Why Sears Plans to Start Opening Stores Again

Embattled retailer Sears, which filed for bankruptcy in October and shuttered hundreds of stores, has announced the opening of three new — and smaller format — doors come May.

The shops, dubbed “Sears Home & Life,” will sprout up in Anchorage, Alaska; Lafayette, La.; and Overland Park, Kan. With only up to 15,000 square feet of floor space, each store is a far cry in size from the traditional Sears outpost, which often spanned more than 100,000 square feet.

Neither apparel nor accessories will make an appearance in stores; instead, they will house appliances, home products, lawn and garden equipment, repair tools and other hardline goods that the company believes could drive more profitable growth.

“The exciting new Sears Home & Life stores will carry power categories where Sears has a real strength: appliances, mattresses and our home services business,” said Peter Boutros, chief brand officer for Sears and Kmart. “We are here to serve these communities, and this is part of our strategy to maintain a presence in markets where we have right-sized our footprint.”

He added: “Sears Home & Life supports our strategic plan to become a stronger, more profitable business, and these test stores will enable us to learn and improve as we move forward.”

The stores were developed based on insights garnered from Sears’ appliances and mattresses stores that opened in 2017 in Ft. Collins, Colo.; Pharr, Texas; Honolulu, Hawaii; and Camp Hill, Pa.

Sears, which has long relied on its hardware and appliances businesses, had for years faced an uphill battle against bigger home improvement retailers such as Lowe’s and Home Depot. The 126-year-old company ended up filing for bankruptcy on Oct. 15. (The once-dominant force boasted about 3,500 stores across the country when Sears and Kmart merged in 2005. Last year, it was down to about 1,000 locations.)

With its new smaller-format stores, Sears joins retailers such as Nordstrom, Kohl’s and Macy’s, which have recently rolled out tinier stores aimed at — among other things — trimming their brick-and-mortar footprints amid digital disruption, and upping more experiential features.

In February, a bankruptcy judge approved Sears’ $5.2 million sale to chairman and ex-CEO Eddie Lampert, whose restructuring plan through his namesake hedge fund, ESL Investments Inc., would allow the department store chain to continue operations at 425 stores and save the jobs of 45,000 employees.

In a previous interview with FN, Davidoff Hutcher & Citron LLP attorney David Wander, who represented four creditors with claims in the bankruptcy, explained the need for department store chains to invest more resources in e-commerce and cut down their physical footprints — or find more innovative strategies that would help them stay relevant.

“Even with the best efforts by Sears, in this new era of competing with Amazon, it’s challenging for everyone,” Wander said. “The big-box stores will not be as huge [as they used to be], and they’re going to be experimenting with other types of small-box stores and online business.”

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