There were once 2,000 Kmarts across the United States, now only three remain from the iconic retailer. It is a “story of misfortune” that could have been avoided.
The lights are on in Kmart’s cavernous store but no one – no customers at least – is home.
The store was supposed to have stayed open for a few more hours at least. But with the shelves empty of stock, what’s the point?
“I’m devastated,” Ranie told news.com.au, looking 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 a Kmart suit.
“My boots, coat and jeans – all from Kmart.”
“You have more merchandise on you than they have in the store,” said Ryan, who had arrived at the same time and was trying to use a $35 Kmart gift card.
“I took it out of my wallet when I heard they were closing. But I haven’t shopped at Kmart in 10 years.
“That hasn’t changed for two decades. I think he was waiting to die.
For an Australian, hearing people lament the disappearance of Kmart makes no sense. From Perth to Parramatta, shoppers can’t get enough of the discount department store juggernaut.
But things couldn’t be more different – or more dire – for Kmart in the US, which introduced its flagship brand to Australia in 1968.
At its peak in the early 1990s, Kmart USA had 2,000 stores coast to coast. The closure of this Kmart, in Avenel, New Jersey, about 30 miles 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, a retail watcher told news.com.au.
“Tragedy” of the fall of the US Kmart
The website of the current owner of Kmart USA, a company called TransformCosays the retailer will now focus on “revitalizing the business by driving profitable sales, identifying opportunities to further improve efficiency and reduce costs, and improving asset productivity.”
It’s a salad of words that hides the harsh reality. Between them, Kmart and its sister company Sears – also once revered in US retail – have closed 3,500 stores and cut a quarter of a million jobs over the past 15 years.
“It’s a tragedy,” Mark Cohen, director of retail studies at Columbia University Business School in New York, told news.com.au.
“I guess at the end of the year there will be no more Kmart stores.
“Yet there’s no reason, intellectually, why (Kmart) couldn’t be right and successful. The things they sell are in high demand and are on sale at your local Walmart or Target.
“It’s a story of misfortune that should never have happened”.
“Incompetent, stupid” management
Professor Cohen blamed Kmart’s demise on successive waves of “incompetent and stupid” executives who “raped and plundered” a proud American chain with a history dating back to 1897.
That year, Sebastian Kresge – his last name 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.
“In its heyday, and we’re talking over 20 years ago, Kmart was the number one driver in the United States of discount retail,” Professor Cohen said.
But the channel is getting complacent, he says. It stopped innovating and its stores – which were conveniently located when they opened decades before – were now “on the wrong side of the track” and had become “sloppy and dirty”, he said.
“(Management) pontificated how big and wonderful Kmart was while upstarts like Walmart and then Target left them in their wake.”
Kmart has struggled to compete with Walmart on price or Target on cheap style.
What followed from the 1990s was a series of financial mishaps ranging from overseas expansions to new but unloved store formats. In 2002, the store went bankrupt for the first time.
Yet in 2004, Kmart managed to buy the struggling Sears chain for $11 billion (A$15.2 billion). A decision that only dragged the two brands further and further into the mud.
Since 2011, Kmart has been a story of store closures, bankruptcies and takeovers. If it survives, it will probably only be online. But with the power of online offerings from Amazon and Walmart, even that seems optimistic.
Kmart’s Australian success
American and Australian Kmarts may no longer be related by ownership, but they have a lot in common. They compete for similar customers. Even the logo in Australia is the same one used in the United States until a few years ago.
The big difference is the big bucks.
In 2021, Kmart Australia made $1.35 billion in profits to parent company Wesfarmers, which also owns Target Australia and Bunnings.
Professor Cohen said the reinvention of Kmart in Australia could have helped Kmart USA find a way out of the retail slump.
“Cheap, trendy, cheeky and relevant with an integrated private label that gives them exclusivity and differentiation.
“It looks like Kmart Australia behaved a bit like Target did in America,” he said.
Target US, posted a profit of $6.9 billion (A$9.5 billion) in 2021 and now has 1,900 stores – almost as many as Kmart at its peak.
Last remaining stores in poor condition
In Westwood, New Jersey, 25 miles northwest of New York, is one of three remaining Kmarts.
Inside, Vince slowly pushed his cart down the aisles.
“It’s awful. There’s nobody here. Three or four customers,” he told news.com.au.
“I used to spend my life at Kmart. I have purchased many products over the years.
“They have money that people are now directing instead of selling people.”
The few shoppers left might have found themselves humming along to Phil Collins songs blaring from the PA system. When it topped the charts, that was probably the last time things looked bright at Kmart.
An aisle was full of dusty DVDs for US$5 (A$7) a pop. Titles included “Fifty Shades of Irresistible”, a knockoff of “Fifty Shades of Grey”. The fact that he was still on the shelf showed he wasn’t that irresistible. Nor are the hundreds of other DVDs waiting for new homes that, in the age of streaming, would probably never come.
There were bedding and cutlery, a few toys and handbags. But none of the prices were particularly cheaper than its rivals.
The clothing area was always full, but as you got deeper into the store, the stock dwindled.
Some aisles were laden, oddly, with nothing but paper towels and rows of red carts. Big and bulky, they seemed to take up space to hide what would otherwise be the humiliation of empty aisles.
But even the paper towel ran out, leaving an entire side of the store virtually bare.
In what used to be the home improvement section, there were two washing machines and a musty, old-fashioned chair your grandmother would laugh at. Yours for A$149 ($A208).
A red star-shaped balloon floated sadly in the middle of an area that would once have been full of refrigerators and microwaves.
A few steps from the ailing Kmart was a branch of TJMaxx, as TKMaxx is called in his native America.
Even on a Tuesday morning, his parking lot was busy and the store was busy. Inside, it sold almost exactly the same kind of products as Kmart – clothes, toys and household items. Yet people wanted to shop here, not there.
Kmart’s Big Mistake
Prof Cohen said big companies often fail because they become “stupid, complacent or careless”.
“Successful retailers pay attention not only to what they are doing, but also to what is happening around them, to the competition and elsewhere in the world.
“They act on what they observe; they reinvest,” he said.
“But success requires skill; and reinvention requires brilliance. And Kmart didn’t have one.
Back at the dead store, Vince had been slowly pacing the echoing aisles for half an hour now. His cart, the red Kmart logo on the handle, was still empty.
“I’m looking but I haven’t found anything that I want to buy.”