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Wednesday, December 8, 2021

This could finally be the last holiday shopping season for Sears and Kmart.

Originally published: Nov 25, 9:13 pm ET.

Chris Isidore, CNN Business

(CNN) – This Black Friday is likely to be the start of the final holiday shopping season for Sears and Kmart, two brands that once proudly dominated US retail.

The two chains are just a shell of what they were when the holding company that owns both came out of bankruptcy less than three years ago.

At the time, the holding company — given the overly optimistic name Transformco — still had 223 Sears stores and 202 Kmart stores nationwide. This was already 87% less than the 3,500 stores of the two brands when they merged in 2005 to form Sears Holdings. But the percentage drop in stores since the company’s bankruptcy in February 2019 has been even more dramatic.

To date, there are only 21 stores remaining in the continental United States with a full line of Sears stores, and two more in Puerto Rico, according to the store listing on Sears’ website, after recent closings were canceled. Another seven stores listed on the site are limited to the sale of household appliances, and in some cases mattresses, and not the entire assortment, which was once the hallmark of both chains.

By the end of the year, only six kilometers will remain on the United States mainland, with six more in Puerto Rico, Guam and the Virgin Islands.

“It always felt like liquidation to me. This has been going on for many years, ”said Reshmi Basu, retail bankruptcy expert at Debtwire.

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

“He lets leases expire, he dumps stores. He keeps them open when appropriate, ”said Mark Cohen, director of retail research at Columbia University. “Obviously, they will all leave soon. You can count on it. “

Sears and Kmart aren’t the only retailers grappling with a shift in shopping habits in favor of large box retailers like Walmart and Target and online retailers like Amazon. JC Penny and Neiman Marcus filed for bankruptcy when a pandemic broke out in 2020 and Lord & Taylor went out of business.

But Lampert’s critics say he is to blame for the slump in both companies, as he invested little in the stores themselves and sold much of the more attractive properties and brands that Sears once had, such as Craftsman tools, Diehard auto parts. and Lands End.

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

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In the current retail environment, there is little chance of saving any chain. Sellers are struggling to provide stronger retailers with the inventory they need given the current supply chain challenges. This makes it harder for Sears or Kmart to get the products customers want.

“We know that suppliers prioritize their supply. They deliver to retail outlets that add value to the brand, ”said Greg Portell, lead partner with Kearney Global Consumer Practice.

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

“The war for retail talent is very real right now. Not only are they raising hourly wages, they are looking for other elements to attract workers, college tuition, perks that Sears and other distressed retailers will find it difficult to match, ”Portell said.

If this is indeed the end, it will be a sad demise for two chains dating back to the late 19th century.

Kmart began operations in 1899 when founder Sebastian Spering Kresge opened a five-cent store in downtown Detroit that bears his name. The Kmart brand appeared only in 1962. The chain has grown rapidly over several decades, laying claim to the discount segment of the market now dominated by large boxes like Walmart and Target.

Kmart became known for its 15-minute “blue light specials”, with the store flashing blue lights and announcing “Kmart shoppers attention” through the speakerphone, while shoppers rushed to shop for discounted items. The promotions began in 1965 but ended in 1991, although Kmart has tried several times to get them back.

The Sears story is even more legendary. 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, his catalog allowed many consumers to buy goods that they would not otherwise have access to.

And Sears has dominated retail, forcing many of the local stores on Main Street to shut down as the big box retailers will one day close department stores. Many Sears have been anchored in the malls that have fueled the growth of US suburbs. It was literally the company that changed America.

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