Sears, Kmart To Close 43 Additional Stores
Retail crisis continues.
The retail crisis continues as Sears and Kmart will close 43 additional stores. Numerous factors have contributed to stores closing, especially online shopping. But believe it or not, one market correspondent has used the situation to criticize President Donald Trump.
However, CNNMoney even reported that Sears Holdings “has struggled to stay afloat as customers turn away from traditional brick-and-mortar stores to shop online.”
Logical Reasons Behind Closures
Sears Holdings even admitted the company will focus “on bolstering digital sales” and try out some “small, specialized ‘concept stores’ that offer Sear’s [sic] best-selling items.”
USA Today reported:
“We have fought hard for many years to return unprofitable stores to a competitive position and to preserve jobs and, as a result, we had to absorb corresponding losses in the process,” Sears CEO Eddie Lampert said in a blog post.
“It is obvious that we don’t make decisions to close stores lightly. Our efforts have been, and will continue to be, fact-based, thoughtful and disciplined, with the goal of making Sears Holdings more relevant and more competitive for our members and other constituents.”
The company has closed 300 stores this year. This may not be the last we see of this, though, because Sears Holdings admitted back in March “there was ‘substantial doubt’ it would survive on its own, though the company said its cost-cutting maneuvers and other retail strategies would greatly improve its chances of carrying on.”
Sears Holdings has not turned a profit since 2010. Since then, it has lost $10 billion. Sears Canada “filed for bankruptcy protection last month” even though the country developed that leg in 2012.
Comparing Coal to Retail?
Fuzzy Slippers sent me an article from Yahoo! Market Correspondent Nicole Sinclair that placed the retail crisis on President Donald Trump. Because of course she did.
Sinclair complains that Trump has paid too much attention to the coal industry as the retail market consistently does not add jobs.
But in all honesty what can Trump do? The retail industry has not collapsed due to regulations and government strain. Physical stores have died out because of e-commerce.
Last April, I blogged about the retail crisis. I included a Bloomberg report that stated S&P blamed the closures on….ONLINE SHOPPING:
Meanwhile, America’s retailers are closing stores faster than ever as they try to eliminate a glut of space and shift more business to the web. S&P blamed retailer financial struggles on their inability to adapt to rising pressure from e-commerce.
Urban Outfitters Chief Executive Officer Richard Hayne said as much on a conference call with analysts last month. There are just too many stores, especially those that sell clothing, he said.
“This created a bubble, and like housing, that bubble has now burst,” said Hayne. “We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate.”
The retail crisis also didn’t start with Trump’s presidency. CNNMoney reported that Sears Holdings “closed 240 stores last year and 53 in 2015.”
That same Bloomberg article noted that many companies have decided to concentrate on online shopping:
Others are trying to re-emerge as e-commerce brands. Kenneth Cole Productions said in November that it would close almost all of its locations. Bebe Stores Inc., a women’s apparel chain, is planning to take a similar step, people familiar with the situation said last month.
“Today, convenience is sitting at home in your underwear on your phone or iPad,” Buss said. “The types of trips you’ll take to the mall and the number of trips you’ll take are going to be different.”
How do I economy? How do I market? You follow the demand. More and more people (including me) prefer to shop online. If that’s what your customers want that’s what you have to give them in order to turn a profit and stay in business.
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Comments
I’ve lived in my neighborhood for three years. I have two K-Marts near my house. Both are closing and the parking kits have more cars in them now than I can ever recall.
Yeah, when our town K-mart went out of business, I saw more cars there in one afternoon than I had for the 8 years I lived here.
Sears has been going belly up since the late 70’s when they decided it was a good idea to add more crap and annoy customers. JC Penny’s is on the same road. Now the challenge is to find it online without going to Amazon.
I buy all of our underwear, socks and t-shirts directly from Hanes.com. It is always in stock in the right color, right size, and has free shipping over $60 – easy enough to manage with 7 people in my house, 5 of whom outgrow the above items on a regular basis. I do not have to drag the kids all over town in the hopes that the stores I visit have what I need. And it comes right to my door. I buy all of our snow gear online as well (LLBean lasts through at least 4 children); and we often buy from other clothing retailers as well. I wait until I get the email informing me of free shipping, or t-shirts for 3.99, or back-to-school sales. I routinely check the clearance pages of my favorite online stores and buy things out of season or out of style. It’s great!
The thing that drives me nuts with shopping is the check out. They make sure you are not shop lifting, despite the fact their employees are the ones that do that and then the actual process. When I go to CVS, they constantly ask for donations to a cause of the month. I can’t stand that. Once it was for the homeless, so I informed the girl that the homeless make more money than her (about $100,000 from court documents). Another was for the troops, but I was sending tons to the troops as my son is deployed and he has never seen a bit of the stuff from the outfit they were giving money to. Point, make the check out painless and have inventory.
How on earth do the homeless make money? Are you saying they make $100,000 a year?
Online retail sales is not the only thing that killed Sears or K-mart by a long shot. Neither was a penny squeezing operation like Wal-mart, and they both had luxurious headquarters and big staffs. The stores were poorly merchandised and the product mix and price points did not inure them to customers as Wally mart did. The stores were old, dirty, poorly kempt and did not match up well against Wally and Target. Target excels with monied and semi-monied surburban female shoppers, but is of little use to me. Target is the last place I’d go shopping when I was going to change my oil at home and give a car a wash and wax.
I’ve been to a Wally and a premium outlet mall in the last few days, and both were packed with shoppers. So there are some retailers doing well, particularly popular brands that people want at better prices, e.g. a premium outlet mall excels.
I do not deny that online shopping has had some effect, particularly since the advent of the smart phone and expansion of the ability to price shop local physical sellers against online sellers. The smart phone coupled with the confidence of the emerging generations (that have always had the internet at home and school) in the use of cards for online shopping have really been the things that have boosted intermess sales.
The article mentions (in passing) that there are just too many stores.
Simply follow the laws of supply and demand. Too many stores and malls were built because Wall Street types and assorted developers made money by building them and selling them off to pension funds, etc.- money was not made by the stores themselves by operating their businesses.
On-line hurt – but on-line stores go broke too when there are too many sites in a sector; you just don’t get many headlines.
Too many stores fighting over too little business. Too much supply, not enough demand.
Eddie Lampert ought to be one of the most hated fellows in the USA, single-handedly taking an American Icon and bleeding it to death over the last dozen years. So many loyal customers, they put up with old musty stores because they believed in the brand and the company. The Craftsman ‘lifetime’ guarantee is legendary, now he’s sold off that brand too. His online shopping scheme is so complicated and so stupid that it’ll never, ever succeed. Now he’ll profit from selling the real estate.
As my Kenmore appliances die off, so will the Sears brand, in my family nobody will set foot in a Sears except me! So, unlike the stores weakened by online shopping, Sears and K-Mart were pushed over the cliff by Mr. Lampert. He had an empire and he frittered it away. Bye bye, Eddie!
FYI
“Why Sears Holdings Corp. Investors Should Hate Eddie Lampert”
“From early on it was clear Lampert’s goal was not to resurrect their respective retail empires….
Lampert …revealed in his annual letter to shareholders last year, he purposely dismissed spending “hundreds of millions of dollars more in decor and fixtures” because he said customers weren’t interested in that, believing instead they wanted digital enhancements and omnichannel shopping opportunities.
…Lampert was using the company’s available cash to buy back its high-priced stock to juice per-share earnings. Between 2005 and 2010 (the last year the retailer reported a profit), Sears recorded net income of almost $3.8 billion,
but spent over $5.8 billion on share repurchases, sometimes at prices as high as $170 a share.
It was a careless decision at a time when many other businesses were curtailing their buyback programs to adjust to the recession and constrained consumer spending.
https://www.fool.com/investing/general/2015/05/20/why-sears-so-investors-should-lovehate-eddie-lampe.aspx
It appears Eddie is a “Venture Pirate.”
Not venture capitalist at all although that is what they hold themselves out to be. Venture Pirates are the heirs to the Corporate Raiders and Greenmailers of the 80s and 90s.
Venture Pirates take over management of a retailer, make things appear to be better for a very short while (at least on paper) while loading the retailer up with maximum DEBT from borrowing. That is one way they can then increase cash dividends paid out, evidently.
So in short, Venture Pirates are Cash Sucking Vampires who purposely destroy a business so they can enrich themselves. That’s my understanding of it at least.
The fact is that the people with disposable income for shopping do not want to hike around dinosaur malls that have been fuxated by the busing in of inner city visitors. The cities are forced to provide these bus lines under threat of discrimination lawsuits and they then put a gun to the head of the merchants to stop protesting the busing even though the merchants know what’s going to happen to their mall, their investments, and their employees’ jobs. The shrinkage does them in, coupled with a diminishing of repeat clientele with buying power.
This has happened in hundreds of malls across the country. The buildings remain empty for a few years while the blight settles in, then half or fewer of them become occupied by second and third tier merchants selling discounted trash products. The housing prices drop and homeowners lose their equity. It becomes the ‘hood.
Rinse and repeat.
Sears used to be the “go to” place for appliances and hand tools. Kenmore appliances were known for their long term durability. The major appliances were made in the USA by Whirlpool and sold under the Kenmore name.
Craftsman tools were also revered for their high quality and lifetime guarantee. I believe they were made by a Vermont company. I once returned a Craftsman ratchet wrench that had to be at least fifteen years old when the ratcheting mechanism failed. It was replaced no questions asked, not even a receipt to show purchase was required.
Sears has killed both the Kenmore and Craftsman brands. Kenmore products are now sourced from Lucky Goldstar (LG), a Korean company never particularly know for quality products. The Craftsman brand has been sold off. The tools are sourced from various manufacturers, not necessarily in the US either. There is no more lifetime guarantee.
Yeah, I grew up on Sears and Penneys. If they didn’t have it, my parents were pretty sure I didn’t need it. My father was a skilled mechanic (he worked on Jet engines for the Navy), and my mother was as RN. I grew up using Craftsman tools.
I have now pretty much moved to Wal-Mart and Dollar General/Family Dollar. I use Dollar General/Family Dollar to get something very quickly. I can park, go in, buy the item and get back to my car in less time than it takes to drive to and park at the Mall.
I use Wally World for almost everything else. They have Free Grocery pick-up (works GREAT – I bought $98.00 worth of groceries yesterday and was at the store for literally less than 5 minutes. They also do free 2-day shipping for most items, no membership charges required. They have now announced Free Pickup with a discount off the price. I am very interested in seeing how that works.
And some retailers are fighting back. The Publix Grocery chain in FL now has free pickup and has announce home delivery. My daughter is still checking it out, but it says that they will bring you groceries to your house and bring them inside for an additional charge of $5.00. $5.00. Are you kidding me? That’s a no-brainer.
DCP
Walked through a Macy’s yesterday. Noted that the prices on almost all their clothing was considerably less than I was used to seeing. And just did a quick search on Amazon on women’s dresses and men’s trousers. Both starting at $9.99 and going up on the first page. With customer reviews of how they fit.
I bought 3 pairs of lightweight summer trousers at an outlet mall the other day. Not as heavy of well built as the $30. work pants I usually buy. But 3 of them will last at least twice as long.
The one clothing item I’m willing to pay more for is shoes that fit. When I can find a pair labeled 9EE that actually are 9EE. I’m waiting for the day when a major chain lines up with a shoe company and you walk in, place your feet n a box, and the lasers and sensors take all the measurements, and a week or two later, the custom shoe you ordered is delivered to your door. Taking into account length, width, arch height and location, bunions, and any other foot thing.
Shoes..absolutely.
Shoe stores used to have something, obviously not laser, that measured feet for custom sizes. My Dad couldn’t pass the Selective Service physical when drafted at the beginning of WWII because of his feet.
I remember about sixty-years ago going with him to Dr. Scholl’s and sticking his feet into a machine which took measurements to define the shape and size of both feet. It also showed on a small screen the structure of the foot.(perhaps x-ray based?). From these measurements a custom fitted pair of shoes were made.
One reason why brick and mortar stores are on the decline – at least for me – is that I don’t particularly want to share a public rest room with a male pervert.
We used to shop at KMart fairly often. They always had decent housewares and good prices on reasonably stylish clothing. I hadn’t been in for a few years but about a year ago we dropped by KMart. (We have to travel about an hour to get to one.) I couldn’t believe my eyes!
All the nice housewares were gone and the “clothing” was entirely so cheaply made it didn’t look like it would last a single trip through the washing machine, all in ugly out of fashion colors and every piece looking like something a bag lady would wear.
We’ve bought nothing and never bothered to go back.
Some on-line bookseller with a strange name blew Sears out of the water. Why is it Amazon that downed Sears and not Sears that blew away Amazon? It is management competence pure and simple.
I have not bought anything from Sears in 35 years. I have had no reason to buy anything from Sears. I buy on-line and I buy from Sam’s and Walmart and Kohl’s and Home Depot. I have found no reason to buy anything from Kmart except when I was passing by and needed something they had immediately.
Sears and Kmart have just not adopted to reality much less shaped reality.
Ironic that Sears Roebuck & Co that began as a mail-order catalog retailer, ditched the catalog altogether in 1993, and is now essentially being done in by businesses with their original business model.
It’s almost de rigueur nowadays to blame Sears’s woes on online competition, but the Sears death spiral began long before there was any such thing as online shopping. Sears should have been perfectly placed to jump right to a dominant position in online sales, but its mail order operation has been decaying for decades; just tacking a web site onto the corpse wouldn’t do any good. Primarily it was a distribution problem. Customer just couldn’t get the goods. Orders would be delayed for weeks … then months … and finally canceled, with a weird instruction to “reorder”. No thanks, in the meantime I’ve found another supplier. And this became a habit years ago, long before there was any such thing as “online”.
This is particularly weird when you recall that mail order was Sears, Roebuck’s original retailing innovation and breakthrough. Some genius realized that he didn’t need retail outlets everywhere to have every consumer in the entire country be regular customers. All he had to do was make it possible for people located anywhere served by the Post Office to select and buy merchandise. Brilliance—use a system already set up by the government to do his distributing. He needed a good illustrated catalog and a top-notch warehousing operation in some part of the country well served by oceanic shipping and railroads; hence the Sears headquarters in Chicago.
What Tom said.
It is hard for younger people to imagine just how strong Sear’s Catalog Operation was. You could buy just about anything from one.
In fact, I suspect that most people don’t know that you could buy a 2 or 3 bedroom house from the Sears Catalog.
DCP
One might say these 43 Sears stores are being ‘obamaed.’
Speaking of that moron, if he reads this story, he’ll probably think one Sears store is being closed in each state of the union.
There may be a “retail crisis,” but the continuing failure of K-Mart/Sears is a different story. Sears and K-Mart are failing because they’re not competitive.
Both stores are dirty and disorganized and neither has adequate foot traffic. Around here, K-Mart tries to insure people shop elsewhere by hitting up every single customer to contribute to charity at the checkout: one’s charge card is held hostage until one loudly proclaims that, no, I don’t wish to contribute to K-Mart’s chosen charity today.
But even aside from that (what idiot thought that was a good idea?) K-Mart mostly competes head-on with WalMart, and WalMart just does it a whole lot better in that it has better quality merchandise, significantly lower prices, and stores that are more attractive than a K-Mart. Then again, just about any store is more attractive than a K-Mart.
WalMart does some things very well, and K-Mart does practically everything badly, and it’s just very difficult to see K-Mart ever being able to successfully compete directly with Wal-Mart. One would think senior management would realize that if the stores really can’t compete with WalMart then the stores must move to a different retail niche, selling things WalMart doesn’t sell. Yet they don’t: year after year there is no change, just stores that become even dirtier and more run-down and more dismally unattractive.
And Sears, well, Sears lost the battle to sell women’s clothing long ago and they lost the battle to sell hand and power tools, and there are far better places for furniture or large appliances. Sears has been a failed, declining store for decades now, a store that is all too obviously run by people who have no idea what to do about it.
It does seem astounding that K-Mart/Sears just go on losing huge amounts of money year after year, yet apparently nothing at all is done? These are stores run by people who obviously have no idea how to run a store, and don’t seem much interested in learning. The bottom line is, these stores are just so bad that they would still be failing in a universe in which no one ever bought anything on line.
Our local K-Mart and Sears are both older buildings but well maintained and clean.
K-Mart downsized it’s excellent housewares depart ment to add groceries and now has small departments for both that don’t carry enough merchandise.
I shop online because going to a brick and mortor means finding they don’t have what I want or don’t have the right size or someone’s brat is rampaging through the store.
I shop various on-line outlets and love having what I want delivered to my front door without having to fight traffic, weather or other shoppers. I buy ALL my books from Amazon since I can find titles I never find in our local bookstores.
‘Yahoo correspondent…’
As bad as a ‘ny times corresoondent.’
Melissa Mayer: the eddie lampert of tech execs
“33 depressing photos that show Sears is a disaster”
http://www.businessinsider.com/sears-store-photos-2017-7/#the-window-displays-outside-the-store-which-are-meant-to-entice-shoppers-passing-by-are-mostly-empty-1