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The Sad, But True, Human Story Behind The Dismantling Of Once Iconic Sears

Tyler Durden's picture




 

Submitted by Brian Sozzi of Belus Capital Advisors,

Catching up on emails and came across the one below from a now former Kmart employee.  It really tugged at me, and it joined the 1000s of other disturbing emails I have received from former and current Sears and Kmart workers over the past six months.  Visiting stores and combing through the financials are one thing, but to hear the human toll of decisions made by executives not engaged with the stores except to pick those that need to close due to their lack of action through the years is something else entirely.

A more complete picture has been formed for me as to what’s REALLY happening inside this once iconic national retailer, and the REAL economic trends (not jacked up government GDP figures and retail sales) on the ground across the U.S. four years post-recession, from reading all of this outreach.   Friends, say hello to the REAL economy and the REAL story of a disintegrating, once iconic, national retailer Sears.

Outreach

“Hello Mr. Sozzi,

I am a former employee of Sears Holdings/K-Mart.  I live in Streator, Illinois and our store was “liquidated” in early 2013.  There are a lot of “ironies” affiliated with our particular store closure that I would like to make you aware of.

First, after yearly inventory in 2012, SHC signed a five-year lease at our location, assuring us employees that we would NOT be included in the list of store closures that were going on at the time.  We were told that it would stay open for at least the next 3 years because of this lease.  Sadly, that was not the case.

On a final note, I don’t want to hear SHC whining about their 250,000 employees that they clearly care NOTHING about. Ask any one of them to recall the last time they got an EARNED pay raise. At my store, there hadn’t been a raise given in over 6 years.

Simply put, you cannot expect productive employees to thrive on part-time/minimum wage. Top that off with the lack of investment on the store level and one would have to agree with you – they’re shooting themselves in the foot.

You are welcome to visit out Facebook page (Goodbye K-Mart 9804) to get a sense of how this has affected not only the former employees, but our community as a whole. In a city of 13,000, K-Mart was a life line for some of us, since there aren’t many options here. There were employees who had been at that location for 20+ years, and were tossed out like garbage.

As for Eddie Lampert, I hope he enjoys his exclusive island mansion and all of the perks that he’s afforded off the backs of people like me. I just hope I can find another job soon because I’m clearly one of the “little people” in his world that would just like to know my light bill will get paid.”

What Happens When a Kmart Store is Dismantled

Source: Goodbye K-Mart 9804 Facebook Page

Kmart 9

Voices of those Impacted

Source: Goodbye K-Mart 9804 Facebook Page

Kmart 77

 

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Tue, 01/21/2014 - 16:32 | 4352860 texas sandman
texas sandman's picture

Illustrating why Amzon has NEVER made a dime's worth of actual profit.

 

Tue, 01/21/2014 - 14:35 | 4352268 Spungo
Spungo's picture

10 years from now, having a minimum wage job makes you a 1 percenter

Tue, 01/21/2014 - 14:47 | 4352310 all-priced-in
all-priced-in's picture

Folks like shopping at Kmart because they don't need to get all dressed up like they would if they were going to Walmart.

   

 

 

 

Tue, 01/21/2014 - 15:12 | 4352446 MR166
MR166's picture

I have to give you 10 scarcasm point for that one.

Tue, 01/21/2014 - 14:50 | 4352326 fuu
fuu's picture

The American Dream in action.

Tue, 01/21/2014 - 15:05 | 4352407 RabbitOne
RabbitOne's picture

Three and a half years ago I bought a Weed Wacker at Sears. Just over 3 years, this last summer when the warranties expired, the Weed Wacker gasket blew. I took it back to Sears to get fixed.

 

A young guy who knew nothing about repairs looked at it and said “ …yeah we get a lot of these back blown out like this. It will cost you $49 fixed fee plus $89 for each bench hour. You are better off buying a new Weed Wacker from us because the repair charges are going to be more than the new one. … Your only other choice is go in the store and buy the part and fix it yourself but you are on your own trying to find the parts…”

 

This current repair experience contrasted sharply with Sears 10 years ago. Back then they had a service, parts and repair facility a few miles away. At that facility I could talk with a rep who gave me an exact estimate of the repair charges at 25% of the cost quoted today or service people who would pick parts from the blueprint that best described the repair.

 

I trashed the Sears Weed Wacker and bought from a local lawn outlet. They had a repair facility like Sears used to have…   

 

Tue, 01/21/2014 - 15:49 | 4352637 QQQBall
QQQBall's picture

RabbitOne. Zactly - 

Extended repair warrantys are high margin versus the shitty Kenmore washer/dryers. 

Tue, 01/21/2014 - 18:50 | 4353429 MeBizarro
MeBizarro's picture

Consumer Reports or almost any consumer advocate organization can tell you that extended repair warranties are a complete sucker's bet especially on lower to moderately priced items.

Tue, 01/21/2014 - 15:08 | 4352424 MR166
MR166's picture

To blame Eddy Lampert for any of these problems does not really make a lot of sense.  He if anything just delayed the inevitable.   Lets face it, the internet has made bricks and mortar retailers a thing of the past as robotics will soon make industrial workers obsolete also.   Soon we will be able to produce goods and services without any employees at all but who will have enough money to purchase them.  

Welcome to 2020 and the unknowns that it brings.

Tue, 01/21/2014 - 15:24 | 4352515 PowerPlayer
PowerPlayer's picture

Kmart's problems started with the growth of Walmart and Target.  You are exactly right though.  Markets change over time and the market just isn't big enough for Walmart, Target, Kmart, Sears, Macy's, JC Penny, and Amazon.com.

Tue, 01/21/2014 - 15:15 | 4352440 Pinefox
Pinefox's picture

The overwhelming burden of government regulations with which small businesses must cope along with the risk involved in any business is going to discourage the formation of small businesses. All levels of government, City, County, State and Federal saddle small business with taxes as well as regulations that are now the equivalent of an elephant sitting on one's chest.  As an expample, Seattle has an office space tax and a head tax on every employee penalizing growth.  Who needs it?  The burden is so great that economys of scale now is the only way to survive.

Wed, 01/22/2014 - 05:04 | 4354771 DoneThis2Long
DoneThis2Long's picture

Talent and $ is leaving, or avoiding, this country. It is as incredible as it is painful to watch what so many worked and gave their all to build and defend!!!

There is a vid of Reagan stating this is the last nation such as it was at the time. That train left the station. I fear, it will become a nation which will be raped of its resources and ravaged by indiscriminate destruction so to feed the needs of other countries ... ie china & india.

Tue, 01/21/2014 - 15:22 | 4352493 PowerPlayer
PowerPlayer's picture

Let me get this straight.  This former employee received compensation from Sears, which both the employee and Sears agreed upon.  The employee then went on to say that you don't get productive employees at minimum wage, i.e. I have a horrible attitude and I really don't care about my job or customers because you don't pay me enough money, but then when customers stopped coming to the store the empoloyee blames the problem on everyone else and they can't understand why their store was closed.  

If you don't like the pay then don't go to work, but if you accept money for a job then you better do the job.  I was raised on a farm where people took pride in their work regardless of how much they got paid.  I'm sorry, but I'm sick of all these whiners that figure it is ok to collect a paycheck and do a crappy job.  

Tue, 01/21/2014 - 15:38 | 4352585 Fix It Again Timmy
Fix It Again Timmy's picture

With everything collapsing and swirling downwards, people are pulling in their spending which just increases the speed of our economy going down the drain - there is no stopping it and yes, it was inevitable because of policies enacted after the last depression - it won't end pretty, but it will end and there will be a new beginning....

Tue, 01/21/2014 - 15:39 | 4352590 Joenobody12
Joenobody12's picture

People remember what happened when K-mart went belly up ? Right before then ,the board of K-mart voted themselves tons of money from the soon go bankrupted company. Long story short, in 2004 when I was relocating from Los Angeles to WA, I searched high and low for a quiet place to call home in WA. The serach led me to Blue mountain in Sequim, WA. I was looking at a 20 Acres lot and was ready to buy. That was when the real estate agent told me your future neighbor (who was busy building on a lot next door) was an executive from K-Mart. I walked away from the deal in disguest . No way in hell would I live next to people like that.

Tue, 01/21/2014 - 15:45 | 4352615 QQQBall
QQQBall's picture

Obviously, K-Mart does not sell pitchforks

Tue, 01/21/2014 - 16:03 | 4352708 lindaamick
lindaamick's picture

It's predatory capitalism at its finest. 

Monopoly says it all.  Eventually there is a single winner.  It's winner take all.

Look at the trajectory globally.  Fewer and fewer corporations that grow bigger and bigger.

The bigger they grow, them more they own politicians and workers. 

It is a zero sum game we are all in it together.   Few  winners, lots of losers.

Tue, 01/21/2014 - 16:16 | 4352785 aerojet
aerojet's picture

In the past, what you say was not true.  It was not a zero sum game, wealth creation did take place.

Tue, 01/21/2014 - 18:51 | 4353435 MeBizarro
MeBizarro's picture

It's 'Back to the Future' 1890s style!

Tue, 01/21/2014 - 16:03 | 4352712 silentboom
silentboom's picture

Get over it, the store wasn't profitable and needs to be killed.  This worker should spend their time writing a resume instead of an angry letter.  If theis worker can't find a job, they need to learn a new skill and increase their value.  Noone is going to give them a job, they have to make themselves necessary.  What are we at now with unemployment 3 years? Have we gotten to that number yet?

Tue, 01/21/2014 - 16:16 | 4352782 aerojet
aerojet's picture

They should all go out and get MBAs.  

Tue, 01/21/2014 - 16:03 | 4352713 irongator
irongator's picture

Corporatism: The process by which large corporations increase their value while systematically lowering the standard of living for all Americans by continually driving wages down, reducing benefits, and offshoring manufacturing. This is the death sprral for the USA, and we are half way down the bowl already. Take a breath... quick!

Tue, 01/21/2014 - 16:15 | 4352766 silentboom
silentboom's picture

I'd point the finger right at the Federal Reserve rather than big companies.  The Fed is enabling the growth of everything by redistributing wealth.  That includes the digustingly enormous orwellian warmongering socialist government.  If the value was restored to the dollar workers wealth would go back to the workers who earn it at the expense of the establishment.

Wed, 01/22/2014 - 05:32 | 4354787 DoneThis2Long
DoneThis2Long's picture

Responsible politicians should have stepped in and taken the reigns from the fed. I am no fan of the Fed or Ben, but, several times, Ben stressed he can only do so much and pro-growth policies were needed in order to deal with the problem. We know where/how that went!!!

Once rates got to historic lows, or even before, those parasites should have stepped in and pass appropriate legislation so to stop the bleeding of jobs, assets, etc etc. We know how well that worked out.

Tue, 01/21/2014 - 23:27 | 4354313 Fish Gone Bad
Fish Gone Bad's picture

we are half way down the bowl already

As John McEnroe once said, "You can't be serious."  Do you honestly think this is half way down?  I am of the thought that we are not even a tenth of the way down.  Do you see all the prosperity around you (as bad as it is)?  It is NOT SUPPOSED TO BE HERE.  Something went very very wrong a while ago and it will only end up getting fixed in a catastrophic way, I am afraid to say.

Google: cursing fish cafepress

Tue, 01/21/2014 - 16:14 | 4352768 New American Re...
New American Revolution's picture

Have you ever been to Steator?   It was a ghost town 30 years ago and has gone nowhere but down since.

Tue, 01/21/2014 - 16:26 | 4352835 Moe Howard
Moe Howard's picture

Yes, why would someone plan a life there that isn't a farmer?

Tue, 01/21/2014 - 16:25 | 4352831 Moe Howard
Moe Howard's picture

First there were catalog sales companies, Sears, Montgomery Wards, JC Penny's etc. Then the catalog stores started brick and mortar stores that put the little 5 and 10 cent stores, department stores and mom and pop out of business. As the brick and mortar increased, the catalog companies stopped selling so much through the catalog and even stopped printing the catalogs. Then came the internet, and internet sales companies which are glorified electronic catalog companies, able to stock much more variety than a brick and mortar ever could, and they have been slowly putting the brick and mortars out of business.

 

It is called progress, only a moron doesn't get it. The last time I was in a Sears it was a ghost town, and the employees were surly and unhelpful. The last Kmart I was in was worse. Why would I go back?

Tue, 01/21/2014 - 21:49 | 4354051 AgentScruffy
AgentScruffy's picture

True. Sears couldn't "get it." Times changed, and they didn't change adequately or fast enough. They were king of the "catalog" years. Disuptive innovation, creative destruction, and all that.

Tue, 01/21/2014 - 16:31 | 4352859 roadhazard
roadhazard's picture

Apparently the worker brought this all on himself.

 

lol, wingers crack me up.

Tue, 01/21/2014 - 16:33 | 4352868 surf0766
surf0766's picture

If sears/kmart paid a living wage of $22.50 per hour they would be doing well..

Tue, 01/21/2014 - 16:51 | 4352952 dizzyfingers
dizzyfingers's picture

Oldwood

Return to the barter system!

Tue, 01/21/2014 - 17:02 | 4352997 Hengist
Hengist's picture

If you really want to know what brought down K-Mart I shall tell you, the missus was part of an audit back in the late 90's and she had the job of finding out by crunching the numbers (manually back then) to find out where they were bleeding money. 

She found out that the checkout staff were pilfering money and goods and this was predominantly in Melannin enhanced neighbourhoods and also that the delivery truck drivers were double billing or enhancing their time all locations.

She recommended that because of the massive losses at the Melannin enhanced stores either fire all the staff or close the store because the losses were that large.  Also get new delivery drivers/companies.

This was presented to K-Mart who then closed down all the Melannin deficient and profitable stores then keeping the thieving ones open.  Because it would have been racist to actually do something about the theft.  They also kept the same delivery companies.

So K-Mart deserves what it gets and so do the staff.

 

Tue, 01/21/2014 - 20:17 | 4353734 rustymason
rustymason's picture

We used to shop at our nearby KMart when we were first married, but stopped after a few dozen times. It always took at least 5-10 minutes to check each person out, the products and selection got worse and worse, and the sales staff become ruder and more stupid with each visit. How it stayed open for another 10 years is a mystery.

Tue, 01/21/2014 - 17:05 | 4353008 Debt Slave
Debt Slave's picture

A dozen or so years ago I took my car to a Sears auto center for alignment. I waited 2 hours and when I got my car back the alignment was worse than when I brought it in, pulling hard to the right. That was the last time I spent any money at Sears.

Tue, 01/21/2014 - 17:06 | 4353009 purplefrog
purplefrog's picture

Don't know if I'm repeating another comment, but many years ago to retire from Sears was to be able to live quite well.  One has to wonder if Sears, like so many other corps and munis had that to deal with. 

Tue, 01/21/2014 - 17:08 | 4353026 pupdog1
pupdog1's picture

Let me tell you about the little people at Sears.

A while back, I bought a Kenmore hot water heater, only to drag it home, start installing it and find out that it had already been "half-installed" and returned, carefully re-boxed, and sold to me as new. They refused to give me a refund until I got the district manager involved and threatened to put his name in front of the state attorney general's office for fraud. Many hours of wasted time.

About a year ago, I went into a Sears Automotive to buy an $800 set of high-end Michelin tires thay had on sale. There was almost no sales help, and they refused to even acknowledge my presence. After 20 minutes of standing around, I gave up, went to the mall for dinner, and came back to try again, only to get the same non-treatment. So, $800 walked the door and found its way, ten minutes later, to what turned out to be a fantastic independent dealer in a small regional chain of tire shops.

A few months ago, I tried to buy a Craftsman tool drawer rig to sit atop my old Craftsman roll cab. About $300 and on sale. I asked a kid if they had these in stock, and he said yes but started demanding all kinds of personal information including my unlisted phone number. He said he couldn't go upstairs to check until I had given him all the information. I demanded to see the manager, who turned out to be an even bigger dope. Reluctantly and after a big dustup, they agreed to sell the item. In 20 minutes time, three of them put together couldn't manage to get the right price to come up on the screen, after typing what seemed like War and Peace into their goddam computer. That's when I walked out the door.

I am old enough to remember when every household had a two inch-thick Sears & Roebuck catalog--the original Amazon. Sears is certainly iconic. But as these examples show, the demeeze of Sears involves a lot more than their hedge fund grifter CEO.

There's a reason, as those two bims in the ad video said, that Sears has plenty of parking.

Wed, 01/22/2014 - 00:46 | 4354482 jonjon831983
jonjon831983's picture

Heard somewhat similar story... potential customers waiting around... unhelpful staff. (Can't be at every Sears...)

It almost seems like Sears was gutted on purpose.

Tue, 01/21/2014 - 17:35 | 4353150 Bloodstock
Bloodstock's picture

NAFTA! They sent our industry overseas. It was only a matter of time that most everything else would slice into oblivion. 

Tue, 01/21/2014 - 17:47 | 4353199 deerhunter
deerhunter's picture

IT IS CALLED TAKING CARE OF THE CUSTOMER. Sorry for the caps.  I am an Executive Chef but no longer my trade of choice. There are three restaurants I have eaten at in the last 20 years that I would frequent again to spend my hard earned money.  It used to be called the hospitality industry.  Retail is not a whole lot different unfortunately.  Ignore the customer  long enough you go out of business.  I just spent 149.00 for a new kitchen faucet set with a pull out spray head from the main faucet.  While doing the install I noticed that the plate for attachment to the sink was plastic painted silver.  Really?  149.00 for plastic parts?  It doesn't matter if the kitchen is on fire if the ship is sinking.  I will let you guess what state our country is in.  Sorry for the rant.

Tue, 01/21/2014 - 18:40 | 4353404 Oldwood
Oldwood's picture

Marketing companies will always try to convince a company that they can "buy" them new customers more cheaply that they can satisfy or retain existing ones. As their customer base dwindles and their existing customers are long gone, they become even more desperate to "buy" new ones. Another circling of the drain. Of course I have been in business for thirty years and rarely spent a thin dime on marketing, instead focusing on referrals and return customers. But what the fuck do I know? I have four employees. Its always so growth limiting when you are not willing to lie to your customers. I may not be rich but I'm proud of what I do and how I do it!

Tue, 01/21/2014 - 20:55 | 4353847 Vuke
Vuke's picture

>>I may not be rich but I'm proud of what I do and how I do it!<<

That's old school Oldwood.  Let's take your business, roll it into an OTC stock for millions of shares, flog the heck out of it get rich next month.  Those four employees have to go of course but we'll get a cheap MBA student in to manage.


Tue, 01/21/2014 - 20:55 | 4353848 Vuke
Vuke's picture

>>I may not be rich but I'm proud of what I do and how I do it!<<

That's old school Oldwood.  Let's take your business, roll it into an OTC stock for millions of shares, flog the heck out of it get rich next month.  Those four employees have to go of course but we'll get a cheap MBA student in to manage.


Tue, 01/21/2014 - 20:55 | 4353849 Vuke
Vuke's picture

>>I may not be rich but I'm proud of what I do and how I do it!<<

That's old school Oldwood.  Let's take your business, roll it into an OTC stock for millions of shares, flog the heck out of it get rich next month.  Those four employees have to go of course but we'll get a cheap MBA student in to manage.


Tue, 01/21/2014 - 20:09 | 4353708 rustymason
rustymason's picture

Count me as one of those shocked that Sears has lasted this long. I saw them take a big dive in the 1980's and have been holding my breath ever since. That much inertia takes a long time to wind down, I suppose.

Tue, 01/21/2014 - 20:24 | 4353740 nowhereman
nowhereman's picture

OK, so I guess this old dude will have to supply a history lesson from his somewhat hazy, but factual recollection of the past.

I can't remember if it was after Nixon or Reagan that one of the high mucky-mucks (I think it was a VP) in government pulled off the first "leveraged buyout" but what I do know was that it had never been done before.

This ex-government official was able to purchase a business, not by paying for it with money of his own, but by placing a mortgage on the place he was purchasing.   That's right, he was able to buy the comany by putting it in debt.  Because the companies business was so good on paper, the bank allowed the purchase by placing a loan against it.

If I am not mistaken, I believe it was a greeting card company.  A company that was very profitable, with a skilled workforce and very little debt. However, after the "deal"went through, the company was not so profitable as they were required to pay interest on the debt that was incurred to buy them out.  And after this so called "financier" took everything he could get, the company went bankrupt.  A  story that is repeated many times a year with the collusion of the government and the banks.

I remember thinking at the time, "how can this be?" It doesn't make any sense. If this is allowed to continue, it is the end of American business, as we know it.  And unfortunately, I was right.

You see, it doesn't pay to be successful, because some "vulture" "capitalist" can come along and buy your business with debt.  It doesn't matter how productive your workers are.  It doesn't matter how successful your product is, or how much in demand.  The rules say that your business can be butchered in the name of greed, and fuck the consequences for anyone else.  We'll even get our PR boys to blame the workers who made the business what it was in the first place.  And the mindless sheep will parrot our corporate view, because they want to be just like the multi-billionaire sleeze that brought this country to it's knees. 

Being old and forgetful I do know there were a couple of good movies made about this very topic, but I can't remember their names.  

Tue, 01/21/2014 - 21:05 | 4353760 Clycntct
Clycntct's picture

People people people!

Follow the trail of thieves and get off the poor fukn idiots who try and live.

The wall street fkn given to Kmart and sears is where it all takes place.

If you suck the blood out of a idgit you get the final product.

We are living it so get the swords pointed in the correct direction.

It's been awhile but the fraud that sucked the life blood out of those 2 is an amazing feat to view.

And at the time if you didn't dig for the info it was nowhere to be found.

Tylers give us an expose on the Kmart caper. Or maybe I should just use the search and bring up the archives. I forgot ZH doesn't go back quite that far.

 

Dig deeper to find some truth

http://www.nbcnews.com/id/6509683/ns/business-stocks_and_economy/t/kmart...

 

"in 2003, the company has become little more than way for Lampert to create equity for shareholders like himself. Lampert holds close to 60% of Sears Holding’s outstanding shares, and turning assets into cash benefits him directly."

http://www.forbes.com/sites/lauraheller/2013/10/31/sears-is-not-a-retail-story-its-a-holding-company-holding-a-fire-sale/

 

"At the time of Kmart’s bankruptcy in 2002, he was charged with defrauding stockholders by covering up details of the firm’s faltering financial position. He was also accused of spending the company’s money on airplanes and houses.


Read more: http://www.businessinsider.com/the-worst-ceos-in-american-history-2010-5?op=1#ixzz2r5JyjxiQ"

 http://www.businessinsider.com/the-worst-ceos-in-american-history-2010-5?op=1

Tue, 01/21/2014 - 21:17 | 4353933 NeoLuddite
NeoLuddite's picture

Bought a self-propelled lawnmower from Sears Canada a few years back. First time I used it the rear wheel drive failed. Called the store and was instructed to drain the fuel tank, clean it up and return it to the store in its original box for a replacement.  Upon doing so I was told that my account would be billed again and to expect an adjustment within a few weeks. Reluctantly acquiesced. Long story short - the replacement mower failed identically within an hour of use. Being mechanically inclined I dis-assembled the thing and found that the drive mechanism was devoid of essential lubrication.  A triumph of value engineering.

Their saving $0.02 caused me 4 hours of grief.

Haven't been back. Good riddance to Sears.

Tue, 01/21/2014 - 23:09 | 4354276 Fish Gone Bad
Fish Gone Bad's picture

WTF is wrong with you people with all the really angry and hurtful comments?  But for the grace of God, any of us could be in the same predicament.  This is a real mess.  Kicking people when they are down is just so very very uncool.

Google: cursing fish cafepress

 

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