Retail Giants Sears and Kmart Crushed by Christmas

Consumer confidence is at an eight-month high, but that isn’t going to help Sears and Kmart employees. Even the news of a mystery man paying Kmart layaway balances won’t keep Sears and Kmart locations open. The retail giants are set to close over 100 stores across the country in the wake of lackluster Christmas sales.

Sears Closing, Kmart Closing

Sears Holdings Co., the company overseeing both brands, isn’t generally in the habit of closing stores. Rather, the company prefers to leave stores open, giving them a chance to turn performance around.

Christmas season was so dismal for Sears and Kmart, however, that the retailers have little choice but to shutter their doors. Sears Holdings Co. plans to redirect its resources to better performing stores in the wake of poor Christmas sales.

The two brands are nearly synonymous with big retailers in the United States. However, both the Sears closing and the Kmart closing show that their business model might well be a thing of the past.

Sign of the Times

One sign of a changing economy 20 years ago was the decision by Sears to discontinue its famous Sears catalog. Customers were just not shopping by mail the same way they were in decades past.

Similarly, consumers just don’t shop they way they did 20 years ago.

Customers increasingly prefer online shopping from the comfort of their homes. Thus, it’s not surprising that business has taken a dive in traditional brick-and-mortar stores.

Communities Impacted by Kmart and Sears Closing

The closings don’t have a localized effect. Rather, Kmart and Sears closing affects a number of locations across the United States.

Florida is the state hardest hit by Kmart closing and Sears closing, with 11 locations shuttered in the Sunshine State.

George, Michigan and Ohio tie for second with six locations closing down. Only 79 store locations for Kmart and Sears have been announced so far, though the parent company has said that 120 stores in total will close.

So far, this includes 38 Kmart closing locations and 41 Sears closing locations. Employees of these companies are doubtless biting their fingernails over the New Year weekend, hoping their locations will not represent the next Kmart closing or Sears closing.

A New Strategy to Avoid Store Closings?

It’s not controversial to say that the company will require a new strategy to keep its remaining stores open. As the market increasingly moves online, Sears and Kmart need to see their competitors in places like Amazon.com.

Just as the days of the friendly neighborhood dry goods store fell to the way side in the wake of bigger department stores, so now are department stores falling off the map because of internet shopping. Indeed, Black Friday–the biggest shopping day of the year — isn’t even what it used to be. The competitor sale day Cyber Monday was the biggest ever this year and shows no signs of slowing down.

Old-fashioned, brick-and-mortar stores like Sears and Kmart will have to adjust if they don’t want to go out of business entirely.

Consumer Confidence vs. Economic Reality

Consumer confidence can help to spur retail sales. However, it doesn’t necessary represent an economic recovery.

The figure has more to do with subjective attitudes than with hard economic data. Further, as the Kmart closing and Sears closing spree indicates, even an increase in consumer confidence isn’t a rising tide that lifts all boats. Rather, increased consumer confidence targets some sectors of the economy while leaving others behind.

The growth in American consumer confidence in the economy will do little to help the employees of 120 difference Kmart and Sears locations across the country. These employees will be looking for new jobs in an increasingly unsure economic climate.