The End of Retail: Sears Loses $279 Million

Moneybox
A blog about business and economics.
May 23 2013 5:28 PM

The End of Retail: Sears Loses $279 Million

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BRAINTREE, MA - NOVEMBER 23: Shoppers wait in a check out line at a Kmart store during the Black Friday sales on November 23, 2012 in Braintree, Massachusetts.

Photo by Allison Joyce/Getty Images

Another day, another retailer posts a bad earnings result even as the economy improves. Today's victim is Sears Holdings Corp—i.e. both Sears and K-Mart—which has suffered declining sales for years. This year "sales at stores open at least a year fell 3.6 percent" and even more striking they lost $279 million in the quarter. A year ago Sears turned a $189 million profit.

Each company has its own particular problems, but as I noted even mighty Walmart is feeling the pain. The fact is that operating big stores full of physical objects that customers can buy just isn't the kind of sound business model that it used to be. Retailers are going to have to offer a compelling reason to shop in physical stores. That could be because your goods are perishable (Whole Foods) or because your shop is a kind of advertising platform and service hub (Apple). Or maybe you're a restaurant or a health care clinic. Or maybe there's just something really fun and awesome about your shopping experience that a large swathe of the population is really into. There are lots of options out there, but also lots of companies stuck in a basically dying model.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.