On paper, the merger between Kmart and Sears looked almost fool-proof. Investors were confident that hedge fund manager Eddie Lampert had the midas touch, and that Sears’ real estate holdings were worth more than $150 on their own. Sears’ well-regarded brands would be paired with Kmart’s convenient locations—and everyone would make tons of money.
Now it’s looking more and more like both Sears and Kmart are doomed. Customers are “staying away from Sears stores in droves,” says the New York Times. The stores themselves, rather than serving as a marriage between great brands and good prices, are (to be perfectly frank), ugly overpriced sh*tholes.
From the NYT:
The Sears Essentials strategy, now called Sears Grand, offers a case in point. This was a plan by Mr. Lampert to compete with the new breed of smaller strip shopping centers, anchored by stores like Best Buy, Home Depot and Target. Sears stores, found mostly in enclosed malls, were losing prized customers to the smaller centers. But by converting Kmart stores, which were near the smaller centers, into Sears Essentials, the company hoped to lure shoppers back to buy Kenmore washers, Craftsman tools and Diehard car batteries.
“I have always believed that Kmart customers had the inclination to buy more valuable products at Kmart if presented with the right value offerings,” Mr. Lampert wrote in a letter to shareholders in late 2005.
But Sears Essentials flopped. It was not because Kmart shoppers rejected Sears products, but because the experiment seemed to consist only of tossing Kenmore stoves and Craftsman hammers into an old Kmart store, rather than creating a vibrant new shopping experience.
The former Kmart in Parsippany, N.J., is typical. Three years ago, it was converted into a Sears Essentials store. By all accounts, the store could have been a success; it sits in a bustling suburban shopping center, surrounded by popular retailers like a ShopRite grocery store and a Bed Bath and Beyond.
But beyond introducing new brands, Sears invested little money in the store. In November, a visitor found mismatched floor tiles in the lobby, Reagan-era beige shelves in the food aisles and a ragged brown carpet in the clothing department.
Near a customer service desk, a broken pipe dripped water from the ceiling into a garbage pail. Workers said the pail, intended as a quick fix, had been in place for two weeks while they awaited repairs. They also said business in the store was terrible.
Burt Flickinger, a longtime retail consultant, said: “Eddie has cut costs and raised prices for two years. But shoppers are not stupid. They figure it out and shop someplace else.”
A Sears spokesman disputed that the stores were down at the heels but acknowledged that the company must work to “improve the customer experience.” He said the company has improved the profitability of the Sears Grand stores and still considers the original concept valid.
The article goes on to speculate what Lampert’s exit strategy might be, considering that most of the value of Sears is in its real estate… and perhaps you’ve heard that the real estate market isn’t exactly hot right now.
The NYT doesn’t mention other causes for concern besides slumping sales. For example, Sears’ recent privacy dust-ups suggest that they’re not especially concerned with protecting their customer’s personal information—a mistake that can come with a costly lesson. Just ask TJX. And then there’s the repair devision, about which Consumerist receives endless complaints and no resolutions.
As one analyst mentioned in the Times article put it: “We just can’t avoid the cliché ‘rearranging the deck chairs on the Titanic’ when considering the proposed new operating structure for Sears.”
Saving Sears Doesn’t Look Easy Anymore [NYT] (Thanks, Craig!)
(Photo:Allan Ferguson)
(Photo:Getty)
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@HRHKingFriday: Agreed. Agreed on the more polarized nature of consumer identity as well. The middle market brand is drying up partially due to the pressures to be/appear wealthier than you are. For example, Gap jeans used to be considered middle or even middle upper market. Now, that brand is shunned for Prada, Coach, Diesel, D&G, Paper Denim, etc. It’s lower class or upper class and not much in between. Only a few middle market brands have mangaged to thrive (Abercrombie, Hollister, etc.) but they’re nearly out of reach even though they’re considered “middle class” brands. There’s always been this “aspirational rich” pressure, but its become more severe in the last few years. Its sort of like Fox News, they’ve attempted to redefine what the “center” is by pushing everything to the right. Retail has tried to redefine the “middle market” by pushing everything upscale (often without the increase in quality, fit, etc.) In both cases, buying into that pressure could hurt you in the long run. Sorry, this is a bit off-topic to Sears/K-mart but is important for context (at least that’s my justification).
I will add my two cents about K-Mart. My first job was as a K-Mart cashier. On my very first day there, I noticed an odd smell coming from under my register. The manager told me it was a dead rat and then handed me a can of Lysol. She told me to spray if any customer mentioned the smell. The dead rat stayed there for over a week until someone finally vacuumed it up.
In the mornings, it was my job to go through the candy that sits in the check-out aisles and see what the rats had eaten the night before and throw it out. The candy boxes were FULL of rat droppings and I had to tally how many bars of candy were destroyed. We would see rats during the day scattering about. Employees were disgusted and told management about it, but it wasn’t until a customer complained that they finally did something about it.
It’s like polishing the brass on the Titanic.
Before Xmas our local Sears finally built a Lands’ End boutique into about 1/4 of the store. Before that any of the Lands’ End merchandise was sparse and scattered among the clothing I’d never walk out of the store with. If anything might keep Sears holding onto the ledge of the retail market it might be their Lands’ End merchandise.
Other than that recent remodel, Sears is still feeling threadbare at it’s edges.
Hmmmm…ugly stores, abysmal customer service, lousy warranty policies, lazy employees and repair service ripoffs. Sounds like a good way to run a company to me. Customers must just not be getting the positive message that Sears is trying to convey to them. Obviously the whole thing is the customer’s fault. Moving forward.
When my dad and I were Christmas shopping for my mom, we went into a Sears and had the typical “Sears Experience”– the store wasn’t necessarily dirty or worn down, but everything was disheveled (we were just there on a random day a couple weeks before Christmas, not Black Friday or something), the store was uncomfortably warm (saving money not running AC? yeah, we’re in CA so it wasn’t an over-heating issue), it seemed like they were only running half of the lights, etc. I’ve noticed this store in the summer also runs hot.
They basically exude that they’re really tight for money and could go out of business any minute which probably will turn into a self-fulfilling prophecy. If the employees don’t care, and the store doesn’t instill a “pleasant shopping experience”, why would people come back?
It’s sad to see the mighty fall sometimes, but I do agree they’ve dragged Sears down to the KMart level, and then both proceeded to get worse.
You mean this is news? I’ve avoided Sears ever since my Mom bought me Toughskins from them 30 years ago!
You set foot in a Sears, it’s like a timewarp right back to the 1970s. I don’t think anyone under 60 even works there anymore.
Beam me up Scotty!
@BrianH: think sears is a timewarp? try macy’s. welcome to 1961.
I frequent a Kmart on Signal Mountain BLVD in Chattanooga TN. This store went from being down in the heels to being quite spiffy looking after the merger. The floors are spit polished, the shelves are neat and tidy. Sales are promoted with large signs and the help is super friendly and they don’t make me wait in line, they make sure I;m through the check out in a timely manner. In the old kmart, you could buy A Hershey’s candybar – in the New Kmart you can buy lots of Belgian or swiss chocolate – there are many more instances of the buyers for the stores paying attention to stock. You can even get a Craftsman Tool, a Kenmore Grill. And don’t forget Martha Stewart. The store is close to Walmart, but who wants to walk so much to find something. My step-daughter works at Walmart – I know how badly they treat their employees and the benefits are barely affordable to her and she has to live at home with her young son and would love to have her own place. Americans, we are spoiled. Just read the posts before me. You wonder why we are becoming a second rate nation – with your mean-spiritedness and short sighted me-first mentality. Come on America, what DO you want next? As for the customer service comment, try being a little more polite when you call customer service, ANY customer service. Talk to people who work in it, they will tell you how nasty you can be. Get with it America, this is our country and we are all in it together. What you put out you get back, and just read these posts again to see why we are becoming a second-rate power – and it starts with YOU.
@firesign:
1961, eh? Is that good or bad? Still a decent department store, in my mind. Our Macy’s, that used to be Marshall Field’s that used to be Hudson’s are actually quite nice. Did a lot of shopping there for Christmas.
The Sears near my parents treats its customers like crap. That and the clothes just look like junk. The only reason I go into one is for Land’s End stuff.
I am in a border town and the only people that fill Kmart’s parking lots are Canadian shoppers who don’t know any better. This has been reducing since the Canadian dollar is down a bit. We just had one kmart close up in our area this month and I am sure that the one left is soon to follow.
You put a store that is overpriced by A LOT 5 min away from stores like Target and Walmart that have their inventory system down pat and make reasonable attempts at customer service and the overpriced store in this case Kmart will go down eventually. It does not help that the employees in our Kmart are the lowest of the low (seriously, our Walmart has better quality employees) and they act like every time they have to do a price change that the money is coming out of THEIR pockets. I really hate shopping there because I feel that the employees are giving me, the customer of the store the grief of making their job harder and making them work more just because I bring up a wrongly priced item which was the FAULT OF THE STORE, ITS NOT MY FAULT! I have had to have price changes at the register MAYBE once a year at Target and Walmart but at Kmart if I shop there it would be 3 price changes for one transaction, not to mention if you are even thinking of buying a regular priced item there and not a sale item it will almost always be 20-30% higher priced than the same exact item at target or walmart.
Sears is actually a really nice store here, yes I know its very very hard to believe but its very clean, merchandise is organized, checkouts are staffed and employees are friendly and helpful (sometimes overly helpful), and they don’t act condescending and rude when you ask them for something like its coming directly out of their pockets. Merchandise is almost always not accurately priced however they have self scanners all over the store.
One thing I can judge from this thread is that Kmart and Sears stores are VERY inconsistent. Target is extremely consistent, you always know you are going to walk into a reasonably clean store and very well organized store. I have no doubt in my mind that yes there are ugly sears stores that exist and there are nice Kmarts as reported in this thread.
I love Kmart (as the Wal-Marts around here are completely ghetto and trashed), but the stores are just plain out of date. They recently added a large appliances section to my Kmart…did they replace the mismatched floor tiles? Nope. I mean the store still looks clean, but very trashy and cheap at the same time. If they did a full remodel, it would be a very nice store to shop in
The shelves at the local K-mart actually look like they’re falling apart. All the chrome trim (which would look 20 years out of place regardless) is twisted and mangled.
I remember back in the early 90s, Sears charging 70 dollars for video games that you could get for 40 or 50 at the Fred Meyer’s about a mile away.
I don’t think their “operating structure” has anything to do with their problems.
And I’m not sure “deck chairs on the Titanic” is really a good analogy, either. The problem here isn’t the iceberg, it IS the deck chairs.
There is not a more depressing experience than shopping at KMart and Sears is not far behind.
KMart has the energy level of a gas station. Sears just doesn’t offer anything you can’t find elsewhere for the same or less. I’ve been in a Sears maybe 3 times in the last year and it’s just ok.
KMart can offer some decent deals or good quality merchandise if you look but just going there is a downer.
As for the person who asked about JC Penny….JC Penny recently located in my city from it’s downtown store to a really nice brand new suburban store and while I think their regular prices are about $10 more on any given product than they should be their sales can and often are outstanding. I got a $90 winter coat there for like $24 at Christmas time. My choices are JCP,WalMart,Target and TJ Maxx and Shopko if I must.
KMart and Sears…not so much.
@lotusflwr: I just realized the term “ghettoesque” is exactly what the KMart up the road is.
Never crowded, poor selection of items…at least we still have Burdine’s
Actually, here in FLA we tend to shop at Bealls and Tar-zhay.
Bealls has a unique selection of merchandise, and T has everything else.
@HRHKingFriday: The point is as I have a distaste for seeing children under the age of 10 out with their parents at 11pm on a Tuesday school night. Kmart closing at 9pm kind of limits me- not that I would not see the same conditions at a Kmart at 11pm.
Now given the socio-economics of the parents one can understand they do not have a clue. Illegals- children probably aren’t in school, lower class folks- maybe working the evening 2-100 shift and take their kids out at 11pm on a school night- clueless or kids not in school.
It seems that the K-Mart retail experience at our local Big K is the same as everyone else’s, viz. disorganized stock, surly staff, poor physical plant. This Big K actually had signs posted everywhere notifying shoppers that they would get a free (!) 2-liter of delicious Pepsi-Cola if the cashier failed to offer you an opportunity to apply for a Sears Card. Of course, our cashier didn’t do so – she was too busy gabbing with her friends – so just for the hell of it we asked her to get us our free 2-liter. She vaguely gestured over to her side and said “Go to Customer Service for that.” Said counter looked like the Wild West, bedecked as it was with uncrated Martha Stewart Living(tm) crockery and loose clothing. We decided to forego our opportunity to snag a free Pepsi and got the hell out of there.
Seriously, the K-Mart/Sears merger was EPIC FAIL. It’s sad to see Sears go to pot like this, because our family when I was a kid was one of those “Sears families” written about above – tools, appliances, clothes, and of course the Christmas Wish Book.
Ah, such a vibrant economy we have!
I used to pass a K-Mart on my way home from work every day. I would stop in a couple of times a month to pick up a few things. They converted it into a Sears Grand and I haven’t been in there since. I know what I can get in a K-Mart or Target, but what’s a Sears Grand? It’s a failure of marketing.
The K-Mart in Somerville, MA is particularly craptacular. Prices on most items are ~20% more than the nearby Target, and the store is dirty and in disarray. Every time I go there, which is very infrequently and usually for one item that I know only they carry, I have to fight the urge to plead with other shoppers for them to leave and go to Target.
@ MissPeacock, are you freakin serious??? That is so disgusting, not to mention unsafe. Rats carry all sorts of diseases, and you can even get one from just being near/smelling the droppings. Now I’m scared to buy candy from the checkout aisle
I’m living in NYC right now for school, and there is no Target here, just a KMart… There’s a Target by my house though, and I love it. My mom shops there all the time and the prices are really good compared with Rite Aid, Walgreens, and other stores. We used to shop at KMart years ago when I was little. We don’t really go there anymore because Target is closer and cheaper, and nicer! Only if there’s something we really need from there. My mom always laments on how KMart used to be a nice store, and now they’re just so disorganized.
@whoa2go: Eat me.
My favorite ploy by Sears is when they offer free shipping on items priced over “x”. I wanted to buy a refrigerator that was priced at $399. Free shipping that weekend was offered for items $400 or more. I told the salesman to charge me the extra dollar and he wouldn’t do it.
I wasn’t satisfied and I guarantee I didn’t buy anything.
The business at our local Big K was never all that great since it opened in the mid 90′s, but these days it’s rather sad to see the busy parking lot of the Ingeles supermarket next-door while Kmart rarely has a fourth the cars in it. There’s nothing particularly terrible about our store, it just seems to have much less staff than it used to and the selection is somewhat poor with slow turnover.
The one-hour photo they put in was abandoned in about a year and sat, dirty and unused, for over twice that long before they ripped it out. It was in a high visibility area, too, next to the checkouts, so that made it even worse. The snack bar seems to used mostly as a place to store returned items. I’m not sure if still opens at all.
Meanwhile, the Wal*Mart, which doesn’t have Kmart’s central location, is doing a great business. It’s not even a very good one compared to others I’ve seen, but it manages to beat Kmart. Their photo lab always seems to have two staff members. I’m wondering if Kmart will end up like the Roses that was once in the same area, with everything having a deep coating of dust in the years before it was torn down.
My simple solution Mr. Lampert: Stop micromanaging everything, driving staff away and wasting time ‘researching’ solutions. Just kill the Kmart brand, it’s got too much of a low-class connotation to it. Close the underperforming stores, make everything Sears and then spend some of your billions remodeling them and fixing the once famous service department. Or sell the whole thing to somebody who knows what f*ck they’re doing.
My local shopping scene improved substantially after Sear married K Mart — they tore it down, Lowes arrived with a freshly built store, so the outcome was fantastic….
We used to spend a lot of time at Sears and we always bought all of our appliances there.
We liked the shoes and loved the way they stood behind their products with guarantees.
But now, they charge a 15% restocking fee on virtually everything they sell. It does not matter, if you bought it 2 hours ago, if it’s broken when you got it… 15% WOW. So much for standing behind their products.
And have you priced out their extended warranties lately ? Four times more expensive than most other retailers.
I have not spent a dime at Sears in 10 years, and I don’t plan to ever spnd any more there again.
My biggest problem with Sears is that they rarely have anything that I’m really looking for. I used to live in Jersey City and there’s a large Sears in the Newport Shopping Mall. I would often visit the Sears in search of things for my apartment; mainly, things I needed to fix or improve in my apartment. I would say that about 80-90% of my trips to Sears ended in failure when I was looking for specific items — mainly hardware-related items like tile grout, silicon sealant, furnace filters, specialty drill bits, etc. I had always equated “Sears” with having a really good hardware section and in recent years it’s become a joke. During one of the redesigns, Sears cut the Craftsman/home improvement section in the Jersey City store in half, and the other half then became a sales floor for exercise bicycles and other home gym stuff. I don’t think I ever saw an adult in that section; it’s usually the kids that are playing on the bikes and treadmills while their parents are looking at paint and such.
I love my local Sears and am sad to see they may eventually close. The Sears I go to opened about 10 years ago and it is bright and clean and comfortable to shop in. The employees there are some of the nicest anywhere. I always find great deals there too. They had great deals at Christmas. Most of our appliances are from Sears and most of my husbands’s tools are from there. We will be buying a big screen tv from there soon. I really can’t find anything negative about it. I hope they can get their act together, fix their problems and stay in business. It’s always sad to see a long time name go away.
I bought a group of products from Sears…fridge, oven, micro, and water heater…for my new house. Needless to say, at some point ALL these products had issues. Whether it was a missing balance foot, a faulty pilot, or a flat out non-heating heating element, I HAD to deal with Sears customer service. It’s like dealing with fools. They pass you around like a rag doll.
Not one dept. has a clue what the other has said. And meanwhile I cannot heat up food for my kids!!! I complained and complained, to no avail.
The Merrillville, IN and Schererville, IN stores are my main culprits. I do not care if they promise to give away free stuff, I will never step foot in their stores again. Stay clear.
@HRHKingFriday: I agree with you on Kmart competing with the ‘dollar stores’.
I was actually desperate enough to work for Dollar General for about 18 months, so I know a bit about the folks who frequent them. It’s not just the low-to-mid class folks doing business there–folks of higher incomes aren’t above shopping there if they can provide a convenient alternative to Wal-Mart. Say what you will about the crappiness of DG merchandise, but they’ve made quite a bit of money being the RC Cola of retail.
If Sears Holdings is willing to humble themselves on the K-Mart side toward smaller, more efficient stores, they could be the ‘Target’ of this level of discount retail, only with higher quality stuff (The K-Mart brand should retain some measure of superiority). Merge the smaller K-stores with Sears Catalog stores to where they could buy or order appliances and higher end clothing (that wouldn’t be necessarily stocked in store anyway).
They’re dead if they do and dead if they don’t do anything to change, so they might as well scrape from the best parts of the barrel bottom.
The last time I went into Sears, I was shoe shopping. I’ve worn the same shoes to work–Rockport ProWalkers, size 11 1/2–for years. The shoe salesperson told me that they didn’t stock half sizes, and repeated that bit of information because I was staring at him in disbelief. They weren’t out of stock; they never stocked half sizes, ever.
There’s a K-Mart near my apartment, a lot closer than either Wal-Mart or Target, and even though it’s got a much smaller selection than either, I would still go in there for basic socks-and-underwear stuff… except that some genius decided to replace all of the red in the store signage, including the K, with that shade of acid green that’s a little painful to look at. It smacks a bit of desperation.
Since the sears k-mart merger, Sears was never the same. Customer satisfaction and service was thrownout. I recently shopped at a sears store in a Brooklyn Mall and they didn’t even have bags. Some customers had to leave with their purchases in garbage bags. What a shame! This is not the sears before k-mart.
I and 40+family members have cancelled all relationship with Sears. This is due to faulty appliances, bogus warranties and substandard service. We are also filing law suits to recover damages and injuries caused by faulty appliances.
I tried to purchase a layaway for my mom to pick up in another state and put her name as a third party for pickup. Her name did not show as picking up person, and so I called the store and spoke with an associate that made a special note on my layaway so she could get it. The associate not only blatantly refused to give her ALREADY PAID FOR IN FULL merchandise but she was on the phone with me at the time and the rep refused to speak with me so I can find out what the problem is to get things fixed.When I called the store to have a refund made, the supervisor advised me to call the 800# on my layaway ticket. When I spoke with online sales, the rep was surprised that I called them for a refund. I advised the rep on the phone that I was advised to call the number for my refund since the purchase was online and stated does not normally do refunds for product. The rep at the online center was MORE helpful than the store supervisor was.
I now remember why I stopped buying at sears and will not buy again.
Store: Sears
Location: Pasadena Square Mall, Pasadena TX