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.
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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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I'm not a fan of malls, but I traveled to the Detroit area and saw a host of the "new" fashionable strips that are common in warmer areas. It was hot and not problem in June, but my aunt said in the winter it was miserable going from store to store in the open.
The article said that one-third of the malls had problems. That leaves two-thirds as viable places for shoppers and tenants. Again, I don't like malls, but they shouldn't be dismissed just because they aren't the cutting edge of retailing.
Why would I buy large ticket appliances from Sears when they hold you hostage to their credit card?
The only way to get the maximum sale price is to charge the items on the Sears Charge. I can get the same discounted prices at Best Buy, HHG, and pay cash. Why go through the hassle. Also, the customer service is horrible.
The person is the same as I had. We went in to buy a microwave and asked for the most powerful one.
We were told a 1200 watt was not made.
At that time we were looking at one.
The salesman said it must have just been added.
The label on the shelf was wrinkled and faded.
He walked away and said if you need more help I will be right over there.
I said just send someone over to write this up.
He said I guess I could do that and sold it to us before he went back to talking to the other two people.
Saying Sears downfall is because of "Dying Malls" is absurd. I think it's because they charge OUTRAGEOUS interest rates on their charge cards, even to their "Best Customers" who pay on time, as i once did when i bought from Sears on a regular basis. That was decades ago. I never walk into a Sears store anymore. I enjoy Malls because anything you want or need is there. Sears downfall is of their own doing.
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.
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