It was with a tinge of sadness that I read about the closing of the last 15 Sears Auto Centers stores a few months back.
I still recall the opening of the large Sears Auto Centers at Northgate Mall in my hometown of San Rafael, Calif., that my friends and I would ride our bikes to when we were kids.
My parents shopped there for tires, batteries and the full-service convenience offered by Sears.
I once estimated that back in the 1990s, those auto centers were doing, on average, $3 million per year each, which is equivalent to around $5 million today.
Sears was a powerhouse in automotive with DieHard, Road Handler and Craftsman. (Did you know that Allstate — the insurance company conceived and spun off by Sears — began as a Sears tire brand?)
When did Sears Auto Centers begin to slide? I believe it started in the early 1990s. In 1992, the California Department of Consumer Affairs accused Sears of recommending unnecessary repairs to consumers.
Sears had changed the compensation plan for its technicians to a model that included commissions. (A June 23, 1992, report by the Los Angeles Times noted that the company’s chairman, Ed Brennan, held a press conference to announce that Sears was “discontinuing commissions for auto service employees.”)
New Jersey and Florida also held their own investigations.
I watched with dismay at how Sears handled this crisis. But despite everything, I always thought Sears Auto Centers had great, untapped potential.
To get an insider’s view of what happened at Sears Auto Centers, I asked a couple of former Sears executives who were there.
John Leach was CEO of Western Auto when the Sears auto repair crisis hit. Western Auto had been acquired by Sears in 1988 as part of the company’s strategy to expand “off-the-mall.”
“Western Auto also owned Tire America and NTW,” says Leach. “They were such wonderful organizations. We kept them decentralized from Western Auto.”
Tire America and NTW “were in charge” of their own operations “and they performed beautifully,” he says.
However, Arthur Martinez, Ed Brennan’s replacement from Saks Fifth Avenue, was readying the company’s “Come See the Softer Side of Sears” rebrand.
Leach says Sears “took space away from the hard lines in the stores to expand to the higher-profit soft lines,” which he believes alienated Sears’ core customer base.
Sears also abandoned its full-service auto service strategy and got out of most underhood services.
Leach says this was one of the reasons why Sears “did not want to continue to expand Western Auto.
“What they really wanted to do was to rid the Western Auto stores of the service side of the business and get out of the installation of tires, batteries and pretty much everything.
“It was probably the primary reason I left the company, because I had trouble supporting a strategy for Western Auto that I did not believe in.
“Next they took the tire stores away from Western Auto and consolidated them into Sears,” he continues. “They closed Tire America and the NTW headquarters and moved all the people to Chicago,” which was Sears’ home base, and “got them all involved in the highly bureaucratic, centralized organization there.”
Leach says Sears “wanted to centralize all decision-making and that doesn’t work well in a retail and service business. It made them slow to react to market forces.
“We had an interesting little experiment that we did when we were first acquired by Sears. I was asked in 1991 to do something in the Sears stores to generate more tire business. We put together a market test in Richmond, Va. We converted (some locations) to tire stores and called them Tire America by Sears.
“We blew the roof off,” says Leach. “I think we tripled or quadrupled the tire business in those stores. I thought it was a successful test.
“All of those numbers would go back to Sears and they would just crunch (them) over and over again.”
The company “never gave the green light to turn all their auto centers into Tire America by Sears, which would have been the plan.
“I think those centers would be alive and well today had Sears made those conversions. They wouldn’t have needed the main store to draw traffic to automotive and it’s a great model for off-of-the-mall, as well.”
It may have been inevitable that the decline of Sears Auto Centers would mirror the decline of the big department stores.
Once one of the most innovative companies in America and one of the largest retailers in the world, Sears failed to keep up with the ever-changing market and changing consumer demand.
To get a more recent flavor for Sears Auto Centers, I reached out to Frank Kneller, who most recently was CEO of Sun Auto Tire & Service Inc. and had a prior position as vice president of operations at Sears Auto Centers.
Kneller also points to “the softer side” of Sears and the charges in California and other states as the beginning of the end. “I joined Sears as vice president of operations, Sears Auto Centers, in October 2010,” says Kneller. “The reason I joined Sears was to build back the service business. They had pretty much walked away from it because of all the restrictions” imposed after the 1992 crisis.
“They’d (also) gone from selling 20 million units a year down to six million and margins were dropping. So we built back some of the service business. We had 740 stores and were doing $1.3 billion — so about $1.8 million per store. It’s not a bad average.”
