What's the Deal With Kmart?

The once nationally recognized iconic American company Kmart is finally closing its last store in the United States — sort of. But there won't be any more blue-light specials.

Scripps News reports that the last full-sized Kmart remaining in the continental U.S. is set to close on Oct. 20, according to a store employee. The location has already started its clearance sales, which were marked down by 40% as of Sept. 22.

This Kmart, located in Bridgehampton, New York, is the final full-sized store on the mainland. However, three Kmart locations continue to operate in the British Virgin Islands, along with another in Guam. Additionally, there is a smaller Kmart still open in Florida — about the size of a CVS, compared to the closing store's nearly 90,000 square feet.

Meanwhile, Kmart remains a significant retailer in Australia and New Zealand, with over 300 stores serving millions of customers annually, according to Kmart Australia's official website.

In the U.S., it's been a different story altogether.

In an effort to revive both Kmart and Sears, hedge fund executive Edward Lampert merged the two retailers nearly two decades ago, vowing to restore them to their former prominence, as reported by The Associated Press. However, the 2008 recession, along with the growing influence of Amazon, hindered those plans.

At the time of the 2005 merger, Kmart operated around 1,400 stores and Sears had almost 900 full-line U.S. locations, per CNN. The parent company of the two organizations, Sears Holdings Corporation, then filed for Chapter 11 in 2018. By the time it emerged from bankruptcy, there were 231 Sears and 191 Kmart stores remaining. Today, only a small number of Sears stores still operate.

Before being merged with Sears, Walmart’s low prices and Target’s unique products proved too much for Kmart, and the company was forced to file for Chapter 11 bankruptcy protection at the beginning of 2002. Hundreds of store closings followed, and for a retailer that once boasted over 2,000 stores in the U.S., this became a historic moment for such a large North American retailer.

A particularly critical take on Kmart's trajectory comes from Startup Stumbles, which attributes the retailer's decline to strategic missteps. Writer Keith Donovan's analysis points out that a "special strategy group" in the 1970s led Kmart away from its core merchandising business, stalling growth through the '80s and '90s. "CEO Charles Conaway’s subsequent fraud led to a Chapter 11 bankruptcy filing in 2002, followed by a second filing in 2018 due to Edward Lampert’s greed," he stated.

Additionally, in 2002, GPN highlighted Kmart's struggle to find its place between Walmart and Target, calling it "the discounter in the muddle." Walmart thrived as a price leader, while Target moved upmarket, focusing on trend-forward, affordable fashion — creating a niche that left Kmart adrift.

GPN also described some other issues it had at the time, such as how Kmart implemented quick fixes, including diversifying into non-core businesses like Borders, The Sports Authority, and Builder's Square, and when "they weren't able to sustain or grow these chains profitably," Kmart sold them at a loss. On top of that, the company neglected essential technology investments for inventory and supply chain management, hindering customer satisfaction, and lacked a clear customer demographic focus, failing to address lower-income markets. Continuous management changes and high operating costs also contributed to ongoing profitability issues, leading to bankruptcy.

“Kmart was part of America. Everybody went to Kmart, whether you liked it or not. They had everything. You had toys. You had sporting goods. You had candy. You had stationery. It was something for everybody. This was almost as much of a social visit as it was a shopping visit. You could spend hours here. And these just dotted the American landscape over the years.”

Michael Lisicky, a Baltimore-based U.S. retail history author, via The Christian Science Monitor

As far as Kmart making a comeback, it seems highly unlikely at this point, even as videos about Kmart's revival see a steady stream on social media platforms like TikTok.

In the aftermath of the New York Kmart's closing, Greater Long Island conducted a poll asking locals what should replace the closed store. The winner of the poll was Target, with 49% of the votes, while Walmart and Costco rounded out the top three at 16% and 15%, respectively. The outlet noted that the closest Target to the Hamptons is currently around 23 miles away.