Kmart: Kresge's Dime Stores, Blue Light Specials and Edward Lampert

Got something to say to this podcast? Send a voicemail, and you might hear yourself on the next episode!

Sebastian S. Kresge sold tinware to all 19 of Frank Winfield Woolworth's stores before putting his $6,700 life savings into a five-and-dime with John G. McCrory in Memphis in 1897. He built the chain from Detroit and incorporated the S.S. Kresge Company with 85 stores in 1912. In 1962 executive Harry Cunningham opened the first Kmart, a small test store in San Fernando, California, followed by an 80,000-square-foot store in Michigan, the same year Sam Walton opened his first Walmart; both men had been inspired by the New England retailer Ann & Hope. Kmart spread quickly through the suburbs, adding the Blue Light Special in 1965, in-store cafes, restaurant co-branding and lines from Martha Stewart and Jaclyn Smith.

In November 1990 Walmart passed Kmart, having invested in barcode scanning and satellite inventory tracking while Kmart managers still ordered by clipboard. Kmart paid high dividends, bought Sports Authority and Waldenbooks, and opened Big Kmart and Super Kmart stores its supply chain could not keep stocked. It filed for Chapter 11 in January 2002 with more than 2,100 stores and about 275,000 employees, and CEO Charles Conaway, who had accepted a $5 million loan, stepped down. Hedge fund manager Edward Lampert of ESL Investments turned its debt into control and in 2004 merged it with Sears in an $11 billion deal, then focused on real estate as stores decayed. Sears Holdings went bankrupt in 2018, and by 2026 only three Kmarts remained, in Guam, the US Virgin Islands and Miami.

• The Blue Light Special began as a way for managers to clear surplus stock through 15-minute flash sales.
• Wendy's and Little Caesars counters operated inside some stores alongside Kmart's own cafes.
• A data breach in October 2014 exposed customers' debit and credit card information.
• Sears Holdings spun off legacy brands such as Craftsman and Lands' End for cash.
• Remaining assets passed in 2019 to Transformco, also controlled by Lampert, and the last full-size mainland Kmart closed in 2024.