Front Page Talking Points

FOR THE WEEK OF MAR. 27, 2017

Modern dinosaurs? Sears and Kmart, old school retail chains, may be doomed

frontpageactionpoints.gif

1.gifPick another business topic and tell why it's in the news or interests you.

2.gifRead about a local store or company and summarize the coverage.

3.gifNow look for any mention of online shopping. Are you familiar with what’s discussed?

How often do you and your family spend money at a mall? In age when many people shop online, some big national stores without appealing websites and strong Internet marketing face possible extinction. The endangered list includes Sears, which admits it's in serious peril. In the past decade, Sears sales have dropped by half.

The Illinois-based company, founded in 1893, has owned Kmart since 2012. Last week it warned investors that the end could be coming after years of losses and declining sales. Access to merchandise may be limited because it’s short of cash, executives concede in their annual financial report, required from every business that sells stock publicly. Losses also could limit the ability to get more loans, needed for survival. The frank talk comes less than six weeks after the company announced 150 Kmart and Sears store closings in an effort to cut costs by $1 billion.

The dire situation reflects Americans' shift away from buying electronics, tools, clothes and toys at malls. As online sales soar, mall vacancies spread. Sears, Roebuck & Company was once the largest U.S. retailer – sort of the Amazon of its time. It began as a mail order catalog company and started opening retail locations in 1925. There was a time when it even shipped ready-to-erect house "kits." But now it and Kmart are mostly bypassed as American shoppers turn to its huge rival Walmart, to Best Buy for electronics, discounters T.J. Maxx and Marshalls, and the convenience of shopping online.

An irony is that Sears "pioneered a robust catalog business [that] could have been Amazon before there was Amazon," writes Detroit News business columnist Daniel Howes. At The Atlantic magazine, associate editor Bouree Lam sees another irony: "Its downfall will be mourned by those who remember a time when the retailer had a pulse on what Americans wanted to buy, and yet probably haven't shopped there in years."

Sears says: "Our historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern." – Annual report

Professor says: "Everyone within the retail field knew that they were not keeping up with what was going on." -- Amanda Nicholson, Syracuse University business management professor

Columnist says: “Sears and its sister brand, Kmart, spent way too long clinging to a past many of its customers long ago left behind.” – Daniel Howes, The Detroit News

Front Page Talking Points is written by Alan Stamm for NIEonline.com, Copyright 2024

Front Page Talking Points Archive

Common Core State Standard
SL.CCS.1/2/3/4 Grades 6-12: An essay of a current news event is provided for discussion to encourage participation, but also inspire the use of evidence to support logical claims using the main ideas of the article. Students must analyze background information provided about a current event within the news, draw out the main ideas and key details, and review different opinions on the issue. Then, students should present their own claims using facts and analysis for support.