Sad demise of Kmart in the US as final stores look set to close for good
There used to be 2000 Kmarts across the US, now just three remain of the iconic retailer. It’s a “tale of woe” that could have been avoided.
Companies
Don't miss out on the headlines from Companies. Followed categories will be added to My News.
The lights are on at the cavernous Kmart store but no one – no customers at least – are home.
The store was supposed to have remained open for a few more hours at least. But with the shelves stripped bare of stock, what was the point?
“I’m devastated,” Ranie told news.com.au as she peered through the glass of the locked doors.
“I grew up with Kmart so I feel bad. The clothes lasted a long time.”
As if to prove it, Ranie was dressed head to toe in Kmart garb.
“My boots, coat, and jeans – all from Kmart.”
“You’ve got more merchandise on you then they have in the store,” chimed in Ryan who had arrived at the same time and was trying to use up a $35 Kmart gift card.
“I dug it out of my wallet when I heard they were closing. But I haven’t shopped in Kmart for 10 years.
“It hasn’t changed in two decades. I think it’s been waiting to die off.”
To an Australian, hearing people lament about the demise of Kmart doesn’t seem to make any sense. From Perth to Parramatta, shoppers can’t get enough of the discount department store juggernaut.
But things could not be more different – or more dire – for Kmart in the United States, which brought its powerhouse brand to Australia in 1968.
At its zenith in the early 1990s, Kmart USA had 2000 stores from coast to coast. The closure of this Kmart, in Avenel, New Jersey, about 30 km south of New York, leaves the chain with just three branches nationwide.
Kmart could have learned a lesson or two from the success of its namesake down under, a retail watcher told news.com.au.
‘Tragedy’ of US Kmart’s fall
The website of Kmart USA’s current owner, a corporation called TransformCo, states that the retailer’s focus will now be on “revitalising the business by driving profitable sales, identifying opportunities to further improve efficiency and reduce costs, and enhancing asset productivity”.
It’s a word salad that masks the stark reality. Between them Kmart and its sister company Sears – also once venerated in American retail – have closed 3500 stores and shed a quarter of a million jobs in the past 15 years.
“It’s a tragedy,” director of retail studies at New York’s Columbia University Business School Mark Cohen told news.com.au.
“My guess is by the year end there will be zero Kmart stores.
“Yet there’s no reason, intellectually, why (Kmart) could not be upright and successful. The things they sell are in tremendous demand and are for sale at your local Walmart or Target.
“It’s a tale of woe that should never have happened”.
‘Incompetent, stupid’ management
Prof Cohen put Kmart’s demise down to successive waves of “incompetent and stupid” management that “raped and pillaged” a proud US chain which traced its history back to 1897.
In that year Sebastian Kresge – his surname is where the “K” in Kmart comes from – first invested in a variety store in Memphis, Tennessee. The first Kmart branded store opened in San Fernando, California, in 1962.
“Back in the heyday, and we're talking 20 plus years ago, Kmart was the prime mover in US in discount retail,” said Prof Cohen.
But the chain become complacent, he said. It stopped innovating and it stores - which were well sited when they opened decades before – were now “on the wrong side of the tracks” and had became “sloppy and dirty,” he said.
“(Management) were pontificating about how important and wonderful Kmart was while upstarts like Walmart and then Target left them in their wake”.
Kmart struggled to compete with Walmart on price or Target on cheap style.
What followed from the 1990s onwards was a series of financial misadventures from overseas expansions to new but unloved store formats. In 2002 the store first went bust.
Yet in 2004, Kmart managed to buy the struggling Sears chain for $US11bn ($A15.2bn). It was a decision which only served to drag both brands ever more into the mire.
From 2011 onwards, Kmart has been a story of store closures, bankruptcies and buyouts. If it survives at all, it will likely only be online. But with the might of Amazon and Walmart’s online offerings even that seems optimistic.
Kmart’s Australian success
The US and Australian Kmarts may no longer be related by ownership but they have much in common. They compete for similar customers. Even the logo in Australia is the same one used in the US up to a few years ago.
The big difference is the big bucks.
In 2021, Kmart Australia delivered $693 million of profit to parent company Wesfarmers, which also owns Target Australia and Bunnings.
Prof Cohen said the reinvention of Kmart in Australia could have helped Kmart USA find a pathway out of the retail doldrums.
“Inexpensive, hip, cheeky and relevant with a private label businesses embedded that give them exclusivity and differentiation.
“It sounds like Kmart Australia behaved a lot like Target did it America,” he said.
Target US, posted a profit of $US6.9bn ($A9.5bn) in 2021 and now has 1900 stores – almost as many as Kmart at its height.
Last remaining stores in sorry state
In Westwood, New Jersey, 40km north west of New York is one of the three remaining Kmarts.
Inside, Vince slowly pushed his trolley up and down the aisles.
“It’s awful. There’s no one here. Three or four customers,” he told news.com.au.
“I used to spend my life in Kmart. I bought lots of products over the years.
“They have money people running it now instead of merchandising people.”
What few shoppers remained might have found themselves humming along to the Phil Collins’ songs blaring out of the sound system. When he was topping the charts was probably the last time things looked bright at Kmart.
One aisle was full of dusty DVDs for $US5 ($A7) a pop. Titles included ‘Fifty Shades of Irresistible,’ a knock off of ‘Fifty Shades of Grey’. The fact it was still on the shelf showed it wasn’t that irresistible. Nor were the hundreds of other DVDs waiting for new homes that, in the age of streaming, were likely to never come.
There was bed linen and cutlery, a few toys and handbags. But none of the prices were particularly cheaper than its rivals.
The clothes area was still full but as you delved deeper into the store, the stock thinned out.
Some aisles were laden with, bizarrely, nothing but paper towel and row after row of red shopper trolleys. Big and bulky, they seemed to be taking up space to hide what would otherwise be the humiliation of empty aisles.
But even the paper towel ran out eventually leaving an entire side of the store virtually bare.
In what was once the home improvement section stood a couple of washing machines and a fusty, out of date armchair your nana would turn her nose up at. Yours for $A149 ($A208).
A red star shaped balloon wafted mournfully in the middle of an area that once would have been full of fridges and microwaves.
Just a few steps away from the ailing Kmart was a branch of TJMaxx, as TKMaxx is called in its native America.
Even on a Tuesday morning its car park was busy and the store was bustling. Inside it sold almost exactly the same genre of goods as Kmart – clothes, toys and homewares. Yet people wanted to shop here, and not there.
Kmart’s big mistake
Prof Cohen said big businesses often failed because they get “stupid, complacent or careless”.
“Successful retailers pay attention not only to what they're doing but what is going on around them, the competition and elsewhere in the world.
“They act upon what they observe; they reinvest,” he said.
“But success requires competence; and reinvention requires brilliance. And Kmart had none.”
Back at the dead department store trading, Vince had been slowly pacing the echoing aisles for half an hour now. His trolley, the red Kmart logo emblazoned on the handle, was still empty.
“I’m looking but I haven’t found anything I want to buy.”
Originally published as Sad demise of Kmart in the US as final stores look set to close for good
Egg shortage rocks Aussie supermarkets
Aussie supermarkets are being rocked by a shortage of a common dairy staple - blamed on high demand and flow-on from a devastating disease.
How big tech is recalibrating around the DeepSeek threat
Silicon Valley owes its longevity to its ability to pivot and China’s new AI start-up could set it moving in a new direction.