Richard Warren Sears and Sears

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.