One year after bankruptcy, future still cloudy for local Kmart plant; other news from area chain stores
photo by: Chris Conde
Let’s go national today with some news about chain stores that operate in Lawrence:
• Sears is a lot like the 1970s-era lawnmower I have from the retailer. It leaves a pool of oil on my garage floor so large that J.R. Ewing once tried to buy the rights to it. (It is so old that it actually still gets J.R. Ewing references.) In other words, both of them are a mess but keep on running.
Sears entered bankruptcy protection one year ago, but it is not clear that the company is a whole lot more stable than it was back then. Some of you may be wondering why we care. Lawrence does not have a Sears store. But Sears also is the parent company for Kmart. We don’t have one of those either. Believe it or not, Kmart no longer has any store in Kansas, according to the company’s website.
Despite that fact — the website also says there are no Kmart stores in Missouri — Kmart does operate a distribution center in Lawrence. Historically, the distribution center along the Kansas Turnpike in northern Lawrence has employed several hundred employees, and it has the largest industrial building in the county.
So, for those reasons, I try to keep an eye on Sears. The latest news comes from a Monday article in The Wall Street Journal. A reporter there talked with several sources that had information about Sears’ new parent company, Transform Holdco, LLC.
According to the article, the company is in the process of closing far more stores than it has publicly disclosed. The article said people familiar with the situation report that “roughly a quarter of the 425 Sears and Kmart stores that financier Edward Lampert bought out of bankruptcy have closed or are closing.” That number of store closings is much larger than the chains have disclosed, the newspaper reports.
The last we heard from Sears was in August, when it announced it would close 21 Sears and five Kmart stores by the end of the year. But WSJ reports that is just a glimpse of the store closings to come. “In addition, nearly 100 stores are slated for closure by year end, the majority of them Kmart locations, according to people familiar with the situation,” according to the WSJ article. “Transform hasn’t disclosed the 100 additional closures. In most cases, the leases were set to expire, of the people said, and it didn’t make sense to extend them when the stores weren’t profitable.”
As is always the case, these store closings create questions about whether the company also will have less need for distribution center space. My understanding is that Lawrence’s Kmart distribution center does do some third-party work for other retailers. I’ve been told it fills some e-commerce orders that may not be directly tied to Kmart. That could be a positive for the center’s future.
I’m not sure how much the distribution center does to fill Sears needs versus Kmart’s. It certainly appears that Transform is more interested in trying to save Sears’ operations than Kmart’s. According to WSJ, Transform is “in the process of buying nearly 500 money-losing Sears Hometown Stores for at least $21.5 million.” Lawrence used to have a Sears Hometown Store, but it has closed. Those stores focus heavily on selling Kenmore appliances and Craftsman tools. The Kenmore brand has become particularly important, now that Craftsman has been bought by Stanley Black & Decker Inc., which is selling the once exclusive Sears tool line at many locations.
But the WSJ article also highlighted how much of a challenge Sears is having in the appliance market. The article reported that Sears’ dollar share of large appliance sales fell to 11% in June. That’s down from 23% four years earlier.
• Maybe someday Lawrence will have its own e-sports arena, where hardcore computer gamers can gather and compete. There’s at least one national retailer with a Lawrence presence who is testing the waters.
The trade publication Chain Store Age recently reported that retailer Five Below has entered into a partnership to build 3,000 square-foot Localhost esports gaming centers that would be connected to Five Below retail stores.
Five Below, if you aren’t aware, is a discount retailer that sells items such as toys, games, fashion accessories, bath and body items and many other items priced $5 and below. The company’s largest target audience seems to be teens and children. The company has a store near 33rd and Iowa streets in a portion of the former J.C. Penney location.
To be clear, nothing in the news from Five Below says the retailer has chosen Lawrence as one of the locations for its e-sports gaming centers. The company hasn’t made any of those announcements yet, but rather has reported that it has signed a deal to do a multistore launch of the gaming centers in 2020. Chain Store Age reports the plan could include 70 or more locations in the next several years.
Five Below has about 850 stores, so these e-sports centers would only be in a handful of their locations. But, it is an interesting retail trend to keep an eye on nonetheless, especially in a university community. Nerd Street Gamers, the company Five Below is partnering with, has previously said it has an interest in building university-based e-sports centers.
• Two of the larger chains that operate in Lawrence announced last week that they are getting out of the e-cigarette business.
Kroger, which is the parent company of Dillons, and Walgreens both announced they no longer will sell e-cigarettes as questions mount over the safety of the products. Walgreens indicated it would stop selling the products immediately, while Kroger said it would cease selling the products once it runs out of current inventory.
E-cigarettes have gotten a lot of attention lately, first for any role they are playing in underage smoking, but more recently over questions of whether they are causing lung illnesses.
There has not been any type of ban on selling the products, though. A multitude of locations in Lawrence continue to offer e-cigarettes and vaping supplies.