Richard Warren Sears And Sears, Roebuck, & Company Essay, Research Paper

Richard Warren Sears and Sears, Roebuck, & Company

Richard Warren Sears was born on December 7, 1863, in Stewartville,

Minnesota. He was the son of James Warren and Eliza A. Sears, both of English

ancestory. His father led anything but a happy life. He had failed in his quest

for gold during the California Gold Rush of 1849 and was a bitter soldier in the

Civil War, which he blamed on politicians. He had earned a sizable sum of money

working as a blacksmith and a wagonmaker, but he lost it all in a stock-farm

venture. Richard’s father gave up soon afterwards, leaving Richard to be the

family breadwinner at the age of 16.

Richard worked in the general offices of the Minneapolis and St. Louis

Railway in Minneapolis to support his family. He then decided to move Redwood

Falls, Minnesota, where he thought that he could earn more money because of the

small town setting. There he worked as a station attendant, doing chores for his

board and sleeping in the loft of the railroad station. In his spare time, he

learned how the mail-order business worked.

Richard got his opportunity to get into the mail-order business in 1886

when a shipment of watches from a Chicago wholesaler was refused by a town

jeweler. Therefore, the shipment sat in the railroad station until Richard

contacted the wholesaler, who offered him the watches for twelve dollars each.

He bought the watches and sold them by sending letters to other station

attendants describing the watches and offering them at the discount price of

fourteen dollars each. He sold those watches and ordered more to sell. To sell

these he advertised in a small way in St. Paul newspapers. He made a large

profit from this operation.

In a few months Richard made such a profit that he abandoned the railroad

business entirely and started his own mail-order business under the name of the

R.W. Sears Watch Company. In one year he made so much money that he was able to

begin advertising in magazines with a national circulation and move the business

to Chicago.

On March 1, 1887, he set up a shop on Dearborn Street in Chicago with a

staff of three people, one to handle bookkeeping and correspondence and two

stenographers. Soon after the opening of his new shop, he found a need for a

watchmaker to repair watches returned by customers. This watchmaker was a young

man by the name of Alvah Curtis Roebuck from Hammond, Indiana.

Richard Sears became even more successful by opening up the huge rural

market. His advertising was aimed at the farmer, who was independent and stayed

away from big companies. He portrayed himself to them as a fellow independent

businessman, and was able to prove it by his low prices and his willingness to

send watches on approval for just the payment of a deposit.

He was also able to succeed with farmers because he remembered life in

small towns with great affection. Although he enjoyed his commercial success, he

longed for the laid-back, small town way of life. In 1889, Richard sold the R.W.

Sears Watch Company for $72,000 and moved to Iowa to enjoy the small town life.

Richard Sears would soon bore of his new life and decided to start a new

company with his old business partner A.C. Roebuck. This new business was about

the same as the previous one. It was a mail-order operation selling watches and

jewelry under the name of A.C. Roebuck and Company. This new business was even

more successful than the first, mostly because of its low prices and guarantee

of satisfaction.

In September 1893, A.C. Roebuck and Company changed its name to Sears,

Roebuck, and Company, the same name it carries today. Soon after, they moved the

company to Chicago, where they could fill orders more easily to their major

markets in Pennsylvania, Georgia, Texas, and Iowa.

Later that year the first of the Sears catalogs that have become so

familiar was made. The catalog was the key to the success of Sears. It used

simple, direct language that spoke to the nation’s farmers. The catolog would

claim that the goods featured inside were “the best in the world”.

The stress of this rapidly growing business was too much for Alvah Roebuck.

Richard Sears would take several financial gambles that would eventually make

the company prosper but would cause Roebuck to become uncomfortable. In August

1895 Roebuck sold his one-third interest to Sears for $25,000.

Although Roebuck decided to seek a quieter life, Sears had no intention of

doing any such thing. He married Anna Lydia Meckstroth that year. She later gave

Sears two sons and two daughters. His marriage and his growing family were all

he needed to drive him to keep building his company.

Soon after the departure of Roebuck, Sears sold seven hundred shares of his

company. Julius Rosenwald, a successful merchant of men’s suits who had done

business with Sears in the past, and Aaron Nausbaum, who had been in business

selling pneumatic tube systems, each purchased 350 shares. Sears would later

sell 150 more shares of his company to each, giving the three each 500 shares.

Although the introduction of Rosenwald and Nausbaum did bring badly needed

managerial skills to the company, it caused some problems. Nausbaum lacked the

human touch which was so important to Sears. He was rough on the people who

worked for the company, not hesitating to furlough them when he needed their

paychecks to meet overdue bills. There was an obvious personality clash between

the two which led to Sears and Rosenwald buying out Nausbaum’s interest in the

company for $1.25 million.

Sears continued to prosper in rural markets, including the rapidly growing

western frontier. This is because farmers in the West found the prices of

merchandise too high at their local general store, whose prices were inflated

due to several middlemen each taking a share as the goods moved from the

manufacturer. Sears, on the other hand, was able to offer its goods at a lower

price because he was the only middleman taking a share.

This utterly amazing growth caused problems for the company. The company

would need more space and more markets to continue its growth. This also meant

that the company would need more capital. This led to Rosenwald offering its

stock to the public as a way to raise capital. In August 1906 some $9 million in

preferred stock was offered. With the booming stock market, the public bought

the stock eagerly.

While Rosenwald was putting their financial house in order, Sears had

opened the company’s first branch mail-order plant. This plant was built in

Dallas. The branch mail-order plant meant that the company could save money by

ordering from local suppliers and avoiding considerable freight cost.

Sears and Rosenwald began to disagree on the path the company should take.

This disagreement became even bigger during the depression of 1907, when the

companies profits dropped by nearly a half million dollars, the first such drop

in company history. Sears wanted to increase advertising in order to increase

sales while Rosenwald wished to trim expenses to weather the financial woes.

Because Sears was in Europe at the time, Rosenwald’s approach to the depression

was taken.

After the depression was over, Rosenwald’s approach had proven to be best.

Sales remained steady and profits grew. This was enough to make Sears relize

that times had changed since he started his company. Shortly afterwards, Sears

resigned as president of the company and gave the position to Rosenwald. He then

assumed the position of chairman of the board, but resigned that position too

soon afterwards.

Richard Warren Sears died on September 28, 1914, in Waukesha, Wisconsin, at

the age of 50. During his life, Sears succeeded in a big way, having built a

company which has become an American institution.