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Troubled retailer Sears quietly reopens two stores. What is behind the comeback?

By Samantha Delouya, CNN

Los Angeles (CNN) — To the casual shopper, Sears, one of America’s oldest retailers, may appear to be on life support. The department store chain that once reinvented how Americans shopped now barely has a brick-and-mortar footprint after a 2018 bankruptcy and hundreds of store closures.

But talk of Sears’ demise may be premature: just two months ago, a previously shuttered Sears in Burbank, California, quietly turned the lights back on. Two weeks after that, 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 much like the old one, a vestige from a time when department stores ruled America’s shopping landscape. While the store remained mostly devoid of shoppers when I visited, those who did drop in, along with some store associates, expressed hope and excitement of a new age for Sears.

Inside Sears’ revived Burbank store

The reborn Sears in Burbank looks like a typical American department store. Mattresses, appliances, and other home goods populate the ground floor. Up an escalator you find clothing, bags and accessories. Another escalator transports you up to a third floor, but it was roped off when I visited with signs promising something would be coming soon.

The store was clean and organized ­– but shoppers were sparse.

The newly reopened Burbank location, which initially closed one year ago, likely didn’t look so different from a typical Sears store in 2005, when hedge fund operator Eddie Lampert bought control of the chain for $11 billion and merged it with another retailer in his portfolio, Kmart. That year, the two brands counted 3,500 US stores between them and more than 300,000 employees.

Today’s Sears’ footprint is minuscule, with no more than 12 Sears stores remaining in the continental US, according to data from Google Maps. A November post in the Union Gap, WA Facebook group confirmed that store location’s reopening.

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

One Burbank store associate, who asked not to be named since they weren’t permitted to speak to the media, told me they had worked at multiple Sears locations for decades and they were glad to be given the chance to come back.

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

I don’t remember Sears at the height of its influence: I was born just one year before the retailer discontinued its groundbreaking catalog in 1993. Half a century ago, the Sears catalog helped change the way Americans lived, allowing more people to shop from anywhere since they didn’t have to rely on nearby stores to buy goods. It was a proto-model of online shopping.

As Sears grew and pioneered its own brands such as Kenmore appliances, Craftsman tools and Allstate insurance, the company became a juggernaut, 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 world’s tallest skyscraper until 1998.

More than one Burbank store associate said they thought their store might 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 proved successful, more locations would open and the brand might be revived.

How serious is Sears’ relaunch effort?

Neil Saunders, managing director of GlobalData’s retail division, had a different view of Sears’ relaunch.

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

Saunders said it’s likely Sears hasn’t found tenants for some Transformco-owned retail locations due to challenges facing the overall retail sector.

“I think there a lot of locations where retailers just don’t want to lease out that space, and so I think the view is ‘if no one is going to lease it out, rather than it sitting there idle, we might as well try and monetize it,’” Saunders said.

“For a very big space like Sears, you haven’t got many tenants. No department stores are really opening a lot of 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. One Sears associate told me they hoped the store would be busier that day.

“Welcome back” signs lined the outside of the store, but perhaps people just hadn’t heard of its reopening: the announcement was made on Sears’ local 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 of whether any stores remained open.

“Sure enough, it said this one was opening. There’s still conflicting information too, because some of the maps say it’s closed,” she said.

Bankruptcy and closures in recent years

The Sears brand has been riding a rollercoaster for years. In the years after Lampert’s takeover, sales at the 137-year-old retailer slowed amid a lack of investment in store updates, a slower pivot to e-commerce, and increased competition from other big box retailers and newer online behemoths such as Amazon.

By 2018, the company had filed for bankruptcy. The next year, Lampert’s hedge fund bought the remains of the business out of bankruptcy and renamed its parent company Transformco. The retailer exited 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 the store employees’ excitement about the reopening.

“I’m just really happy they reopened. It feels like the Sears I remember, which is good,” said Katherine Sage, a shopper who stopped into Sears to pick up a polo shirt for her son. “I think they have good products; I think their mattresses are awesome.”

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

“I don’t know why they closed that store. It was a wonderful store,” she said. “For Christmas I don’t have to go to any other place. I just go to Sears and I find everything.”

Cohen said she was “crossing her fingers” that the Glendale store would reopen.

Could Sears make a comeback?

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

“Big stores that offer a large variety of products, but do so in a curated way, putting together products that you want ­– those are thriving,” Siegel said.

“Recognizing that there is value in a brand name, even if that brand went out of business, is not something new,” he added. “You watched another company buy Bed Bath and Beyond’s intellectual property immediately after it went out because a brand is a tough thing to kill.”

At least one shopper was optimistic about a future for Sears if it embraces a more modern shopper.

“I think they need to consult with the younger generation to find out more of what they want,” Sage said, standing outside the Sears in Burbank. “Keep the products that people go in for, but innovate.”

™ & © 2023 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

CNN’s Chris Isidore contributed to this report.

Article Topic Follows: CNN - Business/Consumer

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