While online sales break new records and other stores both online and offline see an increase in the fourth quarter, Sears and its sister retailer, Kmart took a hard hit this holiday shopping season, as both big-name department stores announce plans to shut down 120 stores. Is bankruptcy in the near future for Sears?
It’s not a big surprise that stores like Kmart and Sears are starting to fall behind. Online shopping is the preference of today’s consumer, which adds more competition to the retail mix. Also consider the fact that Sear and Kmart have taken too long to renovate run-down stores and have also failed to improve less than satisfactory customer service.
The deadly combination of crippling sales, plummeting stock prices and a total lack of concern for individual locations, has set both Kmart and Sears on slippery slope to financial break down.
In 2005, Sears merged with Kmart in a strategic effort to increase sales; however, the merger has not helped in any significant way. Experts say it's several factors that are bringing Sears down. Managing director, Mary Ross Gilbert says, “[is] The customer just doesn’t think of Sears at the top of their mind anymore,”
Comparison to competitors like Target, J.C Penney and Home Depot show that Sears is the weakest link. Many of the store’s well-known competitors have increased sales, even considering the economic state of the country, while Sears trails behind, losing close to 50% of earnings in this fourth quarter.
At this rate, 2012 might see an end to Sears and Kmart, unless a hopeful merger or acquisition can save the two retailers before it is too late.
In the meantime, Sears will close stores, selling inventory which is expected to generate $170 million.