It’s finally the end for the Blue Light special, with news that Kmart is shutting down its last full-sized store in the mainland United States. The store in Bridgehampton, New York, is due to close on October 20, according to CNN. The once-leading discount retailer will still have a small convenience store open in Miami, plus Guam and the US Virgin Islands, but it will never return to its heyday. “You’re always thinking about it because stores are closing all over, but it’s still sad,” cashier Michelle Yavorsky, who worked at the Avenel store in New Jersey for 2 ½ years, toldFortune. “I’ll miss the place. A lot of people shopped here.” Here’s why Kmart will soon be gone for good.
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Disastrous Merger
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The writing was on the wall for Kmart since its 2005 $11 billion merger with Sears, engineered by hedge fund manager Eddie Lampert. “I’ve taken a huge personal hit,” Lampert told The New York Times after filing for bankruptcy in 2018. “Not just in money, but time. There’s been an enormous opportunity cost… Being a contrarian, being an independent thinker has never bothered me. I knew it was going to be hard no matter what. But I was trying to be opportunistic. I was willing to make a very big bet in money and time.”
Bad Business
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Lampert says no one offered to buy Sears or Kmart from him, even at a discount. “I had a vision and a passion, but I never thought of myself as the only person who could save it,” he said. “I may have been the only person who tried to save it. It wasn’t lost on me that other people didn’t think it was possible. If I could have raised billions, I could have done things differently. The ability to incubate ideas requires a huge investment. I’m not fine with the outcome, but I’m fine with the effort. I’ve never worked harder or stretched further beyond my limits.”
Bankruptcy and Decline
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Kmart boasted of over 2000 stores at its peak in the 90s, but simply couldn’t keep up with competition such as Walmart and Target. The chain first filed for chapter 11 bankruptcy in 2002, and has been in decline ever since. Only a handful of Sears stores remain.
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Sears Won’t Survive
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Sears is likely to follow down the same path as Kmart. “Sears has been going down the drain for a very long time. There’s no chance of it being revitalized,” Neil Saunders, managing director at GlobalData Retail, tells CNN. “No one apart from Eddie Lampert knows why he’s keeping these remaining stores open. You can’t make the economics work with that volume of stores.”
Was Decline Inevitable?
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Not everyone believes the decline of Kmart and Sears was inevitable. “It could have been a rival to Amazon. It had been the Amazon of its day,” Mark Cohen, director of retail studies at Columbia University and the former CEO of Sears’ Canadian unit prior to the Kmart merger, tells CNN. “No doubt that Sears would have needed to close stores and consolidate holdings, but their real estate holdings would not have been the albatross they were for other department store chains. Nothing would have stopped it from having a second life as a world beater. At the end of the day, this was all about the incompetence and malfeasance of its leadership.”