Sears, Kmart Was Never A Match Made In Retail Heaven

Sears is facing some tough times trying to survive bankruptcy, but Kmart is in even worse shape. Many traditional department stores like Sears have online competitors and box retailers that are hindering them from making a good profit. Kmart is facing competition from stores like Dollar General and Dollar Tree where both are making great profits and expanding their reach.

Both Sears and Kmart became one in 2005 to create Sears Holdings, and it’s been downhill ever since. The company filed for bankruptcy recently and claimed it’ll stay in business. However, experts don’t see any long-term viability for either company. In many minds, the companies are in terminal condition.

Kmart’s condition is even worse than Sears because it was already in trouble when Eddie Lampert purchased it while in bankruptcy in 2003. The problem is that Kmart was unable to keep up with Target and Wal-Mart. The company had always worked on a relatively thin gross profit margin, competing on price alone. Sears has brands like Craftsman and Kenmore to keep it from going under earlier.

The real losses for Kmart began in 2011, as the country was recovering from the Great Recession. It shuttered stores as sales dropped. Sears was also having problems but not near to the extent that Kmart was. In an eight-year span (from 2010 to 2018), Kmart closed over 70 percent of its stores. It currently has 360 stores still open, but about 110 of them have been slated to close already.

The advertising budget for both stores was slim, and eventually, Kmart advertising was gone.

Kmart, which first named for Sebastian Spering Kresge, began at the tail end of the 19th century in Detroit as a five-and-dime store. The store’s name changed in 1962 to Kmart, and it grew fast for many decades. It would dominate the big box stores with its blue light specials and announcements of “attention Kmart shoppers” on the public address system. The specials stopped in 1991, but the store attempted to bring them back a few times.

During the early part of the 1990s, Kmart bought OfficeMax, Borders and Sports Authority. They didn’t hold onto them for very long, as both Borders and Sports Authority fell into bankruptcy and closed. Kmart also filed for bankruptcy in 2002 when it has 2,100 stores. The bankruptcy process allowed them to close over 300 stores and reduce its debt to boost the balance sheet.

It didn’t do much good!

Sears Holdings’ managers were distracted by Kmart’s issue to fix the problems Sears was suffering from.

For that reason, both companies have suffered tremendous losses and may never recover.

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Posted by on Oct 23 2018. Filed under Business, New. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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