Kmart could soon be going out of business, with rumors reportedly circulating among store employees that all of the remaining locations are on their way to being closed within about a year.
The retail chain has been falling into deeper and deeper financial strain along with its parent company, Sears Holdings. Back in April, the company announced that a total of 78 locations for both Sears and Kmart would be closing and starting liquidation sales.
There are signs that many more Kmart stores could be following — possibly all of them. Business Insider spoke to a number of store-level employees who reported that the remaining 941 Kmart stores appear to be moving into the liquidation process as well.
Rumors among the Kmart employees indicate that the entire chain is moving toward bankruptcy, with a two-phase plan being implemented in all of the stores that includes layoffs and hourly wage reductions. Employees are also moving all of the stores’ inventory to the sales floor, with some even adding extra overhead shelves to accommodate all of it.
The company has denied the chatter circulating among employees and on Kmart message boards, issuing a statement to Business Insider that the company remains committed to becoming profitable.
“Sears Holdings is highly focused on restoring profitability to the company, and Kmart remains a key piece of our asset portfolio,” Sears spokesman Howard Riefs said.
But industry analysts see a bleak forecast for the retail chain. Jonathan Heller, a financial reporter for The Street, explored what’s behind the sinking performance for Kmart and found what appeared to be a formula for failure.
He noted that the chain had a substandard reputation dating back decades (at least in his home in New Jersey), but that its problems had grown deeper with the emergence of internet shopping and some “newer and better bricks-and-mortar chains.”
It has been a slow death for Kmart, Heller noted. The retail chain has taken a hit with each newcomer, starting with the spread of Walmart stores in the 1970s and 80s and then with warehouse clubs like Costco and Sam’s Club. The steady movement of shoppers out of actual locations and onto the internet has also been a problem, with Kmart having a difficult time responding.
Heller noted that Kmart appears to now be on a path that many other retail giants have taken.
“Retailer bankruptcies are nothing new. Does anyone even remember Caldor, Bradlees, Hechinger’s, W.T. Grants, and Clover (and that is just a short list)? Many of those went under long before internet shopping was the phenomenon it is today. However, the potential dynamic that we are currently being set up for is unprecedented; a whole lot of large, empty, and perhaps abandoned retail locations.”
There could be deeper problems for Kmart as well. Business Insider quoted one anonymous employee who reported that the infrastructure has been ignored for a long time and some stores are falling apart.
“Ceilings leak when it rains, floor is uneven and cracked… Our air conditioning and heating systems suck… freeze in winter, roast in the summer. Registers are outdated. They keep upgrading system with ancient technology which in turn causes system to crash every now and then. I’ve been there for 30 years and we have had one remodel in 1997. Fixtures are broken, dented, [and] rusted, which doesn’t look nice when new layouts are instituted… The list goes on.”
If the rumors that Kmart is closing all of its locations turns out to be true, the retail chain could have close to one year left before fading away entirely. Store employees noted that locations entering the liquidation process have about nine months before closing down.
[Photo by Julio Cortez/AP Images]