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Diversification had cost Sears its profits and took the company away from its core business of merchandising. But beginning from the 1990s and through two turnarounds, the company is making every effort to go back to its roots. Its first attempt at the turnaround was a major success while the second one is showing promising signs.
For most of the past century, Sears Roebuck and Company was the darling of American households. It used to be the largest retailer in the United States, with sales representing one to two percent of the United States gross national product for almost 40 years after World War II. Then during the 1980s, Sears diversified into other businesses, hoping to provide middle-class consumers with banking, investment, and real estate services in addition to its traditional retail business. At the same time, it shifted its focus inward, to the interests and needs of its huge bureaucracy, all at the expense of the customers who found themselves in declining, dismal stores. The diversifications carried Sears away from its roots in retailing, giving way to rivals to fill the top spots. Sears steadily lost ground, moving from the Number 1 position to Number 3 behind discounters Wal-Mart Stores, Inc. and Kmart Corporation. The company completely lost its way but only to find it again under Arthur Martinez, who was brought in from Saks Fifth Avenue. He led the company through two transformations that saw the American retailing idol of yore return to its long forgotten roots. The first turnaround happened in 1994 and the second one in 2000. Today, Martinez's successor, Alan J Lacy is trying to sustain the turnaround.
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