Why are Kmart and Sears stores closing across the United States?
KMart and Sears are relics of the “Old Economy”. They have many strikes against them. The first is that they were usually anchor tenants in the decaying shopping mall space. As malls have seen marked decline over the past few years, both Sears and KMart have felt their share of this pain.Amazon is another reason for the decline of both Sears and KMart. Both of these entities have not embraced the advantages of the online mania of the past several years, nor have they fully embraced the changing advertising landscape, which relies heavily on social media. As a result, Amazon has stepped in and “eaten their lunches”.Also, the “new economy” seems less focused on brand names and dated model spokesperson’s. These two elements have been the backbone of both Sears and KMart. Many of the brand names and model spokesperson’s are old and hearken back to an older time. I am not sure that Cheryl Tiegs really resonates with the new millennial consumer. The same is true of the Craftsman brand, however, Sears was able to salvage some residual value when they sold this asset. The newly competitive virtual landscape has changed consumer sentiment as well as the overall affinity for these brands and icons significantly.Turning both of these retail monsters around would have been a “Fool’s Errand”, so management decided to “Gordon Gekko” these firms, selling them off “bit-by-bit”. Since many of these firms bought property in the late eighties and nineties, property values have risen steadily. The lack of any serious financial help at critical early moments coupled with management’s guidance into dissolution has accelerated the decline in many of the stores. At times, photo’s have memorialized stores and shelves that have resembled third world nations, with stores in total disarray and shelves empty of basic products.Many baby boomers grew up with these stores and NEVER anticipated their precipitous decline. Because of the size of this demographic, the demise of these icons seems to be a harbinger of something more serious. However, my belief is these two firms are victims of, “ you snooze, you lose”. Management is ultimately responsible for this decline and for not reading the “tea-leaves” as the retail market has changed so dramatically.