Troubled retailer Sears is quietly reopening two stores. What's behind the comeback?

Los Angeles
CNN
—

To the casual shopper, it might look like Sears, one of America's oldest retailers be on life support. The department store chain that once reinvented how Americans shop now barely has a physical footprint after a 2018 bankruptcy and hundreds of store closings.

But talk of Sears' demise may be premature: Just two months ago, a previously shuttered Sears in Burbank, Calif., quietly turned the lights back on. Two weeks later, another reopened in Union Gap, Washington.

I visited the newly opened Burbank store several times last month, including on Black Friday, retail's busiest shopping day, to explore the storied brand. The new Sears looks a lot like the old one, a holdover from an era when department stores dominated America's retail landscape. Although the store remained empty of shoppers when I visited, those who entered, along with some store associates, expressed hope and excitement for a new era for Sears.

The reborn Sears in Burbank looks like a typical American department store. Mattresses, appliances and other household items occupy the ground floor. Down an escalator you'll find clothes, bags and accessories. Another escalator takes you up to a third floor, but when I visited it was plastered with signs promising something coming soon.

The store was clean and organized, but shoppers were few and far between.

The new Burbank location, which initially closed a year ago, probably didn't look that different from a typical Sears store in 2005, when hedge fund operator Eddie Lampert bought control of the chain for 11,000 million dollars and merged it with another retailer within it. wallet, Kmart. That year, the two brands had 3,500 US stores and more than 300,000 employees.

Sears' current footprint is minuscule, with no more than 12 Sears stores remaining in the continental United States, according to data from Google Maps. A November post on Union Gap, WA Facebook group confirmed the reopening of this store.

Some suggest that Lampert used the Sears acquisition as a play the real estate market. His plans for the brand going forward are less clear. Attempts to get a straight answer were unsuccessful. The brand exists under a holding company called Transformco. Calls and emails over several weeks to the main line and executives at Transformco went unanswered. The Burbank store manager passed along a phone number for Sears' media department; the number was not in service.

An associate at the Burbank store, who asked not to be named because they were not authorized to speak to the media, told me they had worked at various Sears locations for decades and were glad to have the opportunity to return.

“I love Sears. They treated me well,” the person said.

I don't remember Sears at the height of its influence—I was born just a year before the retailer ceased production. innovative catalog in 1993. Half a century ago, the Sears catalog helped change the way Americans lived, allowing more people to shop on the go because they didn't have to rely on nearby stores to buy products. It was a prototype of online shopping.

As Sears grew and pioneered its own brands, such as Kenmore appliances, Craftsman tools, and Allstate insurance, the company became a behemoth, employing legions of workers to produce and sell the products in the rapidly expanding brick-and-mortar Sears stores. The Sears Tower in downtown Chicago, where the corporate parent operated, was the tallest skyscraper in the world until 1998.

More than one partner at the Burbank store said they thought their store could be a test for Sears' parent company, Transformco, which is owned by Lampert, who is also Sears' former CEO. They hoped that if their store was successful, more locations would open and the brand could revive.

Neil Saunders, CEO of GlobalData's retail division, had a different take on Sears' relaunch.

“I don't think it's a serious attempt at revitalization,” he said.

Saunders said it's likely Sears hasn't found tenants for some Transformco-owned retail locations because of challenges facing the broader retail industry.

“I think there's a lot of places where retailers just don't want to rent that space, and so I think the view is 'if nobody's renting it, instead of sitting there sitting idle, we might as well try and monetize it.'” , Saunders said.

“For a very large space like Sears, you don't have a lot of tenants. There are no department stores that are really opening many new outlets,” he added.

When I returned to Sears on Black Friday, few shoppers perused the aisles compared to other stores in the Burbank Town Center mall, where Sears is located. A Sears associate told me they expected the store to be busier that day.

“Welcome Back” signs lined the outside of the store, but people may not have heard about the reopening — the announcement was made on the local Sears Burbank Facebook page.

One shopper, Daisy Davis, said she only learned the Burbank location had reopened after a conversation with her neighbor about Sears prompted an Internet search to see if any stores remained open.

“Sure enough, he said this one was opening. There's also conflicting information, because some of the maps say it's closed,” he said.

Bankruptcies and closures in recent years

The Sears brand has been riding a rollercoaster for years. In the years following the acquisition of Lampert, sales to the 137-year-old distributor slowed amid a lack of investment in store upgrades, a slower turn to e-commerce and increased competition from other big box retailers and new online behemoths like Amazon.

In 2018, the company had declared bankruptcy. The following year, Lampert's hedge fund bought the remains of the business out of bankruptcy and renamed its parent company Transformco. The retailer emerged from bankruptcy with 223 Sears and 202 Kmart stores nationwide. But four years later, most of those stores have closed.

Sears shoppers I spoke with shared store employees' enthusiasm for the reopening.

“I'm so glad they reopened. It feels like the Sears I remember, which is good,” said Katherine Sage, a shopper who stopped at Sears to pick up a polo shirt for her son. “I think they have good products; I think their mattresses are fantastic.”

Armita Cohen, an 80-year-old retiree, said she has visited the Burbank location often since it reopened after her local store in Glendale, CA closed.

“I don't know why they closed that store. It was a wonderful store,” he said. “I don't have to go anywhere else for Christmas. I just go to Sears and find everything.”

Cohen said he was “crossing his fingers” that the Glendale store would reopen.

Simeon Siegel, a retail analyst at BMO Capital Markets, said it was still possible for a store with strong brand recognition, such as Sears, to make a comeback, even in the Internet age.

“Big box stores that offer a wide variety of products, but do it in a curated way, bringing together the products you want — those are thriving,” Siegel said.

“Recognizing that there is value in a brand, even if that brand went out of business, is not something new,” he added. “You saw another company buy The intellectual property of Bed Bath and Beyond immediately after release because a brand is a hard thing to kill.”

At least one buyer was optimistic about Sears' future if it adopts a more modern buyer.

“I think they need to check with the younger generation to find out more about what they want,” said Sage, outside the Sears in Burbank. “Keep the products people are looking for, but innovate.”