New York (CNN Business)This Black Friday could very likely be the start of the final holiday shopping season for Sears and Kmart, two brands that once proudly dominated the US retail landscape.
The two chains are only a shell of what they were when the holding company that owns both emerged from bankruptcy less than three years ago.
At the time, the holding company — given the overly optimistic name Transformco — still had 223 Sears and 202 Kmart stores nationwide. That was already down 87% from the 3,500 stores between the two brands when they merged together in 2005 to form Sears Holdings. But the percentage drop in stores since the company emerged from bankruptcy in February of 2019 has been even steeper.
Today there are only 21 full-line Sears stores left in the mainland United States, and two more in Puerto Rico, according to the store locator on the Sears website, once recent closings are eliminated. Another seven stores listed on the site are limited to selling appliances, and in some cases, mattresses, rather than the full range of offerings that once was a hallmark of both chains.
And by the end of the year there will be only six Kmarts left in the mainland United States, along with six more in Puerto Rico, Guam and the Virgin Islands.
“To me it always felt like a liquidation. This has been going on for years,” said Reshmi Basu, an expert in retail bankruptcies at Debtwire.
Many retail experts blame Eddie Lampert, the primary owner of Transformco and Sears Holdings, for the demise of two chains.
“He’s letting leases expire, he’s abandoning stores. He keeps them open if it’s expedient to stay open,” said Mark Cohen, the director of retail studies at Columbia University. “Obviously, they are all going to be gone shortly. You can count on that.”
Sears and Kmart are not the only retailers to struggle with the shift of shopping habits to big box retailers such as Walmart (WMT) and Target (TGT), and to online retailers such as Amazon (AMZN). JCPenney and Neiman Marcus both filed for bankruptcy when the pandemic hit in 2020, and Lord & Taylor went out of business.
But critics of Lampert say he’s to blame for the steep decline at both companies, as he invested little in the stores themselves, and sold off much of the more attractive real estate and brands that Sears once had, such as Craftsman tools, Diehard auto parts and Lands End.
“It’s been in terminal decline for quite sometime,” said Neil Saunders, managing director and retail analyst at research firm GlobalData.
There’s little chance of saving either chain in the current retail environment. Vendors are having problem supplying much stronger retailers with the inventory they need, given current supply chain problems. That makes it more difficult for Sears or Kmart to have the products that shoppers want.
“We know that suppliers are prioritizing their deliveries. They’re delivering to outlets that add more value to brand,” said Greg Portell, lead partner in the global consumer practice of consultant Kearney.
And the labor market — with near record numbers of job openings — only makes it tougher for the struggling chains to attract the workers they need.
“The war for talent in retail is very real right now. They’re not only raising hourly wage, but look for other elements to attract workers, college tuitions, benefits, things that Sears and other troubled retailers will have difficulty matching,” said Portell.
If this is indeed the end, it would be a sad demise for two chains that both go back to the late 19th century.
Kmart started in 1899 when founder Sebastian Spering Kresge opened a five-and-dime store in downtown Detroit bearing his name. The Kmart brand didn’t come about until 1962. The chain grew rapidly for several decades, claiming the discount segment of the market that big box stores such as Walmart and Target now dominate.
Kmart became known for its 15-minute-long “blue light specials”: a store would flash a blue light and announce “attention Kmart shoppers” over the public address system, and customers would rush to buy the discounted goods. The promotions started in 1965 but were discontinued in 1991, although Kmart has tried to bring them back several times.
Sears’ history is even more storied. The company was once the largest retailer in the country -— both the Walmart and the Amazon during its heyday. At a time when the majority of Americans lived in rural areas, its catalog allowed many consumers to buy goods to which they would not have had access otherwise.
And Sears stores dominated the retail landscape, forcing many locally owned Main Street stores out of business the way that big box retailers would one day cause department stores to close. Many Sears were the anchor of malls that helped lead to the growth of US suburbs. It was literally a company that changed America.
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