GRASS VALLEY, Calif. — The glow of the blue light special is growing dimmer as the last Kmart in California hobbles to the end of its run in the state. When it fades, it'll leave the once mighty retail giant in the dark.
Kmart's last brick and mortar store in California closes on Dec.19 in Grass Valley, dropping the company down to just a handful of stores.
"It's a major end to an era. At a peak, Kmart had more than 2,500 stores all over the country. We're down to six right now, and the very last store in California is shutting down,” said Sanjay Varshney, professor of finance at Sacramento State University.
Steve Mensinger, CEO of developer Mesa Management, said the closure conversations started about five years ago. He said Kmart had been closing stores for about 15 years at that point as they addressed bankruptcy and reorganization.
According to Mensinger, the store was once one of the most profitable in the whole chain since it pulled from neighboring communities with little competition. It had a 75-year lease at the McKnight Crossings center, and when it debuted back in 1978, it was a gamechanger.
"That was a big deal. Kmarts were today’s Walmarts and Targets. At that time, if you had a Kmart anchored shopping center, you had the coupe de grace, the best of the best, in terms of retail shopping centers.”
But over the years, it took a substantial fall from grace.
"Grass Valley, in particular, had approached us several times asking us to work with Kmart to try to improve their store because customers weren't super happy, and Kmart knew that. They went through the last seven years of reorganization, so they had had limited products and they were going through the struggles of a reorganization or bankruptcy,” Mensinger said.
It was a competitor to Walmart, but Varshney says new players like Amazon, Target and more joined the field, leaving Kmart to die out. He says times changed, and in the end, Kmart didn't.
“Other companies like Sears, or Kmart, they were just doing the same good ol' girls stuff. And they thought everything was not going to change. But the world had changed dramatically, and they did not keep pace with all these changes,” Varshney said.
Varshney said the way people buy nowadays changed dramatically with online shopping. Consumer habits and demographics also played a factor as millennials became a driving force and baby boomers started to retire. He said that while some stores adapted to online strategies, others didn't.
Mensinger felt the same way.
"They (Kmart) didn't evolve," he said. "You know, the blue light special is what they're known for, as we probably remember. And the blue light special is what you think about… that's 1970, 1977. Since then, they haven't done anything. They basically just existed.”
Varshney added that with the company down to six stores, it shows that their business model has been decimated with no way for the store to come back. He said Kmart is now an example of a store can be a leader and powerhouse only to eventually be wiped out and join the likes of Netscape and other companies that never grew and disappeared.
“When when the world evolves, you need to change when the world,” he said.
While the glow of the blue light special will eventually be snuffed out in Grass Valley, the building won't stay dark for too long. Target confirmed that they plan to move into the old building, but that process could take a few years, according to Target spokesperson. The new store is expected to be about 90,000 square feet.
Additionally, McKnight Crossings is planning a renovation of their own that will highlight local stores and food. Mensinger said there'll be 5,000 feet of small shops and a building filled with small food establishments and restaurants as they look toward the future.
“That's kind of where the market is going. Everybody's kind of getting tired of the big guys. The retail businesses is always going to include Targets, but we want to include some local faire at the same time. We want to give them the advantages; Target brings a lot of traffic. These are some of the small shops that can take advantage of all that traffic.”
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