The seeds of their eventual demise were planted back in the mid to late 70's when they decided that they were paying out too much money to their sales associates and decided to stop hiring full time well-compensated employees and hire only part time low wage employees. Then in 1981 they stopped issuing Sears credit cards and started Discover. The Sears credit cards held many of their customers captive to their stores and products. They would issue their cards to anyone who was breathing and had a job, many of whom could not otherwise qualify for a MasterCard, Bankamericard (Visa), or American Express card. Prior to this, they would not accept any of these other credit cards in their stores, only their own Sears card. After that, business started to go downhill.
How do I know all of this? Back in the 70's I worked at Sears, in the Automotive Department. At the time, their Automotive Departments were VERY busy places, and they had a lot of very good experienced full time employees working in them. They were the number one retailer of tires, batteries, exhaust systems, shocks, and ignition components in the US.