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Shoppers kept coming into Sears stores, but they were buying less and less. At the same time, catalog sales were losing ground to newer, slicker competitors. Profit on retailing so dwindled that the Allstate Insurance division, started in 1931, accounted for more than half of Sears' earnings from 1979 through 1982. In 1981 "the merchant," as the merchandising group is known around Sears Tower, was hit by recession and squeaked out only $285 million in profits on sales of $20 billion.
Upon being named chairman, Telling, a 32-year Sears veteran, went after the problem like a skilled mechanic equipped with Sears Craftsman tools. His remedies were swift and drastic. Unprofitable stores in Europe and Latin America were sold off, as well as older stores in the U.S. and an almost new suburban one in Northbrook, Ill., that did not measure up to sales expectations. Between 1978 and 1982, a total of 201 smaller and older outlets were closed, some of them in black urban areas. In June, Sears' very first retail store, opened in 1925 in Chicago's Lawndale section, joined the casualty list.
Telling put a crisp business philosophy to work. Says he: "Taking chances is a fact of economic life.
Business must risk to grow. Fear of what may or may not happen is no excuse for avoiding challenges." He heeded the advice of a consulting team from McKinsey & Co., which had been called in by his predecessor, Arthur Wood, in a rare departure from Sears' policy of keeping its own counsel. McKinsey's recommendations included trimming back bloated management ranks and centralizing authority. Telling slashed the Sears work force by 82,180, about 20%; he got 1,500 merchandise-group managers to take early retirement in 1980 alone. He truly astonished entrenched Sears executives by giving Brennan, then only 46 and an executive vice president, full responsibility for reorganizing the merchandising division.
As the new head of the Sears Merchandise Group, Brennan came up with the "store of the future" concept. A third-generation Sears employee whose father and grandfather were Sears buyers, Brennan began a program to renovate Sears stores and redesign the company's product line. In Burlington, Mass., not long ago, he showed the whirlwind, cheerleader style that has become his trademark. He raced through the aisles, arranging displays, holding meetings, complimenting managers and clerks at registers. He stirred up intramural rivalry by telling the manager in the automotive section of his visit to a Sears store in California. Said he: "I've been out in Torrance." The manager's competitive comeback: "We have them on our target list." Brennan's retort: "They have you on their target list to beat."
Not everything that Telling touched turned a profit. Sears World Trade, which was launched in 1982 as an American version of the powerful Japanese trading companies like Mitsubishi and Mitsui, is still struggling. Based in Washington, it markets the company's expertise to retail chains in other countries, and had farfetched