Sears's Profitable Alianza

U.S.-based businessmen who carp about constantly working under the gun ought to get a look at Fred Eaton. On the roof above his modern office in Caracas, Venezuela, booted militiamen with submachine guns patrol 24 hours a day. They are watching for Communist terrorists who, in a perverse kind of compliment, have focused on Eaton's company as a prime example of Yanqui capitalism. It is Sears, Roebuck of Venezuela, and all of its 13 stores have been the targets of bombs or burning. Though nothing has happened lately, Eaton's workers each night before closing have to examine every drawer, dress pocket and cranny in the store for possible homemade incendiaries. Nevertheless, Sears is prospering in Venezuela and throughout Latin America.

On a continent where revolt, expropriation and inflation are common, Sears since 1960 has lifted sales from $103 million to $150 million. In the last decade--despite the nationalization of six stores by Castro's Cuba--Sears has tripled its number of stores to 64 in nine countries from Costa Rica to Brazil (plus seven in Puerto Rico). This week its top Latin American executives will meet in Mexico City, site of the biggest operation, to discuss further expansion. Next year the company will open two stores in Spain--its first European venture--and transfer some of its Latin American chiefs there.

A Stake in Stock. Like any wise intruder, Sears staffs its stores with natives: 99.3% of its employees are Latin Americans, including almost all store managers. The company offers a share in stock ownership as well as jobs. In Venezuela, for example, employees through profit sharing have accumulated a 17% stake in the local subsidiary. Because Latin American countries have prohibitive import barriers. Sears buys 80% of its merchandise from 9,000 native manufacturers, who produce such goods as refrigerators, washing machines and blue jeans. Sears's local purchasing program amounts to a private Alliance for Progress that has made a lot of suppliers rich and helped the company become an integral part of each country.

When a new Sears store opens up, curious crowds form thick lines in front. Lured by such innovations as price tags, one-stop shopping, money-back guarantees, credit buying, parking space and prompt deliveries, customers have turned Sears's air-conditioned Latin American bazaars into human hormigueros, or anthills. What shoppers primarily come for, however, are the goods, which are tailored to Latin American tastes. Clothing styles owe more to Europe than the U.S. The tool and paint departments, which are mainstays in the U.S., scarcely exist in Latin America, where cheap labor and a middle-class aversion to manual work prevent any do-it-yourself fad.

Sears expects to grow further in Latin America, in the next five years plans to open 50 new branches in Brazil alone. Smaller local retailers have two choices. They can complain about the competition, and languish. Or they can prosper by adopting Sears's fairly moderate prices and modern methods. Many have done just that.

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