Funny you mention that....The problem is its very hard to run both a retail operation AND a credit card outfit at the same time. What often happens and what happened in Sears’ case is there is an economic downturn or the company starts not doing as well. The retail operation is obviously the most important part of the company so they start leaning on the credit card side of the business to loosen their credit standards in order to boost sales.
That works and it does boost sales but it does so at the cost of extending credit to people who should not be extended credit.....remember the housing bubble? That is the heroin needle. It feels great...at first. Then one day all those people who were extended credit who should not have been default. Then the company is stuck with those bad debts it has to write off.
That is exactly what happened at Sears. Wally brought over the Executive VP who was running the operation at Sears to run their new financial services division. I worked for her for 2 years. She was a Harvard MBA and former consultant for a real white shoe consulting firm. She was brilliant at making presentations and speaking to executives. She was clueless about the nuts and bolts of running a business or even how to build a financial model.
They also introduced high fees. I was very busy in those days. So I got burned one month. Well, I hope they enjoyed the money.
Still, I’ll miss them (what they once were) much more than Target. When Target finally goes the way it should.