Local Boys Make Good
Why Sears became America’s corner store
November 13, 1987
One of what seemed like the 37 pieces I did about Sears, Roebuck. I’d much rather review a book like Katz’s than to try to write one but reviewing one had its challenges; imagine one of the great old Sears stores in which the merchandise was not organized by department.
Adapted from my review of the same book in Across the Board.
Reviewed: The Big Store: Inside the Crisis and Revolution at Sears by Donald R. Katz, Viking, 1987
Ed Telling makes an unlikely hero. The highest compliment his own people paid the recently retired chairman of Sears was that they were willing to do anything he asked even though they never understood why. Wall Street at first couldn't understand how such a hick ended up running a $30-billion-a-year corporation. In 1981, Sears was considering the purchase of E. F. Hutton as part of its expansion into the booming financial-services sector. According to Donald Katz, author of the fascinating book The Big Store: Inside the Crisis and Revolution at Sears, Telling nixed the purchase after seeing Hutton's opulently produced annual report. "What in hell do we want with a company that has a silver annual report?" demanded Telling.
Yet this same Ed Telling saved Sears. He didn't do it single-handedly—nobody does anything single-handedly with a company that, at the time of Telling's election as chairman in 1977, employed close to half a million people and serviced a core of customers equal to the population of France—he did it with a little help. For nearly a century Sears had been what Katz calls the central warehouse of the culture, catering to the "power-mowing, casserole-consuming, hedge-trimming, winterizing, God-fearing American." Sales in 1972 neared $11 billion, a figure that did not include the business done by Sears's subsidiary, Allstate Insurance. At that time, three of every four Americans visited a Sears store at least once a year.
For all that, Sears in the '70s was a doddering chain. As the decade advanced, profits declined to near-Depression levels, and with them stock values. The company was hobbled by too many stores, too many executives, too many goods. The sales slump triggered internal conflicts. Store management hated headquarters bureaucrats in Chicago, the buyers hated the stores, and everybody hated outsiders.
By the early 1980s, Sears's retailing operation had turned around—revived to profitability, if not to its former preeminence. Some stores were closed, others were redesigned, and the system as a whole was streamlined. The peddler of washing machines and nearly-in-fashion ready-to-wear expanded into a potent purveyor of financial services when it acquired brokerage house Dean Witter and real estate agents Coldwell Banker. By the time Telling retired, in early 1986, Sears, Roebuck & Company was as unlike its postwar self as that postwar company had been unlike the rural catalog giant that preceded it.
The Sears saga is told compellingly in Katz's The Big Store. It is not strictly speaking a book about a business, or even about business. This superior work of journalism, cast almost in the form of a historical novel, is about businessmen. Readers will learn from Katz what he learned from one of Telling's lieutenants: that "the company contained the stuff of moral conflict and human drama . . . on an epic scale."
One of Telling's dreams was to transform Sears into the Great American Company, the corporate expression of its people's small-town values. A longtime Sears personnel chief said that the ideal Sears employee came from a town of fewer than 10,000 somewhere in the midwest. Telling came from Danville in downstate Illinois, one of the "sons of miners [and] sons of machinists and sons of farmers" that Sears since the 1930s had transformed into "sons of the sale." Its phenomenal growth—success was any item marked "Sears" for an entire generation of small-town and suburban Americans—happened because the people who ran it had grown up wanting the same things that other Americans wanted. Its veteran executives saw retailing as a form of referendum in which the will of the People could be expressed; in a nation dedicated to consuming, buying may be the closest thing to real democracy there is.
The erosion of Sears's retail profits in the '70s had its conventional economic explanations. Specialty shops like the Gap and discount retailers like K Mart nibbled at Sears's traditional market. Inflation and a saturated market for such traditional Sears sellers as refrigerators didn't help. But Katz makes clear that Sears's more fundamental failure was cultural. After some 40 years, the people who ran Sears were no longer just like the people who shopped there. The white male World War II vets who comprised most of the company's corps of 17,000 senior execs had trouble adjusting to the fact that America had changed, that most people of modest means weren't white anymore, for example, and that people bought labels instead of value.
A well-connected deal maker from Washington, D.C., described Sears to Katz as "a relentlessly Midwestern thing." It could be said that the company was based in Chicago as much out of conviction as out of convenience. The wider world of arts and politics seemed not to interest the merchant kings. (Katz notices during a visit to the suburban condo of one top manager that his coffee table reading consisted only of Sears catalogs and Golf Digest.) Nearly all the college-trained men Katz profiles graduated from such schools as DePaul, Northwestern, Marquette, Notre Dame. No matter where they were from, most senior men adopted what Katz describes as a transrural twang. And the main course at every Sears banquet meeting was steak, a regimen so relentless that the members chatted about their triple bypass operations, Katz says, the way other execs might chat about golf handicaps.
The aggrieved provincialism of the Sears top managers was a trait of long standing. Katz explains the curious fact that the east coast, which is the nation's richest retail market, had always been among the weakest of Sears's territories: the legendary Sears chief "General" Robert Wood had deliberately channeled expansion funds away from the east because it contained what he called "the evil city" of New York. To the General, New York was "a moribund place laden with sick markets and a decadent citizenry. It was full of liberal, Harvard-educated ethnics [and others] who did things the increasingly reactionary leader . . . never liked—such as controlling the American capital markets and starting World War II." The east, in short, wasn't good enough for Sears; real Americans lived in places like Paducah and Keokuk.
Telling and his lieutenants felt much the same. Katz notes that more than one deal with New York financial types was complicated because of the "Middle American chips" Searsmen carried on their shoulders. If much of industrial America looked down on retailers for merely selling things instead of making them, Searsmen looked down on people who sold pieces of paper instead of things. Katz was there as Telling left a reception one day at the Morgan Stanley & Company investment bank. Anonymous in an elevator crowded with Wall Street's youngest and yuppiest, Telling boomed out to a companion, "Say there fellas, jus' what is it this here Morgan and Stanley outfit makes, anyhow?" His startled fellow riders rolled their eyes; Telling laughed.
That Sears in the '70s should have been judged by both customers and consultants to be old-fashioned is ironic. The company had succeeded by anticipating change. Katz describes Sears as singular in the history of enterprise: in less than a century, it had been "founded and refounded three times by three charismatic business geniuses." The first of this trio of wizards was Richard Sears, who liked to boast that he could sell a breath of air. He was followed by Julius Rosenwald, who made the former "Sears & Roebuck" into a catalog merchandising empire. After Rosenwald came the General, who transformed Rosenwald's supply network into a massive chain of retail stores catering to an America newly mobilized by the automobile. It was Sears, Roebuck that pioneered the use of consumer credit, and Sears, Roebuck that first built stores in the remote urban fringe on sites surrounded by plenty of free parking, anticipating the mall. But like most aging enterprises, Sears by the 1970s had "risen to utter dominance of its economic sphere, only to find that its necessarily bureaucratic order had curtailed innovation and change."
The man who revived the ailing merchandise group at Sears was Ed Brennan, Chicago-born son of a Searsman. Katz suggests that tumult in companies like Sears offers opportunities for the crazier corporate types to rise. Brennan seemed to Katz to regard retailing as "the stuff of moral drama." Certainly he seemed to regard an untidy display as something akin to sin. Katz catches him in a revealing moment: waiting in the executive garage beneath Sears Tower, Brennan became enraged by the litter he saw strewn about and began picking up handfuls of it—this from a man who the day before had been named president and chief operating officer of one of the biggest companies on the globe.
It was Brennan who oversaw Sears' Store of the Future in the early 1980s. Sears being Sears, Brennan's new store layouts and displays actually amounted to a Store of the Recent Past, but they excited enough shoppers that the disastrous slide in sales was stemmed. But while Brennan gave Sears' retailing a boost, it still wasn't fully revived. This year, although the company's overall third-quarter earnings were up, the profits from Brennan's old group, the merchandise group, were still flat (Brennan was promoted to chairman and CEO upon Telling's retirement in 1986). One industry analyst told the New York Times that Sears stores still suffer from uninspired presentation and merchandise.
Sears made its name (and because of its relatively higher markups, a big chunk of its profits) partly by selling its own private-label goods—Kenmore and Diehard, for example—goods manufactured for it by such suppliers as Whirlpool and Toshiba. But less than a week after 1987's disappointing third-quarter sales figures came out, Sears announced that in 1988 it would break its 60-year tradition and begin carrying brand-name appliances and home electronics products. The aim is to appeal to what a company spokesman described as a "broader range of customers"—including the millions who no longer regard the name "Sears" as magic. As Brennan liked to tell his troops soon after he took over the demoralized merchandise group, it will never be 1955 again.
In an insightful review of The Big Store in the Atlantic, Nicholas Lemann said this about Searsmen: "Everybody knows that in some way they represent the absolute center of this country, and yet we're conditioned to think that there's something boring and insignificant about them." As Lemann added, their very typicality makes them difficult subjects. It is proof of the quality of Katz's work that he makes them as interesting as he does. But if, as Katz insists, Telling can be seen as a de Gaulle, and Brennan a Cassius, they are such only in a corporate context. One of the few Searsmen whose personality almost vibrates on the page is the late "Jumpin' Joe" Moran, who liked to quote Aeschylus in his communiques about men's dress slacks. This is a lovely eccentricity in a top exec—for Katz it must have been like finding a Titian hanging in a Holiday Inn—but it is not genius, as Katz suggests. Whatever his charms, Moran ended up being remembered only for his memos.
Katz never quite solves the riddle of small men who do big things. No shame in that: our novelists have dissected the tycoon, the entrepreneur, the Babbitt, the huckster, but the corporate bureaucrat has escaped them. (Sloan Wilson may have come closest in The Man in the Gray Flannel Suit.) The founders of commercial empires have their kin in politics and the military, even the arts; General Robert Wood, for one, was a sort of Roosevelt of ready-to-wear. But the men who come after, to run those empires, are harder to illuminate. Telling said something crucial when he remarked to Katz that he had never had any power as chairman. Telling apparently meant that his power derived not from his personality but from submerging his personality in the company. Telling became Sears, and Sears made him powerful.
Telling would tempt any novelist. The chairman craved company but seldom conversation; he often asked colleagues to accompany him on strange, silent walks. He once promoted a waitress from the old west-side headquarters to a Tower job because he was impressed by her ability to peel a grapefruit without leaving any rind. His natural style of discourse derived from what Katz describes as the hee-haw tradition of the American vernacular, but he was also surprisingly well read. He once wrote a speech for a college commencement that knowledgeably compared the rival philosophic traditions of Hume, Smith, and Burke, on one hand, and Voltaire, Descartes, and Rousseau on the other. If at other companies one pretended to know more than one did, at Sears one pretended to know less.
In the end, Katz concludes of Telling that he was a "hopeless romantic," if only because he believed that people could actually change things. But Katz also found that beneath Telling's rube exterior lurked "fury, methodical dedication, and grand designs." Katz sensibly shrinks from making the connection, but there is something almost Ahab-like in Telling's career. Far from the unquestioning company man, Telling loathed the vaunted Sears system that rewarded age over youth, and staying power over talent. He despised the decentralized management system that left so much power in the hands of managers renowned for their arrogance and incompetence. (That system, by the way, in the '70s left Sears vulnerable to legal actions alleging patent violations, hiring discrimination, and bait-and-switch sales practices.)
Telling's fury is dissected in a key chapter that recounts his early years with Sears. Like so many Searsmen, Telling came from a small town, and like them he worked for Sears because he had to. Sears tested the loyalty of its people with low pay and frequent moves, and while Telling forbore he never forgot. He had suffered humiliation at the hands of local managers under a system he eventually destroyed; his later insistence upon company transportation to get him home each night may seem merely indulgent, until one learns that as a novice he was expected to ride the store circuit in his own car, the only one he had, leaving his pregnant wife to haul groceries home in a toy wagon.
Telling was a revolutionary in the making in those years. Once in power he surrounded himself with "several super-sensitive and insecure men, some deeply religious men, some obsessively ambitious, several quite short men" into a "private band of irregulars" who had in common only that they, like Telling, "never fit into the status quo" at Sears. Telling's genius was to recognize the fires that burned in him burning in other people. Katz concludes, "The crisis caused only the most politically attuned, most mysterious, and least stable of Searsmen to rise to the top, for only they had the slightest notion of what to do." In many ways Telling was the most attuned, the most mysterious, and the least stable of them all.
Although The Big Store is a big book, the diligence required of the reader is nothing compared to the author's. The book took five years to complete; Katz's notes and interview transcripts totaled more than 10,000 pages. He even worked the floor during a madhouse Christmas week at a suburban New York outlet to get a worm's-eye view of the company.
Breadth of research is no longer rare in such investigations: witness Robert Lacey's Ford: The Men and the Machine and David Halberstam's The Reckoning (about postwar Ford and Nissan). What makes Katz's account unique among insider accounts is how far inside he was able to get. Katz is a journalist, not a businessman, but at Telling's command he enjoyed access to the highest levels of decision making at a crucial point in the history of one of the world's major corporations. He sat in on the board meetings, flew on the corporate jets, wandered the golf courses, witnessed the deals.
Often the results are almost poetically suggestive, as in the scene where the restless Telling paces his office on the 68th floor of the Sears Tower, unable to find a comfortable seat, or when master merchandiser Brennan compulsively straightens the hangers in a Florida men's department. Of recent books about corporate life, perhaps only Gay Talese's book about the New York Times, The Kingdom and the Power, comes close to The Big Store's intimacy.
It is likely that most of the people profiled in this book will hate it. Katz himself does not presume to know, although he guesses, why Telling allowed him to listen in on what corporations think of as family secrets. Sears was perhaps even more secretive than most during much of its history, its natural distrust of the educated east extending inevitably to the media. Katz does not condescend to his cast, although he has lots of chances to; he writes that he liked all the people he dealt with, and there is little reason here to disbelieve him. But even Katz's generosity does not entirely mask what many will see as the debasing life of the institutional loyalist—the cap-tugging in the presence of superiors, the hewing to the company line. Some unhappy retirees, forced out of the company, still instinctively checked with Sears' PR staff before agreeing to talk to Katz. Others still actively employed talked to him even though they worried that he was a covert talent scout for Telling or on somet mission nefarious but unknown. All Sears employees seem to pay tribute to a chairman's power to compel cooperation: they may have been skeptical about Katz's efforts, but if Telling wanted it, they'd talk.
In the end, Katz wondered whether Telling was simply hoping to be able to read an account of his tumultuous reign that would ring true. In Telling's opinion, the business press and the national news magazines certainly had not provided one. Truth in this case demanded an outsider, not just a non-Searsman but a non-businessman. The existing vocabulary of business life, Telling apparently believed, was hopelessly inadequate to describe what business is really like. That is why so many accounts of business ring false--and why this one, despite its occasional over-inflated sense of significance, rings so resoundingly true. ●