Attention Kmart Shoppers: The Rise and Fall of America's First Big Discounter

by Ben Schultz

On the final day of the Wood River, Illinois, location in December 1983, a 15-year-old regular customer bought a chain and padlock at the neighboring Kmart, then chained himself to a post inside the restaurant. His protest forced Abra K Dabra to stay open for a few extra hours until he could be cut loose, but he failed to convince company executives to change their minds about the closure.

Without getting too far ahead of the ’80s in this chapter, it’s worth taking a moment to notice that Kmart, Sears, and Woolworth all embraced the strategy of diversification while Wal-Mart and Target rejected it, and consider where each of those companies has ended up in the decades since.

As BlueLight.com was announced, the Detroit Free Press interviewed a retail industry expert who predicted that e-commerce would never be successful enough to displace brick-and-mortar stores: “The Internet is just yesterday’s catalog.”

Mark Schwartz to be his second-in-command. Schwartz had left Wal-Mart after trying and failing to start his own real estate business, which he abandoned when it came under millions of dollars in debt. In the two years since then, he had briefly been the CEO of Hechinger–Builders Square before it collapsed, then led Big V Supermarkets, which also went bankrupt shortly after Schwartz left for Kmart.8

Quite a track record

Under Conaway, a key part of Kmart’s strategy for clawing its way back up was to emphasize that it had lower prices than Wal-Mart and Target—a statement that was only occasionally true. Market studies had found that Kmart’s prices were the highest of the three chains on average, and in many cases, those prices were continuing to rise.

the store visits themselves seemed to have little actual purpose. They often devolved into Conaway and Schwartz screaming at minimum-wage workers and store managers, firing them almost at random and provoking others to quit.

The new logo was formed by a green arrow symbolizing progress and motion—one that unfortunately, because of the shape of the letter “K,” had to point backward.

Closer to home, one of the two Kmarts in the city of Detroit was shuttered, in a move that blindsided and infuriated locals. The Meyers Road Super Kmart had opened just four years prior in a neighborhood that was 97 percent Black, and it had the highest sales per square foot of any Kmart in 2000.

Once again, when there was financial trouble, stores in majority-Black areas were among the first to hit the chopping block, regardless of how successful they actually were.

the market share of everybody but the Big Three in the discounting industry had fallen from 30 percent in 1990 to just 10 percent in 2004.

most of the Kmart chain sat on what would be considered prime real estate—if only it was being used for some other purpose than trying to compete with the Wal-Mart or Target across the street.

Under a new program introduced early in 2008, “Sears Holdings Organization, Actions, and Responsibilities,” or “SOAR” for short, the company’s dozens of different divisions and departments were split up, and would now be treated like separate companies with their own profit goals and directives. The result was that each department’s employees were instructed to only do things that would benefit the department they worked for, with no regard for the success of the store as a whole. Department leaders rushed to claim the largest share of the profits, while passing off all the very necessary expenses of running the store on the others. Workers who ostensibly had the same goals were made to fight against each other, and even the executives at the head of each department were stuck trying to race for the biggest bonuses.