The Balancing Act


A generation or two ago just about everyone owned a Craftsman tool purchased exclusively at retail behemoth, Sears, Roebuck and Company. The tools were rock solid and “guaranteed forever.” And if your first day of school was sometime in the 1970s, odds are you hit the playground during recess wearing some, at the time, very fashionable Toughskins. The pants were a conscious effort on the part of Sears to develop a garment that a kid couldn’t wreck. The pants were so “tough” that they were sold with a guarantee that kids would grow out of their Toughskins before the pants wore out. Tools “guaranteed forever” and clothes your kids outgrow before they wear out seem like a recipe for retail success. With that kind of value and commitment to customer satisfaction, why would consumers ever shop anywhere else?

Featured Sponsors:


Recently, Sears, that anchor store for just about every American Mall built in the last few decades, sold the Craftsman brand in a desperate attempt to survive declining sales. Amazon is likely finishing them off after Walmart and Home Depot beat them up pretty good. It is also pretty damn near impossible to find a pair of Toughskins on any playground, but if you look you can find them in remarkably good condition on eBay.

Featured Sponsors:

So what happened to Sears and what does it have to do with anything relating to mortgages?

If you think about it, Sears was the Amazon of the 20th century. In the 1890s, Richard Sears and Alvah Roebuck founded Sears, Roebuck and Company, publishing the first of its soon-to-be-famous catalogs. The company grew phenomenally by selling a range of merchandise at low prices to rural communities that had no other convenient access to retail outlets. Sound like Amazon in this century?

Featured Sponsors:

But in the mid-1920s, new technology made Sears change course. Cars were making retail outlets in urban areas more accessible to consumers in the suburbs and rural communities. Sears tried to exploit this opportunity that technology was presenting, opening the first Sears retail store in Chicago in 1925. It was far more fun to drive to the store and get almost immediate satisfaction, than to flip through the hundreds of pages of a catalog, fill out a form, send a payment by mail and wait for the postman to deliver your goods what could be two or three weeks later. Sear’s retail store sales topped mail-order sales by the early 1930s. Over the next few decades the number of stores increased rapidly and Sears became America’s retailer.

Any kid that had a pair of Toughskins likely watched Dad scour the pages of the Sears catalog for that Craftsman tool before jumping in the station wagon and heading to the store. They, like their parents, their parent’s parents and maybe a generation before them didn’t realize they were living in a nexus, just waiting for technology to bring it all together. The paper catalog at the time was the best way to identify what was available at the Sears store. It weighed about seven pounds even with its micro-print, but its color images and the 800 phone number were the best technology had to offer. Sure, you could still mail order, but jumping in the car and driving to the local Sears store was the quickest means to an end. It met the consumers’ wants, needs and desires even if occasionally you did need to order and pick up in store a few days later.

But then, in this century, technology flipped things around and put it all together, changed some things and left other things pretty much the same. The Internet, electronic payment systems and second day free shipping made it more fun and convenient to shop online than to jump in the car. Catalog shopping was resurrected. With a swipe across a smart phone screen or the click of a mouse, all the material world has to offer is at your fingertips. It is so much easier to search and browse thousands of online catalog pages. Amazon exploited that technology and without the overhead of a brick and mortar retail store brought every convenience technology had to offer and lower prices to the market.

Lenders who have made a name offering value with a commitment to customer satisfaction are going to find consumers tempted by technology. Finding that balance, that Sears didn’t, will be critical to success. The obvious value an experienced loan originator brings to the transaction may not be enough to overcome conveniences technology has to offer.

About The Author

Kristopher Barros

Kristopher Barros is the Regulatory Audit Manager for Embrace Home Loans, a direct lender for Fannie Mae and Freddie Mac, approved by FHA and VA, and an issuer for Ginnie Mae.