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Monday, November 29, 2021

It may finally be Sears’ and Kmart’s final holiday shopping season

Originally Published: 25 Nov 21 13:13 ET

By Chris Isidore, CNN Business

(CNN) — This Black Friday could possibly be the start of the final holiday shopping season for Sears and Kmart, two brands that once proudly dominated the American retail landscape.

The two chains are just 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. This was already 87% down from the 3,500 stores between the two brands when they merged together to form Sears Holdings in 2005. But the percentage drop in stores has been even sharper since the company went bankrupt in February 2019.

There are only 21 full-line Sears stores left in the mainland United States today, and two more in Puerto Rico, according to the store locator on the Sears website, have recently been closed. A further seven stores listed on the site are limited to selling appliances, and in some cases, mattresses, rather than the full range of offerings that were once a hallmark of both chains.

And by the end of the year there will be only six Kmarts left in the mainland United States, plus 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, retail bankruptcies specialist at Datawire.

Many retail experts blame Eddie Lampert, the primary owner of Transformco and Sears Holdings, for the demise of the two chains.

“He’s letting the leases expire, he’s leaving the stores. He’s keeping them open if it’s expedient,” said Mark Cohen, director of retail studies at Columbia University. “Obviously, they all go too soon.” are the ones. You can count on that.”

Sears and Kmart aren’t the only retailers that have had to contend with changes in shopping habits for big box retailers like Walmart and Target, and online retailers like Amazon. JCPenney and Neiman Marcus both filed for bankruptcy when the pandemic hit in 2020, and Lord & Taylor went out of business.

But Lampert’s critics say he is to blame for the steep decline in both companies, as he invested little in the stores himself, selling more lucrative real estate and brands that Sears once owned, such as Craftsman Tools, Diehard Auto Parts and Lands End.

“It’s been in terminal decline for quite some time,” said Neil Saunders, managing director and retail analyst at research firm GlobalData.

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There is little chance of any chain to survive in the current retail environment. Given the current supply chain problems, vendors are finding it difficult to supply more robust retailers with the inventory they need. This makes it more difficult for Sears or Kmart to get the products buyers want.

“We know that suppliers are prioritizing their deliveries. They are delivering to outlets that add more value to the brand,” said Greg Portell, principal partner at Consultant Kearney’s global consumer practice.

And the labor market – with almost a record number of job openings – only makes it harder for struggling chains to attract the workers they need.

“The war for talent in the retail sector is very real right now. They’re not only raising hourly wages, but looking for other elements to attract workers, college tuition, benefits, things that Sears and other troubled retailers would have a hard time matching up,” Portell said. .

If this is indeed the end, it would be a tragic death for two chains that both go back to the late 19th century.

Kmart got its start in 1899 when founder Sebastian Spring Craze opened a five-and-dime store bearing his own name in downtown Detroit. The Kmart brand didn’t come along until 1962. The chain grew rapidly for several decades, claiming the discount segment of the market that big box stores like Walmart and Target now dominate.

Kmart is known for its 15-minute-long “Blue Light Specials”: A store will flash a blue light and announce “Attention Kmart buyers” on a public address system, and customers will run to buy discounted items. The promotion began in 1965 but was discontinued in 1991, although Kmart has tried to bring them back several times.

Sears’ history is even more of a story. The company was once the largest retailer in the country – both Walmart and Amazon during their heyday. At a time when most Americans lived in rural areas, its catalog allowed many consumers to purchase goods they would not have access to.

And Sears stores dominated the retail landscape, forcing many locally owned Main Street stores out of business the way big box retailers would one day shut down department stores. Many were anchors of Sears malls that helped fuel the growth of the American suburbs. This was literally a company that changed America.

The-CNN-Wire™ and © 2021 Cable News Network, Inc., WarnerMedia Co. All rights reserved.

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