Ironically enough Sears paid their employees well until they were bought by Kmart. When Lampert (Kmart CEO) took over he cut wages and jobs at Sears and then proceeded to run the company into the ground. Customers didn’t stop shopping at Sears because employees were paid too much. Sears had more customers at the time they were paying higher wages. Customers stopped shopping at Sears because extreme cost cutting efforts by a former hedge fund manager with no retail experience eroded the company’s customer-oriented quality brand.

I think it was inevitable that Sears would lose customers to cheaper merchants. Sears was offering employees expensive defined benefit pensions and healthcare. The 80s, 90s, and 00s saw the spending power of the bottom 4 quintiles drop. Even if people wanted to support a Sears type store, they can’t afford to.

Lambert didn’t help, but I think we’re still seeing the hollowing out of the middle class causing a loss of customers for places like Sears that could have paid middle class wages and sold decent quality goods.

I don't think that logically follows. Costco is well-known for generous compensation and are doing well.

Costco serves a limited range of items to middle and upper middle class areas only. As it already fulfills this segment of the population that can pay a little bit extra for quality, no competitor to Costco exists.

The same dynamics exist with Nordstrom/Apple/Trader Joes. There’s a few brands that can afford to offer more quality and better paid workers, but they don’t exist in poorer parts of any city, and there’s only one of each type of store.

Everyone else has to offer the lowest prices.

Not to be nitpicky, but wouldn't Sam's Club be considered a competitor to Costco?

It is, but last I heard Walmart was downsizing Sams Club operations. I also don’t think it’s known for quality and treating its employees well like Costco is. If you put a Sams Club next to a Costco, I would bet people choose to go to Costco.

What actually happened to Sears: https://www.salon.com/2013/12/10/ayn_rand_loving_ceo_destroy...