Blocking and Tackling

Sears merged with Kmart in 2005, but the new company lags because of weak fundamentals.


It might seem like a credit union can't learn much from a retailer, but in October we highlighted what credit unions could take away from Blockbuster’s bankruptcy in October. Now, Sears is in the crosshairs, and the retail veteran’s mistakes are directly applicable to credit unions.

An article in The New York Times reported on the difficulties the chain is having carving out a product niche and giving its image a facelift. Sears merged with Kmart in 2005 to form Sears Holdings and hasn’t crafted an identity since. Here are the manifestations of the wayward past few years.

  • Revenue dropped more than 10% from 2005-2009; revenue of major competitors Walmart (up 31%), Target (up 24%), and Macy’s (up 5%) climbed.
  • Sales dropped 1.9% over the same period last year.
  • The company isn’t investing in stores that are in need of repairs or relocation. Last year, capital spending was just 0.82% of sales.
  • Sears is strong in the appliance world. It lead the market in appliance sales in 2009, but its numbers were still down 8.2% and competitors' numbers are rising.
  • The company is trying to capitalize on young celebrities for fashion sales and is placing a new emphasis on online sales. The results of such a strategy are far from guaranteed.

Sears Holdings is letting slip the blocking and tackling that initially helped the company succeed. The stores are in poor condition and the company is spreading itself thin rather than focusing on what’s worked. And because of a merger, it has lost its identity.

Credit unions must not make the same mistakes. They must properly weigh any merger before moving forward. Consider what each credit union will lose in the process? What will each gain?

And credit unions should never let the building blocks of success get lost in the cracks. Member service. Cooperation. Problem solving. These are to the cooperative movement what appliances are to Sears. They are the fundamentals, and they demand constant attention.

Sears isn't dead, but it's been lackadaisical enough to put itself in danger. Credit unions should avoid a similar attitude.


Dec. 22, 2010


  • Would a credit union offer a special savings or CD rate, or a reduced auto or home loan interest rate at only some of its branches? That would be crazy! But I get e-mails from Sears offering special deals and discounts on certain product lines or items that are not good at all metro area stores. So they don't apply to the Sears two miles away, but at stores 10 and 15 miles away - this in the city of Chicago, not a rural area. So I ignore them just as I would a CU offer that wasn't available at the nearest branch.

    -Jerry DeMuth
    Jerry DeMuth