To be fair, in '98 there weren't many people with big corporate web store experience who were also experienced enough in retail to trust with a big corporate retail operation.
It is probably relevant to consider Amazon's (limited) forays into bricks-and-mortar establishments. They have had about as much impact as the online versions of the legacy retailers.
I don't think Sears could have done quite that, but keeping the catalog and 'order to the store for free (long time) shipping' / 'delivery to home with paid shipping' would have been a much better move and SHOULD have been within their grasp to understand and execute on. All the more so if a customer could look at clothing styles and options and order slight variants or harder to get sizes from the catalog.