Sears' big problem: Dying malls

The company built a valuable real-estate portfolio by placing stores at shopping centers across the country. Now many are falling out of favor.

By Kim Peterson Jul 30, 2012 1:49PM
Sears Holdings (SHLD) anchors many of its stores in shopping malls, a tried-and-true strategy that served it well for decades.

But malls have gone out of style in the U.S., and now Sears finds itself on the wrong side of that strategy. Many Sears stores have fallen into disrepair along with the aging malls they anchor, and while the company is trying to remodel some stores, that won't fix the problem.

Post continues below.

About a third of the enclosed malls in the U.S. are "dead or dying," Ellen Dunham-Jones, a Georgia design professor, told the Los Angeles Times. Many count a Sears store as one of their largest tenants.

A Times reporter visited a Sears store in Santa Monica, Calif., several times and found no customers, no toilet paper in the restrooms, not enough signs to help shoppers, and "unsmiling sales associates who rarely offered help."

That's not isolated. Sears shoppers complain loudly on this site and others about lousy customer service and aging stores. The company is taking the hint and spending some money to improve stores, but not nearly enough. In general, retailers spend $6 to $8 per square foot a year on such updates, ISI analyst Greg Melich told The Wall Street Journal. But Sears spends far less -- about $1.50 to $2 per square foot.

Sears' substantial real-estate holdings are considered among its biggest assets, but it has been selling or spinning off some properties. The company is closing as many as 120 Sears and Kmart stores. It's selling 11 stores and spinning off others.

That has helped the company raise cash. Sears posted a $189 million profit in its most recent quarter from a loss a year earlier. But analysts say those moves are just a bandage over bigger wounds at Sears.

Dying malls aren't helping. The trend these days is larger "lifestyle centers," Dunham-Jones told the Times. Such centers have restaurants, shops, movie theaters and other amenities and are easier to access for cars and public transportation. People no longer want to park in a monstrous lot and walk into a monstrous mall that drains time and energy.

As a result, many of the malls that once made Sears plenty of profit are falling by the wayside. Vacancy rates hit an alarming 11% at strip malls and 9.4% at large malls last year.

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Tags: SHLD
Jul 31, 2012 2:35AM
Sears needs to go back to "American made, American proud".  Do you hear me execs?  Sears was at the forefront of American goods and they wrote the blueprint for Walmart before everything was made in China.  Bring back the American spirit and they will not only help rebuild this country but they will once again be the giant on the mountain.
Jul 30, 2012 3:48PM
I think Sears should get back to the basics and stop doing things like carrying the Kardashian brand.  Sears is a family store - leave that Kardashian line of trashy, cheap clothing for some other store.
Jul 30, 2012 4:26PM
As a former Sears employee I can't tell you how frustrating it was trying to help customers when the store was out of inventory, or the product was of inferior quality or when the tools started being made in China.  The management didn't care about taking care of the customer.  All they were measured on was how many credit apps, extended warranties or email addresses did I get during my shift.  The other posters are correct.  Sears has lost sight of what made them great.
Jul 31, 2012 2:14AM
Are the dying Malls or the dying middle class killing Sears?
Jul 30, 2012 4:41PM
Sears or JCP should shake things up a bit and offer MADE IN USA goods.
Jul 30, 2012 2:26PM
I can honestly say that I think the biggest issue Sears has is customer service.  In a world where I can buy online and return the item with no questions and no hassles, last year when I went to return a clothing item that was Christmas gift to my son (wrong size), I was told, I could not return it to THAT Sears store because it was not a main Sears store.  I would need to drive 40 minutes to the nearest main Sears store to return the item. What the...?!?!? 

Their problem is not retail locations.  It was failing to realize that the internet changed the game.  Stellar customer service or bye-bye and die dinosuar.
Jul 30, 2012 2:25PM
When there was a giant re-grand openng, of the large mall in my town, Sears was totally empty of customers.  The other stores in the mall were packed with thousands of customers, but Sears had a few grumpy sales associates and no customers  I wrote a long letter about this to the CEO of Sears and had no response.  They don't seem to care at all about these systemic problems in their stores.         
Jul 30, 2012 2:48PM
Sear has no one to blame but themselves.  Old, dirty, dingy stores.  Tired poor-quality merchandise.  Employees who don't give a damn and a company that doesn't care whether they do or not.

As far as enclosed malls.  Do a little upkeep on your properties.  Clean the restrooms.  Repaint when things get dingy.  Fix or replace the tile.  Update the lighting.  Installing some modern new, darker shade of carpeting goes a long way.  People don't want to shop in your dated dingy malls.  And kick out the roaming herds of ****er wannabees.
Jul 30, 2012 3:30PM

I live in Austin Texas and I go to the Sears in Lakeline mall, I have never had any problem. There's alway's cars in the parking lot and people in the mall. So you have to walk alittle bit, so what. next thing you lazy idiots want is a drive through store. what a bunch of lazy americans and complain about everything.

Jul 30, 2012 10:45PM

'Dying malls aren't helping. The trend these days is larger "lifestyle centers," Dunham-Jones told the Times. Such centers have restaurants, shops, movie theaters and other amenities'


Sounds a lot like a mall.

Jul 30, 2012 4:41PM

I like malls, in the winter, as I live in Minnesota. - 20 to - 40 below makes them attractive. As for Sears, I have seen the local store start to slip on the downhill slope. Sears was a better store until the Sears-K-mart merger. After that the Sears store started looking like the K-Marts, crowded, dirty, out of date and less customer/clerk interaction. I avoided the K-Marts because of this and now I am avoiding Sears for the same reasons. I hope they get their act together before they go the way of Montgomery Ward.

Now on Wal-Mart/Sam's I don't shop there unless I have to. They are getting over run with

 "Not Made in the USA" junk. They hold a gun to the heads of suppliers and say "If you want to stay in business with us you WILL sell your product to us for X number of dollars. This forces suppliers to outsource overseas. I call Wal-Mart and Sam's Club as the "More and More of Less and Less" stores. I find more things in our locally owned stores than the big box stores. I can't compare prices because the big stores don't have it. Besides the profit stays in the community and goes around town many times, Also most of their stock is Made in USA. Not all mind you, but most.

My anthem is "Buy American and Buy It Locally!"

Thanks for reading my spiel. God Bless!  

Jul 30, 2012 2:27PM
Why is this surprising to anyone? sers shop themsleves in th foot in the late 80's byletting bean-counters take over and make cuts in stupid areas...they effectively pushed out their experienced and long-term career people in an early retirement scheme, replacingthem with part-time people on the cheap. Apparently no one in senior management heard the phrase: "You get what you pay for"....and they have reaped what hey have sown ever since. No...I did not work for Sears, nor had anyone in my family in a career path position with them. I just watched this happen, and knew back then that where they are today is exacly what i thought would occur. The real fx to Sears? Kick the senior level clueless managers out and promote some talented middle managers who have a name and career to build....and spend some money on fixing those decreipt stores and equipment!! Some of these places look like one step above ghetto.
Jul 31, 2012 7:54AM
Sears is on much the same path taken by its formerly largest competitor - Montgomery Ward. The stores come across as dirty and with merchandise poorly displayed. Customer service is nearly non-existent and blunt to the point of rude, that is, when you can get any customer service. My last experience in a Sears store made me feel as though I was in a minority-owned business where it became clear I wasn't wanted and wouldn't be offered any service until I was the last customer in the building. The unfriendly attitude of the majority of the staff, combined with the junky appearance of the shelves, finally got the better of me and I left... leaving several hundred dollars worth of clothing in a heap after being ignored by the "sales" staff, and it's been well over a year since I even thought of returning for one more try at a store I once considered to be "All-American" in value and service. It's a real shame... Sears used to be "THE" store, but now it's "THAT" store!
Why would anyone want to spend half of an hour of their time just walking to and from the parking space and to find someone to wait on them in a store that doesnt want to bother??
Jul 30, 2012 6:08PM
No. Sears problem has LONG been corporated arrogance. People too far removed froom the front lines and continued cost cutting. They never understood that they have the Sears card. Here is a fact at the stores I have seen. They will have 4 people selling tires and only one poor guy installing tires. Discount tire will have 5 people selling tires and 12 people installing them. Also, they shoud have gotten out of the clothes business long, long ago. Not their strong suit. People selling lawn mowers need to know more than me.........and so on and so on.
Jul 31, 2012 2:12AM
One of the biggest mistakes Sears made was buying Kmart.  Kmart was a quickly sinking ship that should have been allowed to die.  Yes, I know, the Wal-Mart haters will say that there needs to be competition and they're right, there does, but Kmart has consistently failed to even attempt to compete.  For example...a notebook at my local Kmart cost $1.24....the exact same notebook, same brand, same number of pages cost 24 cents.  There's many more examples I could cite but the point is, Sears by buying Kmart did not save Kmart, they just got onto the deck of the sinking ship to be dragged down with it.  I also find that Sears does not have enough sales.  Rarely do I see much "on sale" at Sears.  A pair of child's shoes that they probably will outgrow in a month or two runs $30-$40.   They don't have a wide range of price ranges there....there's expensive and really expensive. You can buy many of the same things or at least comparable things at Sears that you can get at other stores for far cheaper.  I have never had too many issues with customer service there though I do notice that there aren't very many employees "on the floor" greeting and helping customers.  I think the only thing that's really keeping Sears afloat right now is their tool department and there are a lot of places around now than there were years before that sell tools for much less.  Yes, their quality may not be quite up to par with Craftsman, but unless you use them quite often or making a living doing something using tools people can get by quite well with cheaper versions especially in this economy.   As far as appliances go, I can go to Lowes or Home Depot and buy the same brand appliances, the same models, for cheaper AND get free delivery and installation or at least very cheap charges for installation from them where Sears will charge much more.   We bought the same appliance at Lowes a couple years ago we saw at Sears originally....we were going to buy it at Sears until they told us what the delivery fee and installation fee would be and their warranty on it and return policy sucked compared to Lowes.  
Jul 30, 2012 3:34PM
Nordstroms has HAD RECORD high earnings and sales in the past 4 years through out the worst recession we have ever experienced.. They sell "high end" expensive items and have prospered.. why you may ask?  CUSTOMER SERVICE.. they are great at what made America great.. serving customers.. Sears uscks at it.
Jul 31, 2012 2:17AM
Sales are down everywhere. Its connected to employment rates. People need jobs to spend money. Worry over the future, tightens wallets.
Jul 30, 2012 4:56PM
I miss the old malls.  I HATE the new 'outdoor malls' made to look like old downtowns. You can NEVER find parking in front of the store you need to visit, so you end up parking out in back and have to walk just as far, in the heat or cold.  Why not at least be able to walk in air conditioning and no threat of sunburn?  It's especially dangerous for those with strollers and small kids, having to cross streets to visit stores.  Thank goodness when my kids were small I could pull up to a mall and stroll my kids around safely in air conditioning while shopping at several stores and having lunch and only having to get in and out of the car once.
Jul 31, 2012 11:56AM
Years ago I bought almost everything from Sears.  But their service went downhill.  Every order would be wrong.  I finally gave up on them and didn't buy anything from them for 25 years.  Two months ago I needed a window unit air conditioner and Sears was the only one with with an AC with a mechanical thermostat in the size I needed.  So I decided to try them again.  I had problems with their website and it took many tries over several days before my order went through.  I ordered online with store pickup and paid with a debit card(mistake).  In a few minutes I received a confirmation e-mail.  A few minutes later I received a cancellation e-mail(out of stock) and said I would not be charged.  The next day I stopped at a Sears store and they had the AC I needed the same price as online so I purchased it(with a debit card).  When I got home I checked my bank account and their were 2 charges for $460.09, one for online and one for the store.  I called customer service and the first one hung up on me and the second one said I was not charged twice.  In a few days I received an e-mail stating that I was not charged for the online (cancelled) transaction but if I disagreed to send them proof that I was charged..My bank called them and sent them the exact information they asked for but they ignored it.  My bank then contested the charge and temporarily replaced my money(by the Electronic Funds Transfer Act) but told me if Sears did not refund they(the bank) would take it back(not sure if that is correct).  In my book this is fraud.  When they made a mistake they should correct it but they deny they made a mistake.  I haven't heard from it yet but I am preparing to file complaints with everyone and checking into possible prosecution.        
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