Sears and Kmart, troubled in recent years by lackluster sales, uninviting stores and, most significantly, competition from Wal-Mart and Target, announced a merger today that will create the nation's third largest retailer.
The company will combine by March under the name of Sears Holding Corp., according to a joint press release.
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Together, Sears and Kmart will have about $55 billion in annual revenue and 3,500 retail stores, the announcement said. That will put the new company behind Wal-Mart and Target among U.S. retailers, but by some distance.
Both Sears and Kmart have deep roots in American corporate history.
Sears, Roebuck and Co., founded by Richard Sears and Alvah Roebuck, came into existence in 1893 in Chicago. As the country's first national catalog operation, the Amazon of its time, it became the first cross-country retailer of almost everything, eventually opening catalog stores and then department stores across the country. Many of them fell into disrepair in the 1960s and 1970s, however.
Kmart is a direct descendant of the S.S. Kresge Company, started in 1899, one of the first of what came to be known as the "five and dime" stores. Facing competitive difficulties in the 1960s, Kresge stores opened the first Kmart discount department store in 1962 in Garden City, Mich. For a time, Kmart was considered an innovative retail phenomenon with its big box stores on a single floor with vast rows of moderately priced merchandise.
Both Sears and Kmart, along with other traditional department stores, suffered at the hands of massive shopping centers, where consumers could get the same products in gleaming specialty stores and, most recently, at the hands of giant discounters such as Wal-Mart and Target, with their technology-driven efficiencies.
For Sears, which has nearly 900 mall-based stores, the merger will create an opportunity to migrate into lucrative suburban locations now held by Kmart.
Mall attendance is flagging across the country, analysts say, but suburban strip malls are thriving -- driven by the growth of Sears's competitors Wal-Mart, Target and Home Depot. The combined company will convert "several hundred" Kmart stores into Sears stores, executives said during a conference call this morning.
At a news conference in New York, Edward S. Lampert, chairman of Kmart, said, "We want to make sure that the uniqueness of these brands is preserved, but I would say there's no preconceived notion as to which store is going to be which. It's going to be on a store by store basis," the Associated Press reported.