From celebrity-backed store brands to literal “flash” sales, iconic mass merchant Kmart pioneered many concepts valued by shoppers today, albeit in other forms.
That hasn’t saved the once-mighty retailer, however. After April, Kmart will have only three locations in the U.S.
Turning discount shopping into a kind of gamified sport, Kmart locations numbered over 2,000 at the chain’s height in the late 1990s as it mixed merchandise and services in a destination shopping concept that helped to define the retail landscape pre-eCommerce. Its strategy of focusing on suburbs was an initial strength that Walmart arguably improved on.
News surfaced Monday (April 11) that the Kmart store in Avenel, New Jersey, will close April 16, bringing the U.S. store count down to just three: Bridgehampton, New York; Miami; and Westwood, New Jersey. Don’t expect much in way of Blue-Light Specials at this point.
Kmart concepts were ahead of their time, seeing aspirational overlap between luxury lifestyles and price-conscious shoppers, creating several curated lines endorsed by home style guru Martha Stewart, TV star and fashion icon Jaclyn Smith, NASCAR tie-ins and more.
See also: Sears Holdings to Shutter 28 Kmart Stores
Those clever ideas didn’t save Kmart from Amazon, Target and Walmart or the steady move away from department store shopping, much less the pull of eCommerce.
In January, owner Transformco closed the Kmart location in Fort Lauderdale, Florida, saying in a press release that its “go-forward store strategy for Sears and Kmart is to operate a diversified portfolio consisting of a small number of larger, premier stores with a larger number of small format stores — combined with its Shop Your Way rewards program, online marketplace and buy online, pick up in store [(BOPIS)] capabilities.”
Read also: Costco Pays $1B to Sears Owner for Logistics Co Innovel
The release stated Transformco “will continue to explore both Hometown Stores and Home & Life stores in cities and towns that previously had larger format stores.”
What remains of these two retail empires can now be found on ShopYourWay, a longstanding Sears loyalty and rewards program that’s now an eCommerce site offering discounts and deals on Sears brands like Kenmore, and points for purchases redeemable with dozens of partners.
An upgraded app called Shop Your Way Max debuted in 2021 offering higher points rewards.
Missteps on the Growth Path
Transformco was formed in February 2019 by former Sears Chairman and CEO Eddie Lampert, owner of private hedge fund ESL. Transformco acquired over 400 locations in the Kmart and Sears chains from Sears Holdings for $5.2 billion, along with other assets.
Already facing its most serious competition from an ascendant Walmart more focused on rural areas and with an impressive logistics operation, Kmart is seen as having ignored logistics in favor of sheer brick-and-mortar brute force.
It acquired Borders Books, Builder’s Square and Sports Authority, which were themselves either overbuilt or succumbing to competitive pressures — and which eventually shuttered.
Walmart overtook Kmart as the largest chain in 2002, and in its approach to modernization.
As Fortune reported, “Kmart also did not invest in the right technology and logistics, which caused it to lose against Walmart and put them in a position where the company would never catch up. Slow adoption of eCommerce put the final nail in the coffin for Kmart, as shoppers increasingly turned online for their needs.”
Mark Cohen, director of Retail Studies at Columbia University in New York and former CEO of Sears Canada, told the New York Post Monday (April 11): “It’s a study in greed, avarice and incompetence. Sears should have never gone away; Kmart was in worse shape, but not fatally so. And now they’re both gone.”
“Retailers fall by the wayside sometimes because they’re selling things people don’t want to buy,” Cohen added in the report. “In the case of Kmart, everything they used to sell, people are buying but they’re buying it from Walmart and Target.”
As a postscript to this chapter of the retail saga, a federal bankruptcy court ordered Sears Holdings creditors into mediation with Lampert Friday (April 8) in this ongoing litigation.
See also: How Retail Is Turning Closed Stores Into New Opportunities
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More