Me entiende!* Sears in Mexico
The fifth in a series on Who Killed Sears and Kmart. The success of Sears in Mexico.
This article originally appeared in Medium in July 2020.
This Sears location is clean and bright. The menswear section is filled with the latest fashions and takes up an entire floor. Women’s accessories fill the tables, but it still looks orderly. In fact, everything looks orderly. The furniture and appliance section is filled with customers. The toy section looks like it could rival Santa’s workshop. The mannequins are stylishly dressed with alluring poses. Everything about this Sears is different than any other Sears store you’ve been in.
There is a place where Sears stores don’t look shabby and unkempt. But to go to one of these stores, you have to leave the United States.
Sears might be on its last legs here in the US, but south of the border in Mexico, Sears is doing well. While it shares the name of the American retailer, it is owned by Groupo Sanborns, which is owned by Carlos Slim, the Mexican billionaire considered one of the richest people in the world.
The difference between the two chains is the difference between an owner that cares about the company and one that seems to either not know what he’s doing or doesn’t care.
According to Bloomberg, Sanborns owns about 100 Sears across Mexico and which includes three brand new stores and plans to remodel a number of others. Sales are a mixed bag, but on the whole, positive:
In the second quarter of 2018, Sears sales declined 0.9%, according to the company’s financial report, whereas Liverpool’s sales went up by 7.4% in the same period.
Nevertheless, Hermosillo explained that the chain generates around 50% of all income for Grupo Sanborns, one of several subsidiaries under the Slim-owned Grupo Carso umbrella.
The former has invested around 2.3 billion pesos (US $122 million) this year and by the end of this year is expected to have opened a fourth new Sears store.
In an attempt to boost sales and better compete with its rivals, Sears México is also updating its image by increasing promotion of its fashion lines rather than home appliances, furniture and hardware as it has traditionally done.
It’s fascinating that in Mexico a brick and mortar store like Sears invests in their locations and finds ways to compete in the marketplace. This is a big contrast to Sears here in America where stores were left to languish and the leadership has no real ideas to compete with its competitors. Over the last eight or nine years, former CEO Eddie Lampert talked about a turnaround plan, but a plan never materialized, other than more and more closing stores. Some people think that Lampert bought Sears and KMart in order to get the land-he had no concern for the stores themselves.
A few years ago, I wrote how Kmart in Australia is doing somewhat well after years in the doldrums. Retailers want to make money, but they want people to buy what they sell and they want to make sure the experience in buying is a good one. That seems to be the case in other countries. It should be the case here in America, but it feels like American capitalists forgot about the customer.
More and more American businesses are owned by private equity firms or hedge funds. In the case of Sears, Eddie Lampert is a hedge fund manager. Nothing is inherently bad about private equity or hedge funds, but when they start owning businesses, there seems to be an emphasis in squeezing the business to make a profit, not caring about the mission of the business.
The example of Sears in the US, along with the private equity debacles at Toys R’ Us and Digital First Media are proof positive something is rotten in American capitalism. There is nothing wrong with making a profit. It’s just when it becomes the main thing above customer service or employees.
Sears in Mexico reminds us when capitalism in the United States was more humane. It’s great to see Mexicans going to department stores that want to please the customer and make a little money. I wish we in America could go back to those times.
Me entiende is the tag line for Sears Mexico. It means, “You Understand Me!”