Follow-up stories to the Sears, Kmart closings
By Flickr user robinsonsmay
Sears Holdings Inc., parent company of the Sears and Kmart retail stores, didn’t waste any time reacting to the lumps of coal it earned from consumers this Christmas season; as you’ve probably heard, the New Year hadn’t yet tolled when the commpany announced it would close up to 120 stores after same-store sales down an average of 5.2 percent for the quarter that includes holiday shopping.
The partial list of potential store closings is out — Florida reportedly is hardest hit — but even if your locale doesn’t have Kmart or Sears stores on the chopping block, or if you’ve already covered the immediate impact, this post-December retail story involving iconic merchants has lots of legs and can trigger several follow-up angles.
It’s a good peg for an update on existing vacant retail space in your region, be that due to the failure of big box stores like Circuit City and Borders, to auto dealerships losing their franchise during the past several years’ reinvigorating of the car industry or to poor planning/overbuilding on the part of area developers. As this BusinessWeek article written earlier this year – as it became apparent that Borders’ bookstores wouldn’t survive – indicates, the nation’s shopping districts already are struggling with near-record levels of retail space vacancies. As unemployment persists along with other dampers to consumer discretionary spending, what are the prospects for mall operators, strip center developers, the builders and vendors who service and remodel them, the workers who would staff them? How has the retail landscape in your region changed since 2008? And what creative approaches – like those in this Washington Post story – are being taken by landlords to fill idle square footage?
Other angles are suggested by Sears Holdings’ press relaease about the Kmart and Sears store closures. For example, the company projects some $140 million to $170 million in net revenue due to the selloff of the closed stores inventory. (That sort of begs the question, by the way: If 120 stores are closing, does that mean an average Kmart or Sears store has $1 million in inventory? How does that break down? If you’re into do behind-the-scenes explainers about how firms on your beat work, this could be the starting point of an interesting flow-of-goods or flow-of-cash story about retailers in general.) The going-out-of-business industry is interesting in itself; many states have regulations or registration requirements for GOB (going-out-of-business) events, to prevent consumers from being snookered by false liquidation sales. You might want to check with your state’s attorney general — in addition to consumer caveats, a routine review of GOB registrations could help you get ahead of the inevitable other retail failures that follow the holiday shopping period.
Second, the liquidation industry itself is quite interesting; here’s an older Portfolio story that may suggest some nuggets. Another angle – follow a single good, like a blouse or a Sears’ Craftsman tool kit or a Kmart toaster oven – from inception to eventual fate.
As I always advise, ask “Who benefits?” Even vacant properties require utilities, landscape maintenance, cleaning and other routine caretaking to stay viable and in conformance with codes. What sort of small businesses have found a niche or a new business line in babysitting defunct retail properties until a new owner takes over?
