It looks like Kmart is going on yet another diet amid whispers that it could be wasting away.
The discounter will reportedly close 64 stores by mid-December — adding to the 68 slated to shutter this year — according to Business Insider, citing Kmart employees and filings by parent company Sears Holdings SHLD +3.09%.
Kmart has been hemorrhaging market share and sales for years. A decade ago, the chain boasted 1,400 stores; 870 stand today. Sears did not respond for comment by press time.
Just last week, the retailer dismissed an earlier Business Insider reportthat Sears, and in particular, Kmart, are facing their imminent demise. “We disagree with the opinions stated in the Business Insider report,” Sears spokesman Howard Riefs told FORBES. The story cited a note from Moody’s Investor Service downgrading Sears’ liquidity rating.
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Subhead: Anatomy Of A Discounter’s Decline
Until the early aughts, Kmart was routinely mentioned in the same breath as Wal-Mart and Target TGT +1.24% as the country’s big three national discounters. By sheer store expansion and economies of scale,the trio helped put regional discounters like Bradlees, Caldor and Ames out of business.
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But Kmart failed to keep pace with its discount-store brethren.
While Wal-Mart owned the low-price leader/world’s biggest retailer niche, and Target secured its spot at the nation’s only mass-merchant couturier, Kmart’s reason for being became increasingly nebulous amid focused competitors and a retail landscape upended by Amazon and online shopping.
The retailer has since suffered from a lack of investment in stores, a revolving door of senior ranks and an undifferentiated merchandise mix.
For over a decade, Martha Stewart’s Everyday home line was the crown jewel of Kmart’s product mix. The two parted ways in 2009, and Stewart has since said she regrets not buying the chain. Photographer: Mike Mergen/Bloomberg News.
It lost what was once the crown jewel of its product assortment in 2009 when it parted ways with domestic doyenne Martha Stewart, whose groundbreaking Everyday line of home goods lined its shelves for more than a decade.
Stewart since regrets not buying Kmart. “We thought about buying it, but we didn’t do it, and we should have,” Stewart told The Associated Press last year. “That could have been our store — KMartha!”
Who’s Minding The Stores?
Eddie Lampert, chairman and CEO of Kmart parent company Sears Holdings. (Photo credit: Forbes)
Meanwhile, Eddie Lampert, Sears Holdings CEO and majority shareholder, has been slammed for cutting costs as opposed to minding the stores. Since the hedge fund guru orchestrated Kmart’s $11 billion merger with Sears in 2004, he has been spinning off divisions, unloading real estate, and closing locations to boost the retailer’s liquidity.
In recent years, Lampert has defended its commitment to the business by citing investment in its Shop Your Way loyalty rewards program, whose members generate most of Sears and Kmart’s sales. But even Lampert conceded this spring that the program has failed to compel those core customers to shop more frequently.
In August, Kmart unveiled a new “store of the future,” in Des Plaines, Ill. dubbed, a “Whole Lotta Awesome,” with features like “Shoparazzi,” a free personal concierge service whereby store associates do the shopping for you. The concept store is part of a marketing and rebranding effort to provide enhanced, exclusive offers to Shop Your Way members and woo millennials.
But scattershot revival efforts (anyone remember Sears Essentials, the ill-fated Kmart/Sears hybrid format?) have not amounted to a sustainable retail strategy to keep shoppers coming and cash registers ringing. Kmart’s sales have plummeted from $19.1 billion in 2005, to $10 billion today.
While Lampert, who as the founder of hedge fund ESL Investments, earned a reputation “as one of the investing world’s savviest money managers,” he had zero retail chops when he purchased Kmart — and has said as much. “When people say I don’t know anything about retail, I tell them, ‘talk to my mother, and she will corroborate that,’” Lampert said at a Sears shareholders meeting I attended back in 2007, pointing to his mother in the audience, ironically, a Saks Fifth Avenue veteran.
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