GfK Audits & Surveys National Retail Census 2005

A political debate is underway concerning the merits of teaching the theory of intelligent design along with the evolutionary principle of natural selection in our nation's classrooms. While these concepts are usually thought of in the biological sense, they're also useful in examining America's ever-changing retail landscape. Take the case of Sears, Roebuck and Co., for example. It was clearly the product of both intelligent design and evolution. In 1886, Richard Sears worked as a railroad station agent. When a shipment of watches arrived that a local jeweler didn't want, he bought them himself, and sold the timepieces at a nice profit to other station agents up and down the line. The next year, he moved to Chicago where he met Alvah Roebuck and began to make retail history. Sears and Roebuck knew most Americans -- 70% of them at the time -- lived on farms, miles from the nearest general store. Those stores charged very high prices because there were no economies of scale. Sears and Roebuck thought they could do better. Their mail-order catalog made the most of the expansion of the railroads and new postal services like parcel post and rural free delivery. Sears' sales jumped from $750,000 in 1895 to more than $10,000,000 in five years. Sears' money-back guarantee succeeded in persuading skeptical shoppers to trust a merchant most had never seen nor met. But the company's business plan -- to sell a wide variety of merchandise at discount to rural America -- became less compelling as their customers began to gravitate to cities. So, after 32 years in business, Sears opened its first retail store in Chicago in 1925. Despite the stock market crash of 1929 and the Great Depression that followed, that risk paid off. By 1931, its retail stores outsold mail-order for the first time. Two years later, Sears opened its 400th store. Most were built on the outskirts of cities, where land was cheaper and more plentiful. After the end of World War II, while still the largest retailer in the U.S., demographic change again challenged the fabled retail giant. Ironically, though it survived the Depression and war rationing, the post-war economic boom of the 1950s put Sears in unfamiliar territory. The appeal of utilitarian department stores waned as shopper's were lured by more fashion-conscious emporia and specialty stores. Over time, Sears lost many customers and with them much of the buying power it had to get goods at the lowest possible prices. Without its once-formidable price advantage, it eventually fell prey to the likes of Wal-Mart, The Home Depot and a host of specialty apparel stores. In March 2005, the wheel turned yet again. Kmart, the discount department chain that had evolved out of the S. S. Kresge five-and-ten-cent variety stores, merged with Sears. Both will continue to operate under their respective names but they are likely to share many of their proprietary brands, such as Craftsman, Kenmore, Diehard, Martha Stewart Everyday and Joe Boxer. More importantly, their combined annual revenue of $55 billion makes the Kmart-Sears combo the third larger retailer in the U.S. They hope that their combined size will restore the buying power they need to better compete against their two largest competitorsWal-Mart and The Home Depot. One of the first orders of business is improving efficiency in managing its supply chain. Sears, the company that once pioneered efficient retail data flow at its Chicago headquarters with the introduction of pneumatic tubes, is joining much of the rest of the industry in its effort to establish seamless integration of information between outlets, headquarters, suppliers and shippers. Intelligent design or evolution? The best retailers know it takes both to survive and prosper. About GfK Audit & Surveys National Retail Census GfK Audits & Surveys National Retail Census, now in its 52nd year, is the largest, in-person distribution measurement program conducted in the U.S. It is the most established and comprehensive source of reliable information on the number and kinds of stores in the country selling various product categories and specific brands. The National Retail Census provides manufacturers with the most accurate measurement of their product penetration and that of their competitors in every type of retail outlet carrying their product category. It's based on data gathered through in-person store visits to a national probability sample of all kinds of retail and service establishments throughout the country.

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