willthrill81 wrote: ↑
Mon Oct 15, 2018 10:19 am
Interestingly, firms like Sears had far better capabilities to do what Amazon has done that Amazon did. Sears had cash, brand recognition, a supply chain, etc. But they viewed their business myopically, like most businesses do, defining it in terms of the product they sell rather than the value they provide. It's a story that has been repeated over and over and over. Kodak and Blockbuster did the same thing, as did countless other firms.
I can see that for Sears, perhaps. Especially keeping in mind Sears did successfully convert itself from mainly one distribution channel to another in the past. Originally it was mainly a catalog sales merchant, only later an operator of a huge network of physical stores. And the earlier 'Sears Roebuck' (as still called by my parents, though I think even when I was a kid they wanted to be called Sears) had a slightly different product mix. No kit houses in Sears stores later on.
But, they couldn't do it again in the internet age. In fairness though hardly any other mainly brick and mortar has managed it either. Some brick and mortars are, obviously, much better off than Sears financially and we must conclude have been better run than Sears. But challenging Amazon starting out as brick and mortar, even with brand recognition, cash etc. must be harder than it looks, if it looks easy to anyone. Not to say impossible of course. And someday Amazon too will probably be a sick old company which missed the last turn.
On Kodak and Blockbuster I think that's more an example of companies which have no real reason to exist anymore. Companies are supposed to invest owner capital at optimize sustainable profit, return on that capital, within the law*. Sometimes the optimal approach for shareholders is for management to milk the cash cow of an established obsolescent business then close shop when cashflow goes negative. Trying to totally reinvent the way Kodak or Blockbuster would have had to isn't necessarily in shareholder interest. It's not always bad from investor POV if managements accept the doom of their company. The problem is often IMO value destruction that occurs while the managements seek implausible reinventions of their companies to sustain *their* jobs.
On Sears, well informed analysis seems mixed whether Lampert's efforts were aimed just at his own benefit (mainly within his rights as the big shareholder, and operating with carte blanche wrt his own investors) or actually weighted too heavily toward the sustainment of Sears for its own sake, or the sake of stasis, the idea that companies should just carry on forever because otherwise it disrupts people's lives. But that's not realistic in general, or desirable necessarily.
*not seeking to derail the discussion onto the responsibilities of companies other than profit making. But I think that's argued about more than necessary relative to the statement I made. Usually if people want companies to do something they aren't doing, they eventually propose to make them do it via law. OK, then if the law is passed it's still 'optimize profit within the law', including the news things in the new law. OTOH when companies voluntarily do stuff perceived as 'socially beneficial' beyond the requirements of law, it's almost always because the managements think it's also good for long run profits. Managements voluntarily doing stuff they think is bad for long term profits (other than some cases where they realize it's bad for profits but think it's good for *them* personally) is too rare a case to worry about IMO.