Sears Closing Hundreds Of Stores, Many KMart Stores Going Out Of Business As Well

[happyslug]

41. Not so much Downtown locations, but the suburban STRIP malls

Last edited Mon Dec 8, 2014, 09:56 PM - Edit history (1)

That is where the prime Real Estate for retail is. Kmart stand alone stores have to compete directly with Walmart, and in that type of fight the store with the lowest overhead is going to win. i.e unless Walmart over expands (and it does NOT look like that is the case), Kmart is dead.

Sears can survive at its mall locations, but the Malls have a problem. Since Reagan income for the lower 90% of the population has either held steady or declined. It has increase for the 1% and most of the 10%, but neither was ever Sears core market. Sears aimed at the Lower Middle Class and the Working class, and those two groups are the ones with the greatest increase in costs (housing, Student loans etc) and no net increase in income. Thus Sears and the rest of the stores in the Malls are hunting. Malls tend to cater to people making $25,000 to $100,000 a year, the Working Class and the Lower Middle Class. Quality is still a factor in this group when they go to the mall.

Kmart and Walmart aimed at the Working Class, people making less then $50,000 years today and in that market price is the most important factor. This group will switch stores over just a few dollars, even if it means buying something of inferior quality.

Now the Poor do go to the Mall for some items, and the Working Class and Lower Middle Class go to Kmart and Walmart for items they need. The key is what group is the Store aimed at and the Malls are aimed at a higher income group then the stand alone stores like Kmart and Walmart. Thus the Stores in the Mall have a little cushion compared to Kmart, a cushion provided by providing higher quality items. The problem with the Malls is many people are going on line to get their higher quality items. You no longer have to go to Sears to get top quality tools for example. Yes you could get good tools elsewhere in the 1960s to 2000, but Sears is where people went for high quality tools that were to be used around the house. Sears has done little to expand that section of their business for it has low turn over and profit compared to Clothing. On the other hand, people went to Sears for Tools not Clothing.

The most successful stores concentrates on its strengths (Walmart uses its ability to get low prices from supplies and thus has low prices but often at the cost of low quality, that is Walmart's Strength). JC Penney has concentrated in business wear for decades, and people have said it would go under for decades, but has survived for JC Penney knows its niche and does a successful job fulfilling that niche. Do people go to JCPenney for high end Business wear? No, but they go to JC Penney for decent but acceptable business clothing.

Sears was known for Tools and outside equipment (i.e. a "Man's Store", yes a lot of women went to Sears for the tools and outdoor equipment, and using the term "Man's Store" is sexist, but in many ways accurate if you view traditional sex roles and know that such roles never did exist except in theory). Clothing was always high profit and high turnover when compared to tools and thus what a lot of retailers want to sell, but Clothing was NEVER Sear's Strength.

As to Sears Clothing, my Sister called Sears Clothing "Black mail" marketing. A Husband went to Sears to buy a new drill, but a different drill then the other three he already had. His wife goes along and throws in some clothing for herself and the kids. The Husband could object, but he wants his drill, thus the clothing was purchased. This is where Sears clothing sales started and remain. Sear Clothing was thus "Blackmail" by wives to get what wives wanted in exchange to letting the Husband get what they wanted Such "Blackmail" Clothing was how many people ended up buying clothing from Sears. Sear then tried to make Sears a place to go for Clothing over the last 50 or more years but has failed, no one goes to Sears for Clothing unless nothing else is available. Thus clothing has NEVER been Sear's Strong point and even when clothing became very profitable, Sears should have understood clothing was NOT what brought people into its stores. You concentrate on what draws people to your store, not on what people buy while in your store. The difference is important and a lesson not learned by Sears and why Sears is dieing.