Features

Businesses that share centers with closing Kmarts worry about future

Staff

Saturday March 09, 2002

By Sarah Freeman

The Associated Press

Laurel Perga knows that loyal customers will keep coming to her hair salon in Billings, Mont., even after the nearby Kmart is shuttered. But she’s worried about what will happen when shoppers start seeking bargains elsewhere.

“It’s going to impact us big time, I think,” Perga said. “To build a new clientele, or to grow, that will make it more difficult.”

Nationwide, business owners in retail centers anchored by soon-to-be closed Kmart stores say they’re worried about foot traffic once the discount retailer leaves.

Kmart Corp. announced Friday that it will close 284 stores in 40 states and Puerto Rico, representing about 13 percent of its more than 2,100 stores nationwide. When the company filed for Chapter 11 on Jan. 22, it said it would close a number of unprofitable stores.

Sixteen of those stores that will be closing are in California.

The closing stores were chosen based on several criteria, including profitability, age and the amount of local competition, Kmart said. Stores will close in mainly rural and suburban areas, but some urban stores also will close.

In South Sacramento, OnePrice! Fashions manager Yolanda Hernandez said many of her customers are from Kmart.

“If they don’t find it at Kmart, they find it here,” Hernandez said. “We talked about it, my managers and I ... we don’t know what to do.”

South Sacramento officials are already wondering how they’re going to fill four closed department stores and the boarded-up corner of a departed Oldsmobile dealer.

“Every market is different,” said Robert Futterman, CEO of Robert K. Futterman and Associates. “There might be some (real estate) owners that will see this as a blessing in disguise, but for the most part, losing an anchor hurts.”

Neil Jandron has owned Jandron’s Fine Jewelry at Westwood Mall in Marquette, Mich., for 14 years. Although the Westwood Kmart is on the closings list, Jandron is optimistic.

“Personally, I think the mall is strong enough — we have enough of a mix of retailers where we’ll be all right,” Jandron said. “I’ve been in retail 33 years, it’s kind of how retail goes.”

“We will stay (at the mall), there’s no doubt in my mind. If I was the last store in the mall, I’d stay,” he said.

Jandron said he’s confident the landlord will work hard to secure a new tenant.

That shouldn’t be terribly difficult, according to Ben Johnson, editor-in-chief of PRIMEDIA’s Shopping Center World. Shopping Center World is a trade publication that focuses on retail real estate.

“If 284 boxes go dark, I don’t think it will take that long for them to find new tenants,” Johnson said.

He said although Kmart has merchandising problems, the company has often made sound real estate decisions. He said that beside obvious replacement possibilities such as Target and Wal-Mart, Kohl’s, CostCo, and other warehouse clubs or home improvement stores may see real estate opportunities in closed Kmarts.

“The market for value-oriented retailers is growing ... the list is long and getting longer,” Johnson said. “There’s also a ready-made labor force, already trained and ready to go.”

Target employee Sandra Haney said she’s not sure that replacing Kmarts with other stores will keep customers coming back to the same shopping area.

“To me, people went to Kmart if they wanted something particular from Kmart,” said Haney, 48, who works at a Livonia, Mich., Target that neighbors a closing Big Kmart. “And most of those shoppers will find another Kmart.”

But Jody Brown, who manages a clothing store in Jacksonville, Ark., said he’s not worried about customers going elsewhere once the Kmart across the street closes.

“I hate to hear they’re closing,” Brown said. “But it’s not going to hurt our business. I’m curious to see what comes in over there. That might even help us.”

List of Kmart stores slated to close in California

Kmart Corp. announced Friday it will close 284 stores in 40 states and Puerto Rico as part of its restructuring under Chapter 11 bankruptcy. Sixteen of the 164 Kmart stores in California will close, affecting 1,379 of the 18,615 people employed by Kmart in the state as of Jan. 16, 2002.

Here are the stores affected in California:

3362 Big Kmart 233 East Compton Blvd. Compton CA

Big Kmart 520 Hwy. 101 North, Crescent City

Big Kmart 2398 Jamacha, El Cajon

Big Kmart 1013 Riley, Folsom

Big Kmart 16111 Harbor Blvd., Fountain Valley

Big Kmart 4987 East Kings Canyon, Fresno

Super K 4080 W. Shaw, Fresno

Big Kmart 1050 W. Olive Ave., Fresno

Big Kmart 26655 Highland Ave., Highland

Big Kmart 1600 East Foothill Blvd., La Verne

Big Kmart 11507 S. Western Ave., Los Angeles