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< The turmoil at Sears partly reflects the wrenching consolidation affecting all large retailers. The U.S. has too many big stores, and many of them no longer offer the mix of products and services customers want. The gulf war and consumer-spending cutbacks in the face of recession have made matters worse. K mart has held up better than most, upgrading merchandise and overseeing costs through an inventory-control system that is even more elaborate than Wal- Mart's and rates as the industry's most sophisticated program. K mart's pressure on Sears will not relent anytime soon. Other major chains are failing. Last week Los Angeles-based Carter Hawley Hale (which owns the Broadway, Emporium and Weinstocks chains) sought Chapter 11 bankruptcy protection. At the same time, the U.S. Department of Commerce reported that retail sales fell 1.5% in December and an additional 0.9% in January.
But the problems at Sears run deeper. Long seen as a reliable source of values across a vast range of goods, from sheets and dresses to power tools and tires, Sears still enjoys considerable customer loyalty. But increasingly it has come to be viewed as stodgy and poorly managed. Says Carl Steidtmann, chief economist of Price Waterhouse's Management Horizons retail-consulting group: "The level of customer service has deteriorated. You'd be glum too if you saw your friends getting laid off and if you were worried about your own job security."
One exception to that disappointing recent pattern is the rousing success of the Discover credit card. Launched in 1986, Discover is carried by 38 million shoppers. Cardholders can use it to shop at 1.2 million stores and restaurants other than Sears, including a chain that may seem surprising: Wal- Mart. Most businesspeople might refuse to accept a credit card issued by their principal competitor. Not Sam Walton. He wants to make shopping at Wal- Mart as easy as possible -- and if Sears wants to help, well, that's fine with him.
CHART: NOT AVAILABLE
CREDIT: TIME Chart by Steve Hart
CAPTION: FLYING HIGHER