Failure pattern · United States · 1893–2018
Sears: from America's biggest retailer to bankruptcy
Sears pioneered mail-order retail and was America's largest retailer for decades. After merging with Kmart in 2005, years of under-investment and internal division led to bankruptcy in 2018.
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
by the numbers
- Founded
- 1893
- Overtaken by Walmart
- 1989
- Kmart–Sears merger (2005)
- about $11 billion
- Bankruptcy
- October 2018
What happened
Sears began in 1893 and its catalogue brought goods to rural America — in many ways the Amazon of its time. It became the largest US retailer and built brands such as Craftsman and Kenmore. Walmart overtook it in 1989.
In 2005 hedge-fund manager Eddie Lampert merged Kmart with Sears in a deal of about $11 billion. Stores were starved of investment while the company bought back shares and sold assets. Lampert split the company into dozens of units that competed for resources, which damaged cooperation.
Sears filed for bankruptcy in October 2018. Its store count fell from thousands of combined Sears and Kmart stores to only a handful.
Timeline
- 1893
Sears founded.
- 1989
Walmart becomes largest US retailer.
- 2005
Merger with Kmart.
- 2018
Bankruptcy.
what went wrong
- Failed to translate its catalogue strength into e-commerce.
- Under-investment in stores.
- Internal competition between units.
the lesson
A company that once disrupted retail can be disrupted itself if it stops investing and turns its teams against each other.
Apply it to your business
- 1Keep investing in the customer experience.
- 2Design incentives that encourage cooperation.
- 3Your old strengths can map to new channels — use them.
Laws at work in this story
Figures are rounded and drawn from public reports, company filings and widely cited coverage at the time. Check the company's latest filings before relying on any number.