CHICAGO -- At 101 years of age, Sears, Roebuck & Co. is trying to reconcile its past as the "world's largest store" with its planned future as the world's largest financial services provider.

But ironically, the future seems more assured than the past -- at least for now.

Six years after acquiring a major stock brokerage and a national real estate company, Sears' ambitious diversification into consumer finance appears ready to pay off.

However, its core retailing business is being assaulted by younger and more vigorous competitors.

Having committed huge resources and management's attention to its aggressive expansion into insurance, real estate and investments, Sears now must act fast to protect its core retail business.

Already, Sears has mounted an all-out campaign to revamp its merchandise and modernize its 806 stores to appeal to the more fashion-conscious shopper. Meanwhile, Sears hopes to become part of the rapidly growing and successful specialty retailing business by going outside the company and buying an already well-established specialty merchant.

"Specialty retailing is a very important retail distribution channel," said Sears Chairman Edward A. Brennan. "It is essential that the largest retailer in the world participate in that."

These efforts, detailed on Page H6, come as Sears aggressively moves ahead with its 6-year-old diversification strategy to become the nation's largest financial service firm.

With its relatively new subsidiaries of Dean Witter and Coldwell Banker and its older Allstate division, Sears now offers consumers a full range of financial services -- from credit cards and insurance policies to home mortgages, car loans and mutual funds.

In the business world today, "there are an awful lot of people selling assets or restructuring to take some financial gains," Brennan said. "We're trying to do the antithesis. We are working very hard to build something -- create something."

By meshing the retailing and financial-services businesses, Brennan said Sears wants to create an equation where "two plus two equals six. ... We may not be at six right now, but we're at more than four and growing."

The task is not an easy one, even for the behemoth Sears, whose revenue last year totaled $44.3 billion. The diversification strategy has taken a toll on the company's profits, which last year were $1.35 billion, down from the 1984 high of $1.45 billion.

Still, last year's profits represented a slight improvement from 1985 when profits were $1.3 billion -- a sign to many that a turnaround had begun in the financial-service businesses. Although some of its ventures are still losing substantial sums of money -- most notably its Discover credit card -- Sears predicts that even that effort will be profitable next year.

As a result, many financial analysts who had once sharply criticized Sears for its nonretailing forays are now optimistic about the company's future in those businesses.

"I don't worry about the {financial} pieces of Sears," said Edward Weller of Montgomery Securities. "Dean Witter is getting better slowly. Discover card will be a major winner. Allstate is one of the best property and casualty companies in the country. Coldwell Banker has done a very, very good job of not only holding onto and developing commercial business but also making a major push into the residential market, with its market share growing from zero to 10 percent in six years."

But like other close observers of Sears, Weller is not so confident about the longtime retailing business. "The merchandise group, burdened with so many years of great success, has been very slow to change and adopt to new ways and abandon what has made them successful."

One recent analysis of Sears noted that the company may soon lose its rank as the nation's top retailer to K mart Corp. "Unless Sears makes a major retailing acquisition in 1987 {which it might do}, K mart merchandise sales may exceed those of Sears as early as this year," noted SMR Research Corp., a business research firm that studies financial service companies.

Despite the threat, Brennan remains confident that Sears will retain its top-rank status as a retailer and move to the top place as well as a financial service provider.

The key, for Brennan, is the number of customers who do business with Sears in one form or another. "Our greatest asset is our customer base. The Sears family has 68 million unduplicated households that have had transactions with us over the last 24 months. That's an incredible number -- about 70 percent of all households in America. ... All you have to do is get a little bit here and a little bit there, and the leverage is huge."

For now, the greatest opportunities for growth are in the newer financial service businesses. As the SMR report noted, although Sears' retailing business could soon be eclipsed by K mart, the company "appears certain to pick up another distinctive claim: It will become the nation's largest provider of consumer financial services. By many measurement, Sears can claim that second title right now."

It is clear that Sears' emphasis is selling stocks and bonds to individuals. Sales to insurance companies, pension funds and other institutional investors are secondary in its strategy.

As Dean Witter's executive vice president for marketing, Nancy D. Donovan explained: "We want to control a customers' assets, help manage the consumer's household balance sheet by making loans as well as taking deposits."

Sears is not "trying to bring Main Street to Wall Street," Donovan emphatically added. "We are rather after the transitional middle market -- those people who are at a point in the life cycle where they are starting to develop assets and prepare for the future, such as a college education or retirement."

According to Donovan, "Discover card is the glue that holds the consumer-service strategy together." Launched two years ago, Sears has already issued 16 million cards, making Sears the second-largest bank card issuer in the country. By year end, Sears says it will be number one, ahead of the top-ranked Citicorp.

Even so, in terms of account activity and the number of merchants that accept the card, Discover is far smaller than MasterCard or Visa. According to SMR President Stuart A. Feldstein, the average balance of accounts outstanding is $522 for Discover cards -- compared to about $970 for Visa cards and about $900 for MasterCard accounts. Additionally, where 2 million merchants accept Visa and MasterCards, only 660,000 outlets have signed up to accept Discover cards.

Nonetheless, Sears officials remain optimistic about Discover's future. Dean Witter Chairman Philip J. Purcell, noting the card's quick growth, said, "It is almost double the expectations we had when we started."

Former skeptics are also more optimistic about the card's fate. Bruce Brittain, president of Brittain Associates Inc., a marketing research firm that specializes in financial services, had reservations about Discover when it was first launched. Now, he says, "I think Sears has enough marketing moxie and deep pockets to be successful." Yet, he adds, "I find their 1988 profit goal still hard to believe."

By the end of the year, Sears will have invested $500 million in the Discover card. With that large amount, Sears officials are pinning much of their hopes not on the credit card aspect of the card but rather on the investment services Discover is beginning to offer.

Unlike other bank cards, Discover offers its users the opportunity to open a family saving account at the Delaware bank that manages the card -- with a sliding interest rate that rises as the account's balance increases. By last April, deposits had reached $450 million, with an average balance of $13,000 per account, SMR reported.

Other investment products -- such as mutual funds and certificates of deposits -- are in the offing. Meanwhile, Discover has already launched a new car-loan service -- separate from the credit line on the card -- with the promise that loans would be approved within 24 hours. What's more, Sears will provide the money upfront -- before a buyer has even agreed to buy or even pick out a car. The buyer would receive either a letter of credit for the approximate price of a new car or a check for the exact amount made out to the dealership if a car has already been selected.

Current legislation in Congress that seeks to limit the growth of financial services offered by Sears and other nonbank companies could affect some of the company's plans, but not dramatically, Sears officials said.

"It was not designed to help us, so I doubt very much that it will," said Purcell. "But preliminary analysis indicates we could continue to do everything we want. We will continue to aggressively expand Discover card's business. ... It may take a little more creativity" in managing the growth and meeting the new law's requirements.

Part of Discover's most significant appeal is its ready-made, direct-mail audience for promotions of other Sears products. Dean Witter, for example, hopes to gain Discover card customers who want more sophisticated investment options.

Sears also is counting on Coldwell Banker to enlarge its already gigantic customer base. Since Sears bought the real estate firm in 1981, Coldwell Banker has grown exponentially, in almost every aspect. Through internal expansion and acquisitions of local real estate firms, the current number of sales associates is more than six times the 5,000 who worked with the company in 1981. Even more significant, Coldwell Banker -- which accounted for 1 percent of all home sales in 1981 -- now has a market share of 9 percent. "Our targeted level is to reach a 20 percent share of the market by the early 1990's," said Coldwell Banker Chairman Arthur J. Hill.

What's more, Coldwell Banker hopes to sell Sears mortgages to more than a third of its customers who need financing. If that happens, Coldwell Banker "would add an astounding $14 billion per year to Sears' total mortgage servicing portfolio ... 50 percent higher than Sears' total servicing portfolio today," SMR calculated.

In addition to offering mortgages, Coldwell Banker also plans to offer Allstate products to its customers, especially homeowners insurance and mortgage insurance. Pilot programs of these products are now being tested in a number of Coldwell Banker offices.

Behind Sears financial ventures, "the magic ingredient" is Allstate, SMR said, noting that it contributes huge profits to the company's bottom line. Last year, Allstate's earnings of $750 million accounted for 55 percent of all of Sears profits. For the first six months of this year, Allstate's share of Sears profits grew to 73 percent as it earned $500 million.

Dean Witter, by comparison, lost $37 million last year, largely due to its large investment in the Discover card. For the first six months of this year, it reported a profit of $37.1 million.

Although Dean Witter's bottom line has been improving, its performance has been disappointing compared to other investment banking companies. On securities-related business, "Dean Witter's return on average equity for the year of 7.7 percent was 32 percent below the average return for national full-line firms of 11.3 percent," a recent report by PaineWebber Inc. indicated.

To increase its return, Dean Witter recently decided to go where the big money in investment banking is made: funding some of the takeover deals. Last spring, Purcell announced that Dean Witter had set aside $250 million to commit as capital in takeover deals. Some industry officials criticize that amount as too small and too late.

But Purcell disagreed. "I think it's a lot of money. We will not take imprudent risks just to be a player" in this industry.

The financial tasks that Sears has set out for itself -- to become major new players in the credit card, mortgage and investment banking industry -- appear Herculean to some, especially considering the challenges that also lie ahead for the retailing division.

But Sears officials remain confident these goals can and will be met. "At the end of this decade, you will look back and find out how smart Sears was," predicted Dean Witter's Donovan.

At the very least, Donovan added, Sears "will be a unique animal; nobody else will be like it."