Kmart opens inside a Brooklyn Sears store

Dive Brief:

A 10,000-square-foot Kmart convenience shop — selling everyday items like groceries, grab-and-go snacks, health and beauty supplies, cleaning and pet supplies — opened inside a larger, existing Sears store in Brooklyn on Saturday, a Sears spokesman told Retail Dive in an interview.
The goal for this concept is to serve as a one-stop shop for customers in the area. Executives will be evaluating the store's success and no other locations are planned for the time being. Within the store, the Kmart sits at the lower level and customers must check out separately at the Kmart or the Sears, although the store teams are working to better integrate the two shops, the spokesperson said.
Within the next few weeks, Sears will also begin opening a few mini 2,000-3,000-square-foot appliance shops selling higher-end merchandise in Kmart locations in the New York area and other cities across the country, the spokesperson added.

Dive Insight:

As Sears continues to shutter store after store — far outpacing its department store peers in closures — this new cross pollination between Kmart and Sears may be one way to fuse the two brands together under one roof, and another way to convince customers to walk through its doors.

Falling traffic continues to plague the department store retailer. In the first quarter, comparable sales fell by 11.9%, accounting for about 22% of the decline in top-line sales, with store closures accounting for most of the rest. At that time, the company also announced the closure of 72 more stores, which are part of approximately 100 stores Sears identified as not profitable.

According to the Sears spokesperson, the new store has so far brought in existing and new customers, stirring early positive feedback. Shop-in-shops and small format stores have become a popular way for retailers to try to reach younger, more urban demographics. Target, for example, is aiming to open 130 small-format stores in urban, suburban and college markets by the end of 2019. These small stores don't come without big challenges, notably when it comes to accurately matching the assortment to the needs of the neighborhood and smoothing out more regular fulfillment.

While this is the first time Sears is opening a Kmart within a Sears and vise versa, it's part of a few concept shops the company has been experimenting with over the last year. In November, Sears opened two free-standing appliance and mattress stores, sizing between 12,000-16,000 square feet. Those new stores are a different initiative from the new appliance shop-in-shops in Kmart stores, however, the spokesman clarified, adding that "These Sears appliance [shops] are focused on leveraging existing space within Kmarts and broadening the assortment."