Lehman Brothers Collection - Contemporary Business Archives

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Lehman Brothers Collection

Twentieth-Century Business Archives

Sears, Roebuck and Co. - Lehman Brothers Collection

Sears, Roebuck and Co.

List of Deals

Sears, Roebuck and Co. was founded by Richard W. Sears as the R.W. Sears Watch Company in Minneapolis. In 1886 a local jeweler gave Sears an unwanted shipment of pocket watches, which Sears then sold to agents who resold them at the retail level. After this success, Sears ordered and sold more watches, and within six months he had made $5,000. As Sears knew nothing about watch repair, he hired Alvah Roebuck, a watch repairman. Sears undersold his competition by buying up discontinued lines from manufacturers and passing on his discounts to customers. At various times from 1888 to 1891, thinking himself bored with the business, he sold out to Roebuck, but came back each time.

The famous Sears mail-order catalog was introduced in 1888. Originally eighty pages long, within two years the catalog had grown to 322 pages, selling clothes, jewelry, and durable goods like sewing machines, bicycles, and keyboard instruments. In 1884 the catalog cover proclaimed that Sears was the "Cheapest Supply House on Earth." The company changed its name to Sears, Roebuck and Co. in 1893. Roebuck was uncomfortable with Sears' financial gambles and sold his share two years later. Roebuck remained with the company as a repairman. Sears believed in continuous risk-taking and expansion. One of his innovations was the unconditional money-back guarantee.

The company went public in 1906. Sales rose sixfold between 1908 and 1920. In 1911 Sears began extending credit to its customers at a time when banks would not even consider lending to consumers. The company was hit by the depression of the early 1920s and posted a loss of $16.4 million in 1921. In 1925 it began to take on its current shape when it opened its first retail outlet in Chicago. Seven more new stores followed that year, and by the end of the decade 324 outlets were in operation. By 1931 Sears' stores topped its catalog in sales.

For its first forty years, Sears had targeted the U.S. farmer as its main customer, luring him with a combination of down-home earthiness and material luxury. Two postal service innovations, the rural free delivery system in 1891 and the parcel post rate in 1913, helped target this consumer by making it affordable to reach remote locations by mail. Sears quickly became the parcel post's largest single customer. The company recognized that the growing popularity of the automobile would make urban centers more accessible to outlying areas, broadening the customer base for retail outlets. Sears became the first chain to put free parking lots next to its stores.

In 1929 Sears arranged a merger between two of its suppliers, Upton Machine and Nineteen Hundred Washer Company, to form Nineteen Hundred Corporation, which would change its name to Whirlpool in 1950. The Depression had an impact on the company's sales, but thanks to cost-cutting measures, Sears posted a loss only in 1932. The company even diversified in 1931, with its creation of the Allstate subsidiary to sell auto insurance.

The onset of World War II brought about a sharp increase in military and consumer spending. In 1941 sales reached an all-time high of $975 million, a 30 percent increase over the previous year. Sales leveled off, and raw material shortages began to make durable goods more difficult to come by. As late as 1946 the company had to refund $250 million in orders that could not be filled. Military spending made up for the shortfall. During the war, Sears supplied the armed forces with just about everything that did not need gunpowder to make it work, and even a few things that did; some factories belonging to Sears were converted into munitions plants by the War Department. Sears also began its first foreign ventures during and after the war. In 1942 it opened a store in Havana, and in 1947 it opened stores in Mexico. Sears flourished upon the end of the war. Sales rose to $1 billion in 1945 and doubled over the next year. Anticipating an economic boom, the company began an aggressive expansion program. Building new stores in the path of suburban expansion, Sears quickly left its rivals in its wake. In 1954 it posted sales of $3 billion, while Ward, a competitor, posted merely $1 billion. At that time, Sears became a symbol of American prosperity. The Associated Press' Moscow bureau chief reported in the late 1940s that the most effective piece of foreign propaganda in the Soviet Union was the Sears catalog.

Sears was becoming a widely hailed living experiment in corporate management. Management decentralized the company and separated its merchandising operations into five regional "territories," with each given a high degree of autonomy. During the early 1950s Sears began to stock more clothing as durable goods sales lessened. Between 1951 and 1960 the company acquired virtually complete control of Warwick Electronics, which made Sears televisions, radios, phonographs, and tape players.

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