How Bankruptcy Can Lead to Billions

The retail industry has been having hard times for years now. The birth of Amazon and online shopping has caused many shopping malls and brick and mortar locations to experience a great loss in customers and in store sales. The times have gotten so bad for traditional stores and brick and mortar stores some businesses have had to close their doors. Think Toys R Us, Blockbuster, Kmart and Best Buy are all traditional big time retailers who have either closed some of their stores or all of their stores. From banks in Arlington TX to grocery stores to some of the most classic businesses across America to small mom and pop shops, the retail environment is drastically changing.

Sears and Kmart are closing and their bankruptcy may be a big win for Lowes and Home Depot. These two giant retailers in the home improvement space are ready to profit. Sears and Kmart did over seven billion dollars last year in law and garden equipment, home appliances, electronics, hardware, tools, housewares, automotive parts and sporting goods. It is estimated that both of these stores did around seven hundred million dollars’ worth of hard goods merchandise. By Sears and Kmart closing, this is the perfect opportunity for Lowes and Home Depot to sweep in and take a bite out of the billion-dollar profits Kmart and Sears made annually.

Home Depot and Lowes will be able to take a sizable portion of Kmart’s and Sears’ profits due to how the closing retailers provide some of their products Home Depot and Lowes provides. The closures would open the door for hundreds of millions of dollars in annual sales. Lowes and Home Depot would experience a spike in same store sales. Home Depot and Lowes will also experience more proximity to customers once Kmart and Sears completely shut down. Home Depot and Lowes will have no choice in becoming the go to retailers of the home improvement industry.

The downfall of Kmart and Sears has been on the horizon for a long time now. Home Depot has been preparing itself to leap into this new customer base and market size. Home Depot has been working on adding to its lineup of home appliances and smart home offerings. The chief financial officer of the home improvement company would like to hire workers who have been laid off due to the closings of Kmart and Sears. Lowe’s has set itself up too for the closings of these two mega stores. Lowe’s has positioned itself as being the seller of Craftsman, a classic tool brand. Selling Craftsman definitely takes a bite out of Sears’ profits as it used to be the go-to retailer of Craftsman.

Kmart and Sears are a one hundred and twenty-five-year-old classic retailer. They are a part of American history and economics. The demise of this brand is a sad story. But because of debt and a disconnect with today’s shopper, the historical brand had no means of competing in the changing market.

 

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