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That philosophy of trying to get more sales out of existing customers was behind Sears' acquisition in December 1981 of Dean Witter Reynolds Organization stockbrokers and Coldwell, Banker, a national real estate firm. When Sears was struggling to get out of its 1970s slump, a strategic planning committee looked at diversification. Recalls President Archie Boe, 62, who will retire next March: "We studied every industry in the U.S." After looking at areas as diverse as steel and automobiles, Sears decided to go into financial services.
The company already had one remarkably successful entry in the field, Allstate Insurance. Founded in 1931 to sell automobile insurance by mail, Allstate is the most profitable Sears group. Through September this year, it earned $418.5 million on revenues of some $6 billion. Sears also owns Allstate Savings and Loan Association in California, with 87 branches; a San Francisco mortgage insurance firm, PMI; and Allstate Enterprises, which specializes in consumer loans. Brags Allstate Chairman Donald Craib: "We invented the wheel. It's been successful."
Now Allstate is linked with Dean Witter and Coldwell, Banker in financial centers in 133 Sears stores. Though observers remain skeptical about the wisdom of selling stocks and socks or blouses and houses under one roof, the financial s outlets, which are located in stores in the hard-goods departments, have been successful. Dean Witter says it is opening 3.5 new accounts in some Sears stores for every one at its conventional offices. For its part, Coldwell, Banker is on track with an expansion plan that will more than quintuple its sales force by 1988. Sears plans to add 150 more financial centers next year.
The combination of all the companies gives Sears enormous reach. Dean Witter, for instance, can sell federally insured money-market accounts through Allstate Savings and Loan. Coldwell, Banker has started offering discount coupons on Sears merchandise to home buyers in 28 states. Sears is considering the introduction of a universal credit card that will be able to handle any household financial transaction, from buying a pair of gloves to arranging a second mortgage. It also wants to acquire savings and loans or banks. Chairman Telling told stockholders in May: "We can greatly broaden the activities of our financial network and give our customers a far more efficient method of saving and spending their money."
That will place Sears even more squarely in competition with financial firms such as Merrill Lynch, American Express and Citicorp. Sears' huge base of cardholders will give it an advantage in the tough battles on the way. Says Stuart Greenbaum, professor of banking and finance at Northwestern University: "Sears could end up being the biggest bank in America without much trouble."
To complete the transformation of the Sears empire, Chairman Telling agreed to a request from the board of directors to stay on for 19 months past his planned retirement next May. The question of his successor is unsettled. In a company with this broad a sweep, the next chairman could come from the insurance, financial services or merchandise divisions.