Kmart once dominated the department store industry with more than 2,000 locations nationwide, many in New Jersey. Now, the chain has shut off its blue light and closed all but one New Jersey location after filing for bankruptcy in 2018.
As the real estate left empty by shuttered Kmarts slowly fills up with Target, Amazon Fresh and other big retailers, it's important to ask: What went wrong and can today's big retail chains learn from Kmart's mistakes?
Only eight Kmart locations remain, with three in the mainland United States, one in Guam and four in the Virgin Islands. The only remaining store in New Jersey is in Westwood at the Westwood Plaza. The store opened in 1982 and recently celebrated its 40th anniversary.
At one point, Kmart had 14 other locations in the North Jersey area. While some locations remain vacant, others have been transformed by new retailers.
In a twist of fate, three former Kmarts were taken over by one of the chain's major competitors: Target. The new Target stores in Closter and Parsippany are already open, and Kearny is expected to open soon.
The original Parsippany location in the Troy Hills Shopping Center closed in 1997. That same year, Kmart welcomed another Parsippany location that remained open until 2017 and remains vacant.
Following its closure in 2014, the Kmart in Paramus briefly became an indoor sports facility called The Arena. Currently, the location is vacant.
The Belleville location was one of the last Kmarts standing in New Jersey before its 2021 closure. It remains vacant and it is unclear if there are any plans to redevelop the location.
Other former Kmart locations in North Jersey that remain vacant include Wayne, Dover, Jersey City and West Orange.
So, what happened to Kmart?
Kmart made fatal mistakes that contributed to its downfall, said Patrali Chatterjee, chair of Montclair State University’s marketing department and president of the American Collegiate Retailing Association.
“The first major error that Kmart made in its retail strategy decisions is that it did not invest in the right technology and logistics,” Chatterjee said. “So, early in the day when Kmart was that time's Amazon or had an oversized influence on the retail economy, it lost ground to Walmart, which put them in the position where the company could never catch up. They did not embrace e-commerce at the right time.”
Walmart and Target were much smaller at that time and they managed to target specific demographics, Chatterjee said. “Walmart had an everyday low-price strategy. Target had a strategy of affordable and chic, which was great in attracting young families," Chatterjee said. The two retail giants were able to attract those customer segments, "whereas Kmart tried to appeal to all different segments and never really satisfied any particular segment.”
The remaining Kmart stores will likely remain open until the company is able to sell the land to other businesses, Chatterjee said.
“Technically, the stores don’t have a future at this point in time,” Chatterjee said.
What happened to the Kmart locations?
The West Orange location served as a COVID-19 vaccination center during the peak of the pandemic.
In Lodi, Kmart closed in 2016 after 36 years of business. The store was demolished in 2020 to make room for a new development. Soon, the location will be home to an Amazon Fresh.
Another Kmart is being converted into a grocery store in Elmwood Park. By the end of 2023, ShopRite is expected to open in the former big box location.
The North Bergen store, which closed in 2005, is now a Home Depot.
In Passaic, Kmart closed in 2018 and was replaced by Forman Mills.
Despite the rise in online shopping, Chatterjee sees a path to survival among existing retail chains.
“If retailers are store-based, they must focus on in-store experiences,” Chatterjee said.
There are three things retailers should keep in mind when crafting an in-store experience.
“First, it has to be relevant to the customer,” Chatterjee said. “Second, it has to provide resources, different kinds of resources to customers to enjoy their experience, as well as to their employees. And third, both of these, relevance and resources, go toward building a relationship with the customer that goes beyond the transaction.”
Retailers must also build a strong e-commerce presence. Chatterjee highlighted The Children’s Place as a retailer that has made a surprising comeback through e-commerce.
“The pandemic really affected them badly,” Chatterjee said. “They are doing a store rationalization program where they’re closing a lot of stores, and they are beefing up their e-commerce presence.”
As for retailers in danger, Chatterjee is concerned about deep discount grocery stores, including Aldi and Lidl.
“Aldi and Lidl are growing rapidly, but if they don’t beef up or they don’t invest in their online strategy, they will suffer in the long run,” Chatterjee said. “Because Walmart, Target and Kroger, not only do they sell groceries, they sell other goods. So what they’re doing is they are basically capturing the entire shopping journey.”
The former retail giant is slowly reaching its final days, but there is still an opportunity to visit one of the last Kmart stores left standing before it’s gone.
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Out-of-business retailers we miss
Other New Jersey retailers which went out of business and we still miss:
- Two Guys - a large discount store that opened in Harrison in 1946 and closed for good in 1982.
- Fortunoff - This fine goods department store opened in 1922 and closed its locations in 2008. In 2009 the Fortunoff family reacquired its intellectual property and has since opened Fortunoff Backyard stores and more recently, Fortunoff Fine Jewelry.
- Woolworths - Known as a five-and-dime, the first store opened in 1878 in Utica, New York and closed in the 1990s for good.
- Bradlees - This was a discount department store that at one time had more than 100 stores. They all closed in 2001, one year after the company filed for Chapter 11.
- W.T. Grant - The first department store opened in1906 and went bankrupt in the late 1970s. Kmart, a big competitor, helped speed up the end for this retailer with locations in Wyckoff, Millville, Hackensack and Franklin Township.
- Packard's - This retailer was founded in 1933 and was originally Packard-Bamberger in Hackensack. The store literally sold everything including groceries, clothes and furniture. It closed in 1991 and the location is now home to a Target.
- Rickel - This is where everyone went for their home improvement goods before Lowes and Home Depot existed. The first Rickel opened in Union in 1953. The stores, located in Paramus, East Brunswick, West Berlin, South Plainfield and Wayne closed in 1997.
- Jamesway - This chain discount department store was based in Secaucus starting in 1961. After two bankruptcy filings, it closed for good in 1995.
- The Wiz - This chain opened in 1977 and had stores in New Jersey and other East Coast states. The electronics chain went out of business in 2003.
- Caldor - This discount chain was founded in 1951. In 1999 it went out of business and many of its locations were replaced by Kmart, Target and Walmart stores.
- J.J. Newberry - This was another five-and-dime store that got its start in Pennsylvania in 1911. It had stores in Vineland, Verona, New Brunswick, Red Bank and Asbury Park. The company shut all stores by 2001.
- Bamberger's - The first of these upscale department stores opened in Newark in 1912. It had 14 floors of merchandise. The stock market crash of 1929 hurt the company, which was bought out by Macy's. By 1986, all Bamberger's locations either became Macy's or were closed for good. The Newark store closed in 1991.
- Steinbach's - This chain was founded in 1936 in Asbury Park and it went out of business in 1999.
