for many black Americans. But shopping from the Sears catalog allowed them to bypass having to shop at stores owned by racists and enabled them to do their shopping without fearing for their wellbeing.
And while Sears truly revolutionized the American shopping experience, it just can’t compete with the world of online retail.
Who Killed Sears?
Innovation is a perpetual quest without end and consumers should be thankful for this. Can you imagine how boring our lives would be if innovation had stopped at the radio? Instead of searching for the next best thing int he world of tech, we would all still be huddled around large, outdated radios waiting to get our news and entertainment. Likewise, imagine how truly absurd it would be for us to have stopped innovating transportation after the advent of the horse and buggy. Instead of having cars to get us where we need to go quickly, we would all be delayed because we were forced to use outdated means of transportation.
Economist Joseph Schumpeter described this process of the new replacing the old as creative destruction. Elaborating on this, he wrote:
“The opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.”
In order for entrepreneurs to innovate and provide consumers with better options in the marketplace, outdated products have to replaced by something better. And as innovative as Sears was in its heyday, it just cannot compete with the services Amazon Prime offers today. In fact, in many ways, Amazon Prime is the newer version of Sears.
Sears provided convenience to shoppers at the end of the 19th-century by allowing them to shop from their homes. Amazon, utilizing the technological advances that have occurred since the since Sears was founded, was able to take this step even further. Instead of waiting weeks for something to be delivered, Amazon can get it to you within an hour via Amazon Now. And while Amazon might not be selling homes yet as Sears did, they have just about everything else from clothing, to groceries, to food delivery services. In fact, in many ways, Amazon Prime is the modern-day version of Sears, providing convenience to consumers in a way they had never before experienced.
In fact, Sears is not the only retailer to be beaten by Amazon Prime. Many brick and mortar retailers, Toys R Us included, have had to exit the marketplace entirely because they simply do not have the means to compete with Amazon Prime. But this does not make Amazon the enemy, despite what its critics might say.
Right now, Amazon is succeeding because its services are so revolutionary. But we have no idea where innovation may take us in the future. Sears enjoyed over a hundred years of market success before it was finally replaced by something better, and it is likely that the same will happen to Amazon eventually. This is just the way the market works. And we should all be grateful.
To again quote the brilliant Schumpeter, “At the heart of capitalism is creative destruction.” So instead of mourning the loss of Sears, let us celebrate how lucky we are to live in a world where the market is constantly evolving and allowing consumers access to better goods and services.