I've always heard it explained as a problem of margins and inventory. Sears would turn over their inventory 4x a year with a 30% margin. Walmart would turn it over 8x a year with a 15% margin. The "discount retail" approach worked really well because customers saw the lower prices. Walmart had a world class logistics organization, and made smarter decisions about what products to stock.

I'm not sure where I read this but it may have been Clayton Christensen, or Shark Tank ^_^. In the context of disruption, Sears was making the right decision in chasing the higher margins.