Abandoned - Kmart

[Music] what's up guys my name is jake and welcome to a very special episode of abandoned perhaps there's no better and mainstream example of a retail failure more so than one discount chain which has been closing stores for decades slowly whittling away under the sears umbrella hemorrhaging millions of dollars laying off thousands of employees and leaving a wake of hundreds of empty and in many cases abandoned stores some of which myself and my colleagues have been inside but how did all of this happen how did one of the world's largest and well-known retail brands fall this far and what future could they possibly have well today join me as i look into one of the most requested and anticipated topics the catastrophic fall of kmart this episode of abandoned is sponsored by nebula become a part of the quickly growing curated community of like-minded creators and get 40 percent off by going to nebula.com bsf it all began with a man named sebastian sparing kresge after running a small chain of discount stores through the late 1800s in detroit he founded a new company called ss kreske in 1912 a chain made up of over 80 stores and growing quickly now the kresge company could be a whole video in itself but through the early to mid 1900s the brand had become very popular they navigated through the great depression in both world wars having become the perfect place for downtown shoppers looking to save some money there were now over 600 stores in both the us and canada mainly in the downtowns of cities however by the 1950s and 60s retail was changing north americans were now buying cars and to urban planners they were the future of mobility so a trend of what is known as the big box store began popping up a large structure cheap to build with ample room for car parking a place where citizens would seek to drive to instead of walking kresge already had several stores opening in the suburbs but now a massive shift was coming for the growing corporation now under the leadership of harry cunningham the kresge company had opened the first iteration of a new discount big box brand called kmart it was 1962 when it opened in the small suburb of garden city michigan and so kresge continued to open more through the year what set them apart already was the fact that kmarts were now opening in standalone buildings not part of any existing plaza but its own satellite structure with over 80 000 square feet of discount shopping a vast collection of products for all your needs these stores were relatively cheap to build and within just a few years the amount of kmart stores had ballooned to over 120 meanwhile back in the cities the company decided to rebrand a number of the unperforming kresge locations into jupiter discount stores a deeply discounted brand which sort of forced the elimination of the kresge name by 1977 the company had now mainly become known for the kmart brand to which over 90 of their sales were generated from so in that year they changed their name to the kmart corporation this was just the beginning of a long era of unprecedented success by now the brand had continued to diversify expanding into new businesses and trying out new retail concepts like kmart chef most however were short-lived regardless the kmart brand was exploding in sales rising to over 14 billion dollars by 1980 with over 2 000 stores across the united states and canada kmart was now renovating older stores focusing on innovations like electronic inventory systems and broadening their stock with fashionable merchandise through the mid-1980s they also acquired multiple companies and introduced celebrity-created clothing lines again all broadening the appeal of their stores while also making products exclusive one notable line of products was the martha stewart kitchen line which kmart saw a great response to it really is hard to state how popular kmart was during this era in retail they absolutely dominated the 1980s and in america the brand was almost universally known across the country perhaps it didn't always have the best reputation but it was many shoppers go-to store for everyday essentials unique aspects like the blue light special would keep shoppers in their stores waiting for the next big sale or even their in-store food options had allowed consumers to spend a lot of time just hanging around across the thousands of locations now in america kmart had a huge reach and now opening super kmart stores simply put they were woven into the retail fabric of american culture and they were the second largest retailer in north america right behind sears by 1987 they had sales over 25.6 billion dollars this tremendous success however was about to quickly fade and the fortune of the company was about to change through the rest of the 1980s kmart began to lose its place in the market other retailers like ames target wolco and sears had been eating away at their place but that was nothing compared to the goliath that walmart was becoming kmart was slipping and as new walmart stores popped up that negative perception kmart had only got worse as people noticed their stores become run down and dated so to combat this kmart rebranded their logo with a modern design and went on a renovation effort making sweeping changes to their stores spending millions on extending renovating and updating existing stores and opening up brand new ones after even more company purchases like sports authority and a quarter stake in office max by 1992 the kmart corporation had over 370 000 employees and posted an all-time high sales of 34.6 billion dollars despite this positive year-over-year growth kmart was still surpassed by walmart in both sales and market share the company also began to get dragged down by their spin-off brands kmart corporation became too bloated and despite selling off those liabilities they ended 1993 with a net loss of almost a billion dollars with a new ceo in place kmart made sweeping changes in order to keep them afloat they spun off more brands and closed around 214 underperforming stores their stock was then downgraded and talks of bankruptcy even began circling however the company was able to eliminate hundreds of millions of dollars in operating costs as well as introduced a more streamlined merchandise strategy celebrity marketing and another 700 million dollar remodeling endeavor big kmart was introduced around this time a new store format that would feature larger aisles a brighter atmosphere and more emphasis on key product categories like home furnishings around 1 245 stores had been converted into this big kmart concept and already it was a hit ultimately boosting sales around 10 through the rest of the decade kmart continued to make strategic company sales through this time as well selling its interest in their mexico division plus having hudson's bay take over their 112 stores in canada in 1998. many of those stores were converted into zeller's locations and if you want to know more about that company's fall from grace i've actually made an abandoned episode on them already back in their stores private label items like the martha stewart line was expanded to involve other product categories and just that alone generated a billion dollars in sales by 1999. with an e-commerce site now live and the new millennium coming through hopes for kmart were high the company dominated the 1980s and while the 90s were tough the brand was still favored by many according to their 1998 annual report their mission statement reads kmart will become the discount store choice for low and medium income families with children by satisfying their routine and seasonal shopping needs as well as or better than the competition by early 2000 kmart got a new and much younger ceo named charles conway he reorganized senior management and closed 72 underperforming locations he also allocated 1.7 billion dollars to update their distribution strategy and solve the problem of items not being fully stocked blue light special was brought back to their stores as well as a new promotion called always blue light which set thousands of essential items at lower prices this was a risky move for the company and ultimately walmart undercut them and the suppliers 2k mart couldn't keep up with the demand after a lackluster 2000 holiday season and 2 105 stores across the united states becoming less profitable the brand was thrusted into an extremely dire financial position by the end of that year the company earned over 37 billion dollars in sales yet lost over 220 million dollars it only got worse over the next year and by january of 2002 the kmart corporation filed for chapter 11 bankruptcy protection they became the largest retailer ever to file for bankruptcy the company spent around a billion dollars in restructuring laying off 35 000 employees and closing 326 kmart stores they were in a tough position as the discount chain was bleeding money and having to take on two other giants in the marketplace walmart with their competitive prices and target with the higher quality discount goods in a more upscale atmosphere charles conway was largely blamed for this financial disaster and was forced to step down as ceo not long after during this time kmart's debt was purchased by esl investments a private hedge fund run by everyone's favorite eddie lampert after another 300 stores closed in early 2003 however no longer as the kmart corporation eddie lampert's fund had taken control of kmart's interests owning 53 percent of the company through esl investments they bundled this all up under a new company called the kmart holding corporation an umbrella to which kmart would become a subsidiary to sweeping changes were made to the brand which included more store closings and trying out new ideas and marketing strategies one of them being this weird concept store which featured a lime green logo and for some reason black and white portraits of people on the front facade uh yeah that didn't last long surprisingly in late 2004 the kmart holdings corp had declared that they would be acquiring sears at one time their largest competitor for around 11 billion dollars the merger also came with another name change now rebranding the parent company into sears holdings with of course kmart remaining as its subsidiary brand kmart was now down to just 1 382 stores by 2007 with sales dropping quarter after quarter the company had even sold their michigan headquarters and left the facility entirely not long after which also later became abandoned by the next year the financial crisis was ravaging the average american shopper and kmart produced just 17.2 billion dollars in sales a significant decrease from the decade prior this makes sense too as kmart stores began to fall out of favor to many shoppers walmart's approach was going for a rural market in america while target expanded slowly in proven markets however once both brands started popping up in the same towns as kmarts shoppers asked themselves why would i keep going to kmart they were most likely a better place to spend your time by 2010 the brand lost a big exclusive when martha stewart's company couldn't reach an agreement with the brand ultimately stewart went on cnbc and said quote have you been into a kmart lately it's not the nicest place to shop she later clarified however that she didn't mean it as an insult uh sure 2011 proved to be another terrible year for holiday sales and the company continued its ruthless store closures kmart was bleeding money year after year and let's not forget who owns them that being sears which the parent company was also trying to manage two failing mega retail brands not an easy feat to turn around after suffering a massive data breach in 2014 the subsequent next few years were the source of many headlines asserting company-wide trouble following more and more store closures by the end of 2017 they were just down to a little over 700 stores nationwide and 8.6 billion dollars in sales they lost 530 million dollars by year's end with their parent company as a whole losing over a billion dollars kmart was sinking quickly and with little money to reinvest back into their stores the sad state of the brand was apparent for anyone who walked inside one sears holdings was doing even worse and despite numerous store closing announcements through the years the company had no choice but to reorganize or disappear entirely so for the second time kmart and their parent company sears holdings filed for chapter 11 bankruptcy protection in october of 2018. another 74 kmart stores would close during this time and around 240 stores would be sold off through this bankruptcy quite a few lawsuits were filed and sears holdings was blocked from liquidating the entire thing eddie lampert and his company transform holdco a subsidiary of esl investments had purchased 202 kmart stores effectively taking the company into private ownership but even so the brilliant minds at esl couldn't find a way to make the company profitable so just three months later it was announced more kmart stores would close of course this wasn't the end of that as stores continue to close across the country and that brings us to now with just a fraction of a fraction of the amount of stores kmart used to have but how did all of this happen how is one of the world's largest retailers able to slip so far from its iconic status especially when other discount retailers like walmart are thriving well i think it's very easy to chalk it up to eddie lampert killing kmart as well as sears i think to some extent this is true as when the merger occurred lampert was accused of intentionally selling off valuable assets and failing to reinvest into the company effectively not caring whether or not they would fail and trying to squeeze as many assets out of the companies as possible also with little regard to the hundreds of thousands of staff they have on payroll however i believe kmart was on a downward trend no matter what remember even before the merger they were closing stores left and right and of course filed for bankruptcy i think from the very start kmart positioned themselves into a bad place failing to make their stores and brand into a coherent and attractive retail proposition as consumers expectations grew kmart didn't follow and allowed other brands to both out price them and build stronger loyalty failing to keep up with modern fashion trends especially when half the store was made up of apparel losing out on exclusive products that drove interest overpriced electronics and a poor reception to their online store all contributed that website is even crappy in the way it's designed since for some reason the site hosts marketplace products as well the professionally laid out stock is mixed with thrown together photos of other products like for instance these slippers which are for some reason 315 dollars it's probably an error but that just goes to show how sloppy of a website this is i really don't see why a consumer would choose to shop on kmart.com over amazon but regardless i think these issues pale in comparison to the real problem at hand that being they're terrible terrible looking stores this simply does not look like a well thought out coherent design language it looks like it was fumbled together by people who have no background in aesthetics or simply just do not care and when you walk around their stores you get that feeling everywhere there's no excitement here quite the opposite actually a sad and miserable landscape of beige shelves items are just being tossed and unorganized around the stores and little to no clue that you're in a modern facility it's depressing in here and no wonder the average consumer has no desire to shop here for fun i mean come on this looks awful especially when you look at their competitors this is a kmart and this is a target even the carnival cruise lines of retail looks better than this at the end of the day kmart management allowed their stores to become the butt of any joke that involved crappy stores and that public perception lasted with them to the grave well at least about as close as you can get to the grave according to forbes there may be just 43 kmart stores left in the united states and by the time you watch this it will likely be lower think about that for a second in the early 90s there were over 2 200 big box kmart stores across the country each over 80 thousand plus square feet in just 30 years they had closed almost all of them that is an unbelievable amount of stores that had to close and as you can imagine a large number of them especially kmarts that weren't in the best locations were never filled this leads to probably the most amount of abandoned locations for one particular brand abandoned kmarts now dot the landscape of almost every major city in america a grim reminder of a bygone era and the monolithic structures acting as tombstones for where retail prosperity once stood among these abandoned buildings are some particularly heinous examples of unsecured stores for one reason or another decaying at a rapid pace i myself visited one of these kmart locations down the road from another kmart store in michigan i actually made an entire video on that one but it was a store which closed during the 90s when kmart was eliminating unprofitable locations i think this horrific building sitting abandoned from that closure is a bit of a look into the future this store has been sitting here for almost three decades and as it did the building was vandalized set fire to and engulfed by thick mold however it also stood as a retail time capsule in disarray the numerous other abandoned stores across the country many of which have been documented by my fellow colleagues could end up in a similar surreal state within a decade or two so what does the future hold well the coven 19 situation made everything worse and while some remaining locations were deemed as essential stores i would imagine the brand is seeing less and less sales in september of 2020 eddie lampert actually stepped down as ceo however because they are a private company it's hard to see how poorly kmart is continuing to do with so few stores it's hard to say how long the brand is actually going to last perhaps transform holdco continues to keep the name around and rebrands it kind of like how toys r us did with their resurgence and really the name isn't going away in an international sense as there are still some thriving kmart stores around the world completely independent from the american company particularly in australia who knows what transform holdco has in mind for the brand but i think all things considered it's safe to say that kmart is essentially a dead company perhaps the brand may hold on a little more but i can't imagine in its current form kmart will be around much longer on the hedge fund's website the main header for the kmart company reads kmart is a leading integrated retailer offering quality products through a portfolio of exclusive brands out of curiosity what do you think they meant by kmart is a leading integrated retailer seriously what are they possibly leading in other than the amounts of abandoned retail stores in america eddie i'd like to know i've been through a lot of kmart store closings i've seen the last few days of the brand's presence in multiple cities in north america you get the feeling of chaos but also sadness from the local residents who remember going there years ago kmart is certainly not the same company it was nor is the condition of their stores as a company i think they were just too enormous for their own good having over 2 000 massive stores will be extremely profitable when they're all making money like they were in the 70s 80s and 90s but became a liability once many of them had dropping sales the bloated and costly infrastructure they had in place to keep many of the stores and employees going ultimately started piling up on them then the company started losing money and in return didn't reinvest it back into their stores creating a vicious cycle instead they spent their money paying huge salaries to executives and acquiring other companies which they ended up selling anyways and once the cash started to run out they took on more and more long-term debt which ultimately pushed their equity into the negative billions of dollars but when you do look back at the beginning of all of this you'll see the birth of the big box store craze whether or not that's a good thing i'll leave up to you but there's no denying the influence kmart had on all aspects of retail from the humble beginnings of kresge into the mega retailer it became it truly is astonishing i still can't wrap my head around how enormous they once were and how they went from over 35 billion dollars in sales to now well we don't know but it's probably under 3 billion dollars maybe even less to many this marks the end of an era for their home store from the 1900s the end of an iconic brand and an almost 110 year old company but as you drive down the boulevards of your town it's more likely that the only kmart you'll be able to visit now is one that's abandoned if you've enjoyed this episode of abandoned i have also made an exclusive commentary video further talking about abandoned kmart stores over on nebula the streaming service i'm building with a bunch of my fellow educational creators among the thousands of curated videos on the site you can also watch nebula originals which are exclusive videos and series from creators like wendover tierzoo and lindsay ellis in addition to a whole slew of nebula plus content like extended editions of videos and full length interviews on my channel there you can watch my videos ad free including this one as well as every new video a day earlier than its public release on youtube just for this video however you can get 40 off a monthly or annual account by going to nebula.com bsf the amount of content you're getting is a tremendous value and i want to thank nebula for sponsoring this video and i hope you join me in the ever-growing nebula community anyway guys my name is jake and thank you very much for watching [Music] [Applause] okay

Channel: Bright Sun Films

Views: 1,001,954

Rating: 4.9361057 out of 5

Keywords: abandoned 58, bright sun films, 2020, 2021, new, documentary, abandoned mall, retail, abandoned store, kmart, walmart, woolworths, woolco, sears, discount retail, ames, failed company, failed retail, what happened to kmart, downfall of kmart, Jake williams, HD, clean, family friendly, abandoned Kmart store, company history, bankruptcy, sears holdings, bad company, target store

Id: Za44YpyTK_U

Length: 24min 21sec (1461 seconds)

Published: Fri Dec 18 2020

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[u/nbp_leon]

Another gem by Jake at Bright Sun Films.