Kmart used to be one of the biggest U.S. retail empires, but today it has been decimated to only four U.S. stores.
The 123-year-old brand was renowned for its Bluelight special. At its peak, Kmart operated around 2,400 stores, had 350,000 employees, and had $37 billion in revenue.
Today, it joins Sears as one of the most striking victims of the retail apocalypse. Kmart only has four U.S. locations remaining, a fact that is difficult to believe for those who remember bustling, ubiquitous stores.
From failing to adopt new tech, to costly bad investments, here are the mistakes that led to Kmart’s downfall.
Kmart was a pioneer of discount retail
In 1899, Kmart was founded by Sebastian Spering Kresge and called S.S. Kresge Corporation. He envisioned a place where shoppers could find daily needs like toys, clothes, and housewares.
In 1925, the company was handed over to Henry Cunningham after Kresge retired. In the 1960s, the company started focusing on discounted prices, leading to a huge expansion.
In the early 1960s, Kmart was in its glory days. People would wait for the Bluelight Special, where employees announced daily deals on specific departments. In 1977, it changed its name to Kmart. In the 1990s, the company had around 2,400 stores and 350,000 employees.
In 1991, the company raised $1 billion in equity through preferred stock, and by 1993, it had a revenue of around $37 billion. However, a year later, it started closing stores. Kmart did not modernize in time or upgrade their technology, which prevented them from tracking inventory and retailers better.
In 2002, Walmart took Kmart’s place as the second-largest retailer, and the company filed for bankruptcy for the first time. Hedge fund operator Eddie Lampert bought the company’s debt and combined it with Sears. While the deal was worth $11 billion, the company could not make a comeback, and both companies ended up filing for bankruptcy in 2018.
In October 2021, shares for Kmart stagnated to less than a cent. Meanwhile, last week, Target’s stock price was $194, and Walmart’s was $136.
Mistakes that led to downfall
The problem goes back to 1962, when Kmart failed to keep up with rising competitors Walmart and Target.
Unlike Walmart and Target, Kmart failed to define its target market. While it did have bargains, failing to appeal to a specific demographic hurt the business. Kmart wanted to appeal to everyone, but instead it became bland and lacked an image.
Adding insult to injury, Kmart started purchasing other chains like Borders books, Sports Authority and Builders Square in the 90s. None of those retailers are operating today.
Kmart also did not invest in the right technology and logistics, which caused it to lose against Walmart and put them in a position where the company would never catch up. Slow adoption of e-commerce put the final nail in the coffin for Kmart, as shoppers increasingly turned online for their needs.
What’s next for Kmart
Kmart just announced plans to shutter two more U.S. stores. Today, only four U.S. locations remain. Two of them are located in New Jersey, and the other two are in Long Island and Miami.
Kmart has become the subject of fascination on platforms like Reddit, YouTube, and Facebook. People are either followers of the brand, or morbidly intrigued by its demise. Some have even made it a mission to document the last KMart’s standing on video. There are even devoted fan group pages on Facebook.
But, not all Kmarts are dying; according to The Daily Mail, the retailer continues to do well in Australia.
This story was originally featured on Fortune.com
