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.
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.
More from Top Stocks
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.
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.
'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.
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!
Copyright © 2014 Microsoft. All rights reserved.
Like many companies this winter, the fast-food giant blamed a drop in same-store sales on the weather. But could its problems be bigger than a snowbank?
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.