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Sears Demise – A Reason To Buy Gold?

Blog Mar 10, 2016

If you don’t check out the financial news or if you turn a deaf ear to the radio reports of the daily financial recaps on your commute to and from work, then maybe you are not aware of the Sears demise. The Sears demise is a long storied one, with quite a few chapters, and there are more than a couple financial analysts out there that think these may be the last chapters of the American novel that is Sears.

What does Sears, in demise or not, have to do with gold? Well gold and Sears are just part of American history and American culture that are too big to leave out of the rich story that is the history of the dawning of American greatness.

Sears And Roebuck Experienced Sears Rapid Growth, And Sears Demise.

The Story of Sears and Roebuck goes a little like this. Richard W. Sears had a job at a railroad. One day he had the opportunity to buy a small stock of unwanted new watches. Richard bought the watches and sold them for a tidy profit to his fellow railroad workers. He then ordered more watches to sell, and eventually began selling watches by way of mail order catalog.

Richard Sears Sold Watches , An early Sears collapse could have been very likely

It May Be Hard To Believe That Richard W. Sears Began Sears By Selling Watches At Work, But It’s The Truth.

With his newfound income stream, Richard Sears was able to move to Chicago, and this is where he met Alvah Curtis Roebuck, who joined Sears in his mail order business venture in 1886. This particular partnership would take Sears and Roebuck on a wild ride that would see Sears rapid growth, and unforeseen Sears demise.

Sears And Roebuck’s Rapid Growth Before The First Sears Demise.

Together Sears and Roebuck broke new sales ground. Back in the 1880’s and before – I told you this was American history – farmers usually purchased their needs from a local general store, often on credit at inflated prices, and they had to choose from a narrow selection of goods. Before we get to the rapid and exponential growth part, however, here is the history lesson:

Different prices for different folks. Often in the general stores of the 1800’s prices on items were not marked. The price that an individual paid for a particular item was based on a few factors. Race may be one. Financial ability to pay might be another, and the shopkeeper may just factor in whether or not he liked someone into the final price as well.

sears may have caused the demise of many general stores, but we may now be seeing a Sears demise

At The Old General Store, Farmers Had To Pay Whatever Price The Store Keeper Demanded, And Those Prices Were Not The Same For Everybody. Notice The Shopkeeper On The Right Behind The Counter. He Is Sizing You Up Right Now.

Sears and Roebuck actually broke new ground when they offered published prices that were the same for one and all. This sales strategy allowed the new Sears and Roebuck expanded mail order catalog to thrive like no American company ever had.

In addition to offering a whole new pricing structure for it’s products, Sears and Roebuck began to offer a lot of different products that most Americans had never seen or even pondered before. These newfound and now easily available luxury and lifestyle items were not lost on the American public that had dollars, and by the way these dollars were silver and gold back in the 1800’s and early 1900’s, and apparently plenty of them, to spend.

The Numbers: Sears Rapid Growth And The Near Sears Demise.

In 1894, the Sears and Roebuck Mail Order Catalog was more than three hundred and twenty pages, and had produced sales of over $400,000 the prior year. Sales swelled to $800,000 in 1895, but blood was in the financial waters. There was a full scale economic depression in 1893 that was the cause of the first near Sears demise. Roebuck wanted out and sold his half to a fellow by the name of Rosenwald and his associate, Mr.Nusbaum for $75,000. Eventually Nusbaum was bought out in 1903 for $1.3 million, so he did okay.

Mr Nusbaum Made A Killing, He Did Not Experience A Sears Collapse

Imagine Buying In For 3750 Of These $20 Gold Coins, And The Selling Out For 650,000 Of These Gold Coins 20 Years Later. Mr Nusbaum Did Okay.

As Rosenwald had a keen mind for business, he was able to expand offerings and streamline costs, and sales climbed past $50 million a year by 1907. From a box of watches to $50 million in just 20 years, that is an American success story, but it gets better.

Sears represents the first major retail Initial Public Offering in the history of American stock markets. In 1906, Sears and Roebuck & Co. Went public with an initial $40 million in stock offerings. Nothing quite like this had ever happened in American investment markets.

Things can only stay rosy so long however before the financial wolves come around and over power the smell of roses with their own unique stink of wealth decay, and this was again the case for Sears. Much like in 1893, there was another severe financial depression in 1919-1921. Sales dropped and costs soared. Merchandise sat unsold. Creditors defaulted. To avoid another Sears demise, Rosenwald pledged more than $20 million of his own wealth to keep Sears solvent and avoid a certain Sears demise.

$20 Million Dollars Out Of Pocket To Stave Off A Sears Collapse WillLeave You With Empty Pockets

Mr. Rosenwald Came Out Of Pocket $20 Million To Stave Off A Sears Collapse.

In order to survive business wise, Sears did what it was good at, beating the trends to market, and changing the market. In the 1920’s Sears began building the stores we know today, prior to this all sales had been by mail. Sears created new buildings that were easy for people with cars (and therefore money) to access, in blue collar neighborhoods, and now you could easily acquire Sears products without having to wait for them to be delivered. Ingenious.

So What Can You Learn From The Stories Of Near Sears Demise?

The story of the ongoing Sears financial collapse is a long one, and we have only covered the tumultuous beginning and the re-occurring near Sears demise cycle in this blog article. The takeaway is that even a seemingly rock solid American corporation like Sears will eventually end in demise. Gold on the other hand, is still financially relevant, and will be when they are knocking down the last Sears building.

By the way, the last Sears Catalog was published in 1993, and it ended an era. Own gold, it’s wealth transcends eras.

Huge sales from the Sears catalog made a Sears demise seem impossible.

The Sears Catalog Was Internet Shopping Before There Was Internet Shopping.

Thumbnail Photo We believe that everyone deserves a properly developed strategy for financial safety.

Lynette Zang

Chief Market Analyst, ITM Trading

Sources & References In This Article

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