The mood is uncertain at the Kmart on Route 138 in Middletown, set to close this fall. No layoffs are planned; employees at the store must decide whether to accept transfers to other Rhode Island Kmart stores or begin the job search process. Signs proclaiming “Total Sell Off!” greet customers, who are surprised that the store is closing, but not as shocked as the store’s employees, who heard news of the closing two weeks ago.
The Michigan-based retail chain, under the leadership of newly appointed Chief Executive Officer Chuck Conaway, announced it will be closing 66 traditional Kmart stores and six Big Kmarts, most by November 1. The closings account for 3 percent of the company’s 2,171 stores, and will affect about 5,000 employees nationwide. The Middletown Kmart is the only Rhode Island operation expected to close.
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“We weren’t told by them at all,” said Michael E. Embury, Middletown’s Town Administrator. “We heard about it on the news.”
Embury said R.K. Associates, which owns the shopping center where Kmart is located, offered Kmart the opportunity to expand about a year ago. The company declined, and Ocean State Job Lot moved in.
“I’m not sure how interested they were in staying,” said Embury. “That store has always been seen a sort of poor sister. The inside has always been in disrepair. I think that frustrated people.”
What about Middletown’s new Wal-Mart, not even open for a full year?
“There are some people who have attributed the demise of the Kmart to Wal-Mart, but I don’t really see it that way,” he said. “It’s had a little bit of an effect, but not the total cause for them leaving.”
At the national level, that is not the case.
“Wal-Mart is huge competition for them,” said Sarah Scheueur, spokesperson for the National Retail Federation (NRF), the world’s largest retail trade association.
NRF’s annual Triversity Top 100 Retailers list posts Wal-Mart at number one, with Kmart and Target at numbers six and seven respectively. Wal-Mart posted sales of $165 billion for 1999, up 20 percent from 1998.
The company, headquartered in Arkansas, has 1,773 stores in the United States, and 1,022 internationally. In addition, Wal-Mart operates 780 Supercenters (discount department stores with full-line supermarkets), 466 Sam’s Clubs (warehouse clubs that require a membership) and eight Wal-Mart Neighborhood Markets.
To better compete, “Kmart has really been investing heavily in their Big K chain,” Scheueur said.
Kmart’s 1999 earnings were up 6.7 percent at $36 billion, with $1.1 billion spent to remodel and upgrade stores to the Big Kmart prototype, which includes more pantry items.
Upscale general merchandiser Target had earnings of $33 billion in 1999, a 10 percent increase over 1998. The Minneapolis-based discount retailer has 921 stores in 45 states nationwide.
“Target has really branched out,” she said. “They’ve differentiated themselves quite a bit.”
New to this region, Target has stores in Warwick, North Attleboro and Taunton. Earlier this summer, Target announced a partnership with America Online, Inc. Through Shop@AOL online shopping destinations and other areas across AOL, shoppers will be able to purchase Target merchandise via target.com.
Kmart, according to Scheueur, is making moves toward an image boost, with its Martha Stewart brand of housewares and decorative accessories and its Route 66 clothing line for kids and teens.
“They have a new CEO,” she said. “The fact they were looking for someone new is definitely indicative of the fact they know change should happen. Usually when stores close, they’re not bringing in as much as they should, but it’s all a part of a strategy.”
