Richard Sears Sears

Richard Sears Sears The Illinois Business Hall of Fame Our laureates and fellows exemplify the Illinois tradition of business leadership. Aaron Montgomery Ward formulated the ered that there was a lucrative market for basic principles of the mail order business mail order watches. And he discovered that and founded a successful business based on he had the ability to write advertising that those principles. Richard Sears elaborated could tap that market. In 1886 he decided to the principles and, with his flair for sales pro- quit railroading and devote himself full-time motions, built an even more successful mail to the direct mail selling of watches. A year order business. later Sears moved to Chicago and adver- tised for a watchmaker who could assemble As so often happens in the business world, watches from components that Sears would Sears got into the mail order business by buy. Young Alvah Curtis Roebuck answered accident, and then made the most of his the ad and was hired on the spot. good fortune. He started work as a manual laborer at a Minnesota railroad station. He The business of the new R.W. Sears Watch was promoted to a position as a telegraph Company grew rapidly. Roebuck assembled operator and then as station manager. As the watches and Sears sold them through manager he was encouraged to develop a heavy advertising in farm magazines, and trading business among local farmers, Indians the provision of installment credit. He began and townspeople. By accident he discov- to add other jewelry items for sale and in 1889 a money-back guarantee was added Richard Sears’ marketing skills were not to his advertising. Despite the company’s balanced by administrative abilities. He had success, Sears sold out to Roebuck in 1889 trouble controlling costs. Liabilities rose to and tried a new career in banking. But bank- three times the amount permitted by the ing did not provide the excitement Sears had company’s charter. Alvah Roebuck became found in mail order. And so, in 1893, Sears concerned about his personal liability and rejoined Roebuck. Their new partnership was decided to sell his interest in the company named Sears, Roebuck and Company. By to Sears in 1895 (unlike Richard Sears, Alvah this time the company had a mail order cat- Roebuck was not a risk taker). Sears bought alog of 196 pages advertising a wide range Roebuck’s stock and then sold part of it to a of merchandise from jewelry to furniture and new partner, Julius Rosenwald. clothing to musical instruments. With Sears promoting sales and Rosen- Working a 12 hour day, 7 days a week, wald providing efficient administration, the Richard Sears set out to catch up with indus- company entered a decade of outstanding try leader Montgomery Ward and Company. growth and profitability. But there were ten- The strategy was the same – low price, heavy sions between Sears and Rosenwald. These advertising and a money-back guarantee. came to a head in 1907 when the nation But Richard Sears was able to execute the experienced a severe financial panic and for strategy more effectively and within 10 years the first time in its history, Sears, Roebuck and he had caught up with and surpassed the Company failed to set a new sales record. sales volume of Montgomery Ward and Richard Sears wanted to increase advertis- Company. ing to offset the decline. Rosenwald, on the other hand, wanted to cut staff and other Sears was a promotional genius and a risk expenses and await the general upturn of taker. A classic example of these two talents the national economy. The conflict was put at work is the 1901 cream separator promo- to a vote of top management. Rosenwald’s tion. Nobody except Sears thought cream conservative, cost-cutting approach won. As separators could be sold by mail. The prod- a result, the company’s profit performance uct was a complex piece of machinery re- improved in 1908, even though sales de- quiring a local dealer to set it up and service clined as anticipated. it. But Sears was willing to gamble on a hunch that farmers would buy from his catalog if the This episode, combined with Sears’ ill price were low enough. He found a manu- health, caused him to resign as president facturer willing to mass-produce cream sep- of the company on November 21, 1908. He arators at one-half the going price. His ad- kept the title of chairman of the board, but vertising overcame the fears of the customer, never attended a board meeting. For all and his mail order company bypassed the practical purposes, he had severed his ties local agents to capture a large share of the with the company. Six years later, he died. cream separator market. WESTERN ILLINOIS UNIVERSITY Copyright 2016. This is the intellectual property of The American Business Hall of Fame (ANBHF) and the Illinois Business Hall of Fame (IBHF). All rights reserved. No portion of this document may be duplicated, redistributed, or manipulated without the express permission f the IBHF..

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