The decline of Sears Holdings

spinnaker

Joined Oct 29, 2009
7,835
Probably the most iconic company in the country, if no the world.


And they got their mitts on K-mart and dragged them under with them. What a shame.
 

GopherT

Joined Nov 23, 2012
8,012
I think they closed some K-Marts here before that list was made. :(

I saw the writing on the wall for Sears when Ace Hardware started using the Craftsman name.

Also:
http://www.chicagotribune.com/business/ct-sears-sells-craftsman-stanley-20170105-story.html
Sears had to sell the Craftsman name to keep the lights on.
When Sears moved hand-tool manufacturing from Emerson in Pittsburgh to China, processing lifetime warranty claims cost them more than the savings. Shortly after that, the sales declined - appliance sales declined (Kenmore) and now they are ready to fall off the face of the earth.

A former Emerson employee here in Pittsburgh showed me the difference between the Chinese made products and the older Emerson made sockets, wrenches, screwdrivers. The plating is terrible and irregular and so thick in some places that the socket didn't fit a standard 1/4" nut. Screwdrivers not fitting screws.

He was just sick about MBAs making decisions in cost without understanding the desires/needs of their customers and not setting any quality specifications and now the customers are unhappy, the company (sears) is going downhill (almost dead) and 700 people in Norther Pittsburgh suburbs were put out on the street for a while (most are now working at Mitsubishi Electric, Emerson Electric, and Siemens). Ultimately, no cost savings, no market share increase and no Sears.
 
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tcmtech

Joined Nov 4, 2013
2,867
I saw the writing on the wall for Sears when Ace Hardware started using the Craftsman name.

All of my hard use hand and power tools used to be Craftsman but as their prices went up and the quality and local service went down I started buying other things. Over the years other companies improved the quality and prices of their tools while adding better warranty services plus so much of the once chinese made junk stepped up their game it just made it too hard to spend $30 on a single Craftsman wrench or hand tool when I could buy 2 - 3 of some other brand that took the abuse just as well while providing equality marginal or better warranty support.

As of the last year or so all my new hand tools are Crescent brand and I have to say I like the fit feel and warranty plus prices are pretty hard to pass up as well! My local Menards carries a good selection and they claim they warranty everything without question which is super for me being I am at their store at least once a week! ;)

As for power tools Menards MasterForce house brand have stood up impressively well too. So far I have never wrecked any power tool of their brand yet despite well intended attempts to find their limits. :cool:

It's sad to see Craftsman go but their quality and service just got too bad for me to stick with them anymore on new purchases. :(
 

spinnaker

Joined Oct 29, 2009
7,835
Sears had to sell the Craftsman name to keep the lights on.
When Sears moved hand-tool manufacturing from Emerson in Pittsburgh to China, processing lifetime warranty claims cost them more than the savings. Shortly after that, the sales declined - appliance sales declined (Kenmore) and now they are ready to fall off the face of the earth.

A former Emerson employee here in Pittsburgh showed me the difference between the Chinese made products and the older Emerson made sockets, wrenches, screwdrivers. The plating is terrible and irregular and so thick in some places that the socket didn't fit a standard 1/4" nut. Screwdrivers not fitting screws.

He was just sick about MBAs making decisions in cost without understanding the desires/needs of their customers and not setting any quality specifications and now the customers are unhappy, the company (sears) is going downhill (almost dead) and 700 people in Norther Pittsburgh suburbs were put out on the street for a while (most are now working at Mitsubishi Electric, Emerson Electric, and Siemens). Ultimately, no cost savings, no market share increase and no Sears.

I had no idea Craftsman was made here in Pittsburgh. I still have most of the original tools from back in the day. Sadly a few have been lost over the years and had to be replaced with the Chinese version.

You can add Schwinn to that Chinese junk list too. Once the best US bicycle on the market, now they sell crap. Cannodale was made right here is PA too. Now they moved their frame manufacturing to China. :( I was lucky to buy a Cannondale before they moved.
 

WBahn

Joined Mar 31, 2012
26,398
I agree with all of this. It's such a shame to see the brands that once were synonymous with high quality become cheap crap. While I understand that if the market will tolerate cheap crap the market will get cheap crap and, conversely, if the market won't tolerate cheap crap it won't get cheap crap, it is still painful to see it happen, especially in those instances when it really didn't have to happen. Sometimes the market just doesn't care about quality and manufactures legitimately have little choice. But in the case of brands that stood on a reputation for quality that is less likely to be the case and it is more likely to be the case of short-term MBA thinking running a company straight into the crapper.

The company my dad worked for was a shining example of that. The guy that started it built a reputation for quality compressors and also became the DigiKey of the compressor parts world in the region. They stocked lots of parts that seldom sold but when someone wanted that part, they had it and could come pick it up. They had quite a few parts that they only sold every few years. One example I can think of was some gaskets use on most of the compressors used by Denver Public Schools. Every few years (three, I think) their maintenance plan called for them to do a partial teardown of the compressors and part of that was installing new gaskets. Most people never replaced those gaskets, so they were hard to find. But my dad (who was the manager of purchasing and inventory) made sure that they had sufficient stock on hand to do all of their compressors. When DPS hit that maintenance event, they didn't even call anyone else, they simply went down and bought them from my dad's company. Thus they became the first stop place for many business for any of their parts business, not just the hard to find stuff.

But, eventually, the owner turned the business over to his two kids whom he had sent to business school and one of the first things they did was analyze the inventory costs and show how much money they were losing by stocking parts that didn't sell some minimum amount each month. Yes, having those gaskets sitting there for a few years probably tied up a hundred bucks in inventory that could have been being used for something else plus exposed them to a small inventory tax that Denver had (probably still has). Those were hard numbers that their MBA programs taught them how to crunch. But they didn't even attempt to consider how much the effective advertising value of having those gaskets on hand was or how much business they stood to lose if they stopped stocking them. Those weren't things that you could easily put numbers to, and so they were just ignored. Similarly, they showed how having an in-stock rate of over 95% was WAY to high and that the optimal in-stock rate was much lower (something like 70%, if I recall). So they forced changes to the inventory levels that they had just "proven" would make the business so much more profitable and were at a complete loss to explain why, in less than a year, the company's parts business had declined by almost half as customers found other 'first-shop' sources, some of which were in neighboring states. The company effectively folded a few years later.
 

Raymond Genovese

Joined Mar 5, 2016
1,658
I was thinking about this the other day. It has come up repeatedly in threads, especially about the once mighty Shack.

First, I appreciate how difficult it must be to change when you are successful - think about that...what you do works and works for a very long time (ridiculously long in the case of Sears). Then, it stops working well and you have to change...and that does not seem to end well.

The Mall as we know it has changed. Then again, it used to be a Shopping Center and not a Mall and many made that transition. Moreover, urban areas are changing ahead of rural areas with regard to malls (in my opinion).

We buy much more online. But people still go to malls and for certain things and not others (remember when any large mall had at least two bookstores?). Every time I go to a mall (which is less and less frequently) I note where the people are....food court (the true predictor of mall health. Then there are the athletic shoe stores, regular shoe stores, some level of clothing stores, sunglasses stores and a few others.

Now, why have the failing department stores not zeroed in on those area....why not have fast food in the stores (they used to have cafeterias) and specialize on those items that are still popular. Instead, they are weakening in those specialty areas.

They were also way late with online shopping - now they also have to make their products also available on Amazon and the like, in addition to their own online shopping.

They don't seem to want to do any of this and I think it makes sense if they want to survive. I also thought the USPS could have become the iconic email provider.

Then again, maybe this is why I don't own any stores or malls or Post Offices :)
 

GopherT

Joined Nov 23, 2012
8,012
I was thinking about this the other day. It has come up repeatedly in threads, especially about the once mighty Shack.

First, I appreciate how difficult it must be to change when you are successful - think about that...what you do works and works for a very long time (ridiculously long in the case of Sears). Then, it stops working well and you have to change...and that does not seem to end well.

The Mall as we know it has changed. Then again, it used to be a Shopping Center and not a Mall and many made that transition. Moreover, urban areas are changing ahead of rural areas with regard to malls (in my opinion).

We buy much more online. But people still go to malls and for certain things and not others (remember when any large mall had at least two bookstores?). Every time I go to a mall (which is less and less frequently) I note where the people are....food court (the true predictor of mall health. Then there are the athletic shoe stores, regular shoe stores, some level of clothing stores, sunglasses stores and a few others.

Now, why have the failing department stores not zeroed in on those area....why not have fast food in the stores (they used to have cafeterias) and specialize on those items that are still popular. Instead, they are weakening in those specialty areas.

They were also way late with online shopping - now they also have to make their products also available on Amazon and the like, in addition to their own online shopping.

They don't seem to want to do any of this and I think it makes sense if they want to survive. I also thought the USPS could have become the iconic email provider.

Then again, maybe this is why I don't own any stores or malls or Post Offices :)
Last item first, the USPS was never intended to be a money making operation; it was intended to facilitate commerce. It was created as part of the Constitution along with authority of the Federal Government to create roadways. There are other federal laws that prohibit the government from offering goods or services that would compete with existing companies. That combination made it difficult for the US post office was late to the dance and prevented from competing in the email space by threats of lawsuits by yahoo and others in the mid-1990s as some people in congress started suggesting the USPS offer the service.

As for the first first part of your post, businesses changing/evolving with changing times and competition. The current term for these changes is "pivot". I hat that term, I would rather say, survive, compete, innovate, or what ever other actual action is taken by the evolving company.

For that matter, Radio Shack did change (pivot) several times over the years. The changes I remember were moving from selling kits and parts to selling stereos and speakers then they added TVs, and the test equipment disappeared. Eventually the kits dried up and the resistors, capacitors and chips were relegated to a few sets of drawers and RC toys filled the store. Finally, the store was filled with pagers and palm pilot knock-offs and then their primary business became selling cell phone plans. They were eventually pushed out of the cell phone business as Verizon, AT&T and Sprint opened their own stores because they wanted the direct connection with their consumers. Radio Shack tried selling chargers, cases and other accessories but their cost structure was just wrong for the margins and volume. They also tried to get back into the Maker market (selling arduino and shields) but could not compete with the online companies that popped up like adafruit and other arduino enablers (designing and selling shields for Arduino and RPi - who are themselves challenged by Amazon and eBay sellers from around the world.

Other mall stores are changing and I have a feeling they will become social meeting places (if they can pivot fast enough).
 

JoeJester

Joined Apr 26, 2005
4,390
There are other federal laws that prohibit the government from offering goods or services that would compete with existing companies.
I've seen OMB Circular A-76 that suggests the Federal Government doesn't compete with private industry. I haven't seen any law.
 

strantor

Joined Oct 3, 2010
5,752
They stocked lots of parts that seldom sold but when someone wanted that part, they had it and could come pick it up. They had quite a few parts that they only sold every few years. One example I can think of was some gaskets [...] eventually, the owner turned the business over to his two kids whom he had sent to business school and one of the first things they did was analyze the inventory costs and show how much money they were losing by stocking parts that didn't sell some minimum amount each month. Yes, having those gaskets sitting there for a few years probably tied up a hundred bucks in inventory that could have been being used for something else plus exposed them to a small inventory tax that Denver had (probably still has). Those were hard numbers that their MBA programs taught them how to crunch. But they didn't even attempt to consider [...] how much business they stood to lose if they stopped stocking them. Those weren't things that you could easily put numbers to, and so they were just ignored. Similarly, they showed how having an in-stock rate of over 95% was WAY to high and that the optimal in-stock rate was much lower (something like 70%, if I recall). So they forced changes to the inventory levels that they had just "proven" would make the business so much more profitable and were at a complete loss to explain why, in less than a year, the company's parts business had declined by almost half as customers found other 'first-shop' sources, some of which were in neighboring states.
While not involving retail goods, your story is reminiscent of the wire & cable factory I worked in. Most of the machines in that plant were dinosaurs. They were old, but very well designed and very well maintained. My predecessors in the maintenance department had put together a rock-solid maintenance plan and carved out a respectable portion of the plant, gated off, which stored all the spare parts. The majority of the machines came from Europe; primarily Germany and Austria, and a few French machines too. The parts for these machines were very hard to source, had unfathomable lead times, and were very costly.

Most of the other maintenance techs weren't comfortable replacing parts unless they were exactly a direct replacement, from the same manufacturer, same P/N, same exact everything. So they had identified and ordered in advance, everything that they thought might ever wear out or break over time. It never ceased to amaze me when, for example, a 1963 German Baumuller dual winding/dual voltage analog tachogenerator fails, and what'd'ya know, there's one on the shelf, been there since 1996, and the record of its order is filed away so we have a supplier and a starting point to order a new one (because our sales reps at Grainger and Applied Industrial would give us a blank stare) - and good thing too, because when we do order it from the German supplier, it's a bespoke item and it takes 6 months to arrive.

We had massive single-input, muliple output, multispeed gearboxes for the lineshafts on both of our most critical machines. They weighed more than our forklift and had 6-figure price tags. They were ordered in the early 90's for 1970's machines, from the same Austrian company who made them in the 70's, and the company shut down in the late 90's. These gearboxes literally irreplaceable, and were proven to last over 40 years in that application.

In comes this cancer born out of a university "think tank." Wet-behind-the-ears Manufacturing Engineers go out for a quick brainwashing session for a few days and come back chanting the mantra of "5S" and "Lean Six Sigma." We spent the next 6 months throwing away millions of dollars worth of "stagnant" inventory (critical spares). Their mandate was "If you haven't used it in the last 2 years, and you don't have any scheduled maintenance in the next 2 years that calls for it, throw it away." We had to get the forklift from next door to help us load those gearboxes onto the "scrap vulture's" (as we called him) truck as he grinned and rubbed his clammy hands together. We had a 40ft rolloff container that got hauled off every friday, full or half full. Brand new motors, drives, bearing assemblies, rebuild hydraulic assemblies, anything you could think of. Our detailed maintenance records bit us in the behind because if we tried to claim that something needed to stay (because "it had been used in the past 2 years" - which it hadn't), there was no record to back it up. In some cases we even had entire fully functional machines hauled off, because they were only used for special projects which only come up every few years. Anything that collected dust, had the red sticker put on it.

Our spare parts bay slowly shrunk from from ~10,000sf to ~1500sf, at which point they told us that the maintenance department was to relocate to a small ~3,000sf building across the lot from the plant. We are talking about 1,500sf worth of spare parts, 2,000sf of workshop/machine shop, and ~1,000sf worth of offices, that were located in the epicenter of the production floor - the most logical place for it, since nobody in the plant was ever too far from the maintenance office to go get help, and we were never too far to run back for tools, parts, to look stuff up on the computer, etc. We had to throw away even more parts, and tools, and office furniture, and cram ourselves into this tiny space. They set up an intercom so the operators could call us from wherever they were, and we had to push our tool cart across the lot to the plant to check it out.EX: Oh, the machine quit running? Ok hold on, I'll be there ASAP...10min later... Oh, hold on, the batteries in my DMM just died; be right back...15min later...Oh, never mind, the problem isn't electrical, I need to go get the computer cart and check out the PLC...30min later...Hey, it's raining outsite and I looked all over the maint. shack and we don't have any tarps for the computer cart. Do you guys have any here in operations?...20min later...Ok, I'm back, where did everybody go? Did I miss shift change AGAIN?! Oh well, whatever the problem was, we don't have the parts to fix it.

And guess what they did with all that prime real estate after they kicked maintenance out of the center of the plant? They demolished it! And what did they replace it with? NOTHING! They moved some machines around to get more space between them (you already couldn't spit from one to the other) and they pained a bunch of stupid lines on the floor. "Forklift parking" for 8 forklifts when we only had 3. "Full spool storage area" when full spools don't just "sit around" in storage; each cable is made to order and ships out once its done. "empty spool storage area" - for the empty spools that were stored outside for 40 years with no issue. "QC area" so that QC people who used sit right next to each other and pass parts between them, now had 6ft of separation between the workstations and the privilege of getting up and walking across to pass parts. And my personal favorite: "Crane Parking!" For the friggen overhead gantry crane!

I left shortly after that. I DO NOT miss that mentality. Totally bonkers! "oh it's for efficiency," "don't worry, once you get used to it, you'll see the beauty of it," "soon you won't know how you ever got along the old way!" BUll$k1T! I see the pitfall of companies like Sears, Radio Shack, et. al. not being willing to change, but come on! Can we get a side order of logic with our entree of change?!
 

tranzz4md

Joined Apr 10, 2015
310
Strantor's post really tells the tale, and it's simple.

People without applicable experience, knowledge, or credibility inevitably must learn from failures too. They are foolishly or carelessly put into positions they are not at all suited for, and also carry responsibility far beyond their capacities. The classic "owner's son" story is applicable far and wide. Just another disinterested party who should never be allowed access to the valuables.
 

#12

Joined Nov 30, 2010
18,223
I worked at Sears in 1970. People there said I was sitting on a gold mine. I would be rich when I retired.
Then they hired a new guy that worked right beside me and paid that beginner more than they paid me.
I asked why and was told, "He has a wife and child."
That was when I realized they weren't paying me what I was worth. They were paying me just enough to survive.
...and I quit.
Four years later I was earning four times as much money.
Every time I got 5 cents an hour for my annual raise, I quit again.
That's when I was sure that jumping ship always pays better than waiting for a raise, especially when you're young and learning quickly, and becoming more valuable quickly.

Now, it's retirement time and Sears looks like a bad bet for collecting my pension!
 

Reloadron

Joined Jan 15, 2015
6,324
A former Emerson employee here in Pittsburgh showed me the difference between the Chinese made products and the older Emerson made sockets, wrenches, screwdrivers. The plating is terrible and irregular and so thick in some places that the socket didn't fit a standard 1/4" nut. Screwdrivers not fitting screws.
Well the original tools were made with high quality case hardened steel but the Chinese tools are made using case hardened peanut butter so the quality suffers. :)

Ron
 

WBahn

Joined Mar 31, 2012
26,398
In comes this cancer born out of a university "think tank."
That's perhaps the most extreme story of this type I've ever heard, but I'd be willing to bet it isn't even close to the most extreme story out there!

Here's another one that will make you shake your head and wonder just how the government manages to ever get anything accomplished.

When I was in the service (hydraulics tech on fighter aircraft) we had the U.S. Air Force's last squadron of T-33 Thunderbird aircraft. Each aircraft had two brake master cylinders that were classified as XB3, meaning that they were considered non-repairable and disposable.

So whenever one would come into the shop, we would test it and if it failed we would order a new one from supply and through the old one in the recycling bin and send the new one out in its place. We didn't get these in often, but when we did we generally got a bunch of them. I suspect this is because they were pulled as part of a Phase Dock maintenance program cycle, but I don't know that for sure. Thus, about once a quarter, we would get a couple dozen in usually a few would fail. One time we had a dozen of them fail and so we ordered a dozen from supply. The only problem was that the guy that called in the order told them, "We need 12. Yeah, a dozen." But the person on the other end hadn't asked him to repeat how many we needed, he asked, "Unit?" meaning what is the unit of issue, but our guy thought he said, "Units?" asking him to confirm the unit of issue. So the order got entered as twelve dozen.

Now, normally we would get parts from supply delivered within about a half hour. But this time we got a call telling us that they didn't have enough to fill the order and were back ordering them. Fine. Several weeks went past and every time we would call and check on the status, they would tell us that they were still waiting on them. Eventually they delivered something like 106 of these brake master cylinders to us and informed us that, to the best of their knowledge, this represented the entire worldwide supply. Furthermore, since the last T-33 had been manufactured nearly thirty years prior and since the T-33 was already scheduled to be retired from service in another couple years, no more were being made and, therefore, they were closing out the order. The chief of the supply squadron accompanied the shipment to our shop to make sure that we understood that there would be no more of these parts available ever.

Slap your head #1: We always ordered these things in groups of maybe three to six. Even a dozen was an abnormally high order for us. So you would think someone would see an order for 12 dozen and look to see that base supply only attempted to stock about 20 at most and pick up the phone asking us to confirm the quantity. But, no.

So, naturally, our reaction was to return them to supply. Not only did we not have room for them, but they weren't on our list of authorized bench stock items and so we would get in trouble if we kept them. But because they were XB3, supply couldn't take them back because there was no way to return a non-repairable, disposable item back into the inventory. So the answer from the chief of the supply squadron? Just throw them away.

Slap your head #2: This was the very same guy that had just got done telling us that we had, in our possession, every known T-33 brake master cylinder in the world and that there would never be any others. Now he's telling us to just throw them in the trash because he can't do the paperwork to take them back.

But, at least back then, the saying, "Sometimes ya gotta do what what gotta do," was often the guiding principle. So we stuffed all of the remaining cylinders up above the bench stock room ceiling and whenever we needed one we would take one down and report it as FOB ("Found on Base") and then use it.

But a few months later we were up for our big inspection -- I think back then they called them UCIs (Unit Compliance Inspection) -- and one of the things the inspector is specifically tasked with doing is searching all of the nooks and crannies looking for unauthorzied tools, equipment, or parts. Naturally, above the ceiling tiles is one of the first places they look.

Slap your head #3: Our shop chief informed, quite unofficially, our squadron commander about the cylinders above our bench stock room and explained the situation to him. His response? Throw them away immediately as he won't stand for getting written up for contraband in one of his shops. He was more concerned about that than about the heat he would soon be catching when every other time a cylinder went bad the Air Force T-33 fleet was permanently reduced by one aircraft.

So, the night before the UCI team came through, our shop chief took the team leader out for dinner (we didn't know this until later). The next day, while all of us were sweating bullets, the team leader comes through the door and announces that they are going to do the contraband search first thing to get it out of the way. He then immediately grabs the ladder from their truck and personally checks the ceiling spaces for contraband. He removed a tile right next to our bench stock room, stuck his head up through the hole with his back to the stock room, looked forward, looked left, looked right, climbed down and announced that he saw no contraband in the ceiling spaces -- he was very careful to state that he saw no contraband, not that there wasn't any contraband.

A couple years later the remaining fleet of T-33's was sold to Mexico, along with all spare parts. But, once again, we couldn't get these master cylinders onto the manifests and the C-130 loadmasters were unwilling to let us just put them on anyway. So most of those T-33'smade the trip to their new homes with about half a dozen brake master cylinders strapped down to the rear seat. We told the guy in charge of taking possession of the fleet the tale and suggested that he, too, report them as FOB ("Found on Bird") once they got to Mexico.
 

Reloadron

Joined Jan 15, 2015
6,324
A couple years later the remaining fleet of T-33's was sold to Mexico, along with all spare parts. But, once again, we couldn't get these master cylinders onto the manifests and the C-130 loadmasters were unwilling to let us just put them on anyway. So most of those T-33'smade the trip to their new homes with about half a dozen brake master cylinders strapped down to the rear seat. We told the guy in charge of taking possession of the fleet the tale and suggested that he, too, report them as FOB ("Found on Bird") once they got to Mexico.
Great story has me recalling similar incidents. As a footnote:
The last operator of the T-33, the Bolivian Air Force, retired the type in July 2017, after 44 years of service.
Considering its birth and evolution the little airplane had a long career of service. :)

Ron
 

tcmtech

Joined Nov 4, 2013
2,867
But, eventually, the owner turned the business over to his two kids whom he had sent to business school and one of the first things they did was analyze the inventory costs and show how much money they were losing by stocking parts that didn't sell some minimum amount each month. Yes, having those gaskets sitting there for a few years probably tied up a hundred bucks in inventory that could have been being used for something else plus exposed them to a small inventory tax that Denver had (probably still has). Those were hard numbers that their MBA programs taught them how to crunch. But they didn't even attempt to consider how much the effective advertising value of having those gaskets on hand was or how much business they stood to lose if they stopped stocking them. Those weren't things that you could easily put numbers to, and so they were just ignored. Similarly, they showed how having an in-stock rate of over 95% was WAY to high and that the optimal in-stock rate was much lower (something like 70%, if I recall). So they forced changes to the inventory levels that they had just "proven" would make the business so much more profitable and were at a complete loss to explain why, in less than a year, the company's parts business had declined by almost half as customers found other 'first-shop' sources, some of which were in neighboring states. The company effectively folded a few years later.
Unfortunately that miseducation that all items not often used that are sitting on some shelf that serves no real purpose to anything else anymore in some building that has long since paid for itself is still a constant financial cost (when it's actually not) is what killed a huge amount of other wise good businesses over the years.

I can't count how many times I have been told that all of my 'old junk' inventory of odd things I keep on hand is costing me money yet the supposed financial management experts couldn't put a single dimes worth of real negative value to proving their claims.

My storage space is paid for and its cost of ownerships is the same empty or stuffed full.

Same with any item I keep in it. If it has been paid for it now is of zero further cost to have on hand no matter how long it sits. If anything as the average prices of my old obsolete items increase my standing inventory is going up in value not costing me money.

Then there's the cost analysis of actual storage space. Why throw out $100K in new old stock items to make space for $100K worth of new stuff when $10K will buy more than enough new storage space to hold the new $100K worth of stock and then some?

Seems pretty stupid to me to purposely throw away $100K of good slow selling, but still selling, inventory that's only going upon market value to avoid spending $10K on more storage space.
 

GopherT

Joined Nov 23, 2012
8,012
Then there's the cost analysis of actual storage space. Why throw out $100K in new old stock items to make space for $100K worth of new stuff when $10K will buy more than enough new storage space to hold the new $100K worth of stock and then some?
Because the business gets to write off the $100k in inventory as a loss if they discard the old inventory. Now, if you made $100k in profit off of new, active inventory and had to pay ~25% as taxes, I bet most people would decide to toss $100k 8n old inventory that they don't think they would ever sell in order to reduce that tax bill to zero. The additional saving would be that they wouldn't have to build another $10k worth of storage.

There are lots of ways to play this game. Even avoiding local asset taxes (inventory tax or real estate taxes). In many cases NOS sales cannot cover the taxes needed to cover the way local municipalities rate commercial/industrial spaces.

It seems stupid but not everyone can be a hoarder and that is a good thing for the last person to hold out and maintain their NOS inventory.
 

shortbus

Joined Sep 30, 2009
9,066
Well the original tools were made with high quality case hardened steel but the Chinese tools are made using case hardened peanut butter so the quality suffers. :)

Ron
I have to disagree with that. It may have been that way around 5 to 10 years ago, but not now. At least not from places like Harbor Freight. Their hand and power tools are of every bit of the same quality as the old Craftsman tools, some even better. And for stuff like sockets they have the same replacement guarantee. Don't know about other places quality though.

I always liked S-K for my sockets and ratchets. The last time I bought a complete inch and metric set. Many of the sockets have cracked. When I took them back to the place I bought them for replacement, they refused. S-K has a new policy that they don't reimburse the seller for warranted items, so sellers now don't exchange tools. Guess who will never buy S-K again?
 
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