Kmart

Kmart is an American retail company that originated as the S.S. Kresge Company, founded in 1899 by Sebastian Spering Kresge as a five-and-dime store chain in Detroit, Michigan, and pioneered discount department stores with its first Kmart location opening in Garden City, Michigan, in 1962.^[1] The chain rapidly expanded, reaching over 2,000 stores by 1981 and becoming a dominant force in low-price general merchandise retailing, including apparel, home goods, and consumer electronics, while introducing innovations like the Kmart Supercenter in 1991 and early e-commerce via BlueLight.com in 1999.^[2] At its peak in the late 1990s, Kmart was the second-largest U.S. retailer by sales, but faced intense competition from Walmart and Target, leading to financial struggles, a Chapter 11 bankruptcy filing in 2002, and the closure of hundreds of stores.^[3] In 2005, Kmart merged with Sears, Roebuck and Co. to form Sears Holdings, which was later acquired by ESL Investments in 2019 and reorganized under Transformco, a private entity focused on integrating retail, real estate, and digital services.^[2] As of November 2025, Kmart operates three remaining stores: one small outpost in Miami, Florida, and two in U.S. territories (Guam and the U.S. Virgin Islands), with no full-sized locations left in the continental United States since the 2024 closure of the last full-size store, shifting emphasis to online sales and brand licensing.^[4][5]

History

Founding and Early Development

The S.S. Kresge Company was established in 1899 by Sebastian Spering Kresge in Detroit, Michigan, as a five-and-dime store selling merchandise primarily priced at five or ten cents.^[1] Kresge, a former salesman, had previously partnered with John G. McCrory in 1897 to open similar variety stores in Detroit and Memphis, but the partnership dissolved after two years, leaving Kresge with the Detroit operations.^[6] By 1912, the company was formally incorporated with 85 stores across the United States and annual sales exceeding $10 million.^[1] The early business model of S.S. Kresge emphasized low prices and fixed pricing on a wide range of everyday goods, such as housewares, clothing, and toys, drawing direct inspiration from the successful five-and-dime format pioneered by F.W. Woolworth.^[7] This approach appealed to budget-conscious urban and suburban shoppers, enabling steady growth; by 1924, the chain had expanded to 257 stores with sales reaching $90.2 million, surpassing 200 locations well within the 1920s.^[8] In response to post-World War II suburban expansion and the rise of discount retailing, S.S. Kresge shifted toward larger-format stores, launching the first Kmart discount department store on March 1, 1962, in Garden City, Michigan—a suburb of Detroit.^[1] Under President Harry B. Cunningham, this 112,000-square-foot prototype offered broader merchandise selections at reduced prices compared to traditional Kresge variety stores, marking a pivotal adaptation to changing consumer habits and automotive-driven shopping patterns.^[6] The initial rollout was strong, with 18 Kmart stores operational by the end of 1962 and corporate-wide sales totaling $483 million that year.^[1] Kmart's early momentum continued through the decade, with sales surpassing $1 billion by 1966 from 162 Kmart locations alongside remaining Kresge outlets.^[1] A key milestone came in 1970, when the chain reached its 500th store, reflecting rapid scaling amid the broader transition to discount formats that would define the company's future growth.^[1]

Expansion and Peak Era

Kmart experienced explosive growth following the opening of its first discount store in Garden City, Michigan, in 1962, expanding from just 18 stores by the end of that year to 162 by 1966. This rapid proliferation continued through the 1970s, with the company opening a record 271 new Kmart stores in 1976 alone, bringing the total to 1,206 by the decade's close. By 1981, Kmart had reached a milestone with the opening of its 2,000th store, culminating in 2,055 locations across the United States, Canada, and Puerto Rico by year's end. During the 1980s, the chain further innovated by planning the Super Kmart Center format, which combined traditional discount retailing with full-service grocery sections; initial development began in the mid-1980s, though the first stores would not open until 1991.^[2][6][9] In the competitive landscape of discount retailing, Kmart established itself as the dominant player during the 1970s, outpacing emerging rivals like Walmart and Target through aggressive expansion and broad merchandise offerings. The company held a leading position in the U.S. discount sector, capturing a substantial market share that positioned it as the largest discount retailer until the early 1990s. To differentiate its product lines and appeal to fashion-conscious consumers, Kmart introduced celebrity-endorsed private-label brands in the late 1970s and 1980s, starting with the Jaclyn Smith sportswear collection in 1985 and followed by the Martha Stewart partnership in 1987, with the Everyday line launching in 1997.^[10] These initiatives helped bolster brand loyalty and sales in apparel and home goods.^{[6][11][2][3]} Financially, Kmart achieved significant milestones during this era, reporting annual sales of $16.53 billion for fiscal year 1981, reflecting its scale as one of America's top retailers. The company diversified beyond physical stores by venturing into catalog sales in the 1980s and scouting international opportunities, building on its established presence in Canada since the 1960s. By 1987, sales had climbed to $25.6 billion, with profits reaching $692 million, underscoring the peak of its operational success. That same year, Kmart fully divested from its legacy five-and-dime operations by selling the remaining U.S. Kresge and Jupiter stores to McCrory Corporation, allowing the company to concentrate resources on its core discount format.^[6][12][13]

Rebranding and Challenges

In the early 1990s, Kmart launched a major "new image" campaign aimed at revitalizing its brand and competing more effectively with rivals like Walmart and Target. This initiative included extensive store redesigns, such as brighter lighting, wider aisles, and improved layouts to enhance the shopping experience, alongside an updated logo featuring a more modern, bold font in red and blue. Starting in 1994, the company shifted to an "everyday low pricing" strategy, eliminating frequent sales promotions in favor of consistently lower prices on staple goods to attract budget-conscious shoppers. To bolster its marketing efforts, Kmart expanded its product lines in apparel, home goods, and private-label brands while enlisting high-profile celebrity endorsers. In 1999, the company signed comedian Rosie O'Donnell as a spokesperson for its children's clothing line, leveraging her popularity from her talk show to appeal to families and generate media buzz. These moves were part of a broader push to reposition Kmart as a family-friendly retailer with trendy, affordable options, though they coincided with aggressive store expansions that strained resources. By 2001, Kmart's debt had ballooned to approximately $3.5 billion, exacerbated by overexpansion and mounting operational costs. Facing intensifying competition and inventory management issues, Kmart filed for Chapter 11 bankruptcy protection on January 22, 2002, marking the largest U.S. retail bankruptcy at the time with assets and liabilities each exceeding $10 billion. The filing stemmed from excess inventory buildup, pricing pressures from competitors, and failure to adapt quickly enough to changing consumer preferences. As part of the restructuring, Kmart sold non-core assets, including its sports apparel distribution centers and real estate holdings, and shuttered 284 underperforming stores across 39 states, reducing its footprint by about 20%. Kmart emerged from bankruptcy in April 2003 after court approval of its reorganization plan, which included debt reduction to around $1.4 billion and a streamlined store network of approximately 1,400 locations. The process involved renegotiating vendor contracts and implementing cost-cutting measures, such as centralized purchasing and inventory controls, to restore financial stability and focus on core discount retailing.

Merger with Sears and Decline

In late 2004, Kmart Holding Corporation, under the control of hedge fund manager Edward S. "Eddie" Lampert, announced its acquisition of Sears, Roebuck and Co. in a transaction valued at approximately $11 billion.^[14] The deal was completed on March 24, 2005, forming Sears Holdings Corporation as the parent company for both chains, with Lampert serving as chairman and Sears CEO Alan Lacy as vice chairman and chief executive officer.^[15] This merger created the third-largest U.S. retailer at the time, with combined annual sales exceeding $55 billion and nearly 3,500 stores, aiming to leverage complementary strengths—Kmart's discount format and Sears' established brands and real estate assets—to compete against rivals like Walmart.^[16] Sears Holdings pursued operational synergies, including shared supply chains and centralized procurement, with expectations of achieving up to $300 million in annual cost savings from merchandise sourcing efficiencies.^[17] However, integration efforts faltered due to cultural clashes, incompatible IT systems, and mismatched store formats, preventing the realization of anticipated benefits and contributing to persistent underperformance.^[18] By fiscal 2008, the company reported a sharp decline in operating income to $302 million from $1.6 billion the previous year, driven by falling comparable store sales at both Kmart (down 4.7%) and Sears Domestic (down 4.0%), amid broader retail sector pressures.^[19] The onset of the Great Recession in 2008 exacerbated these challenges, prompting Sears Holdings to announce the closure of 100 to 120 underperforming Sears and Kmart stores in December of that year to stem losses and conserve cash.^[20] For instance, eight Kmart locations were among the initial wave of 12 stores shuttered in late 2008, with further closures following as consumer spending contracted.^[21] In response to intensifying competition from e-commerce giants, Sears Holdings shifted toward digital and smaller-format retail strategies, including the relaunch of enhanced online capabilities for Kmart through integrated platforms with Sears.com.^[22] The merger era marked the beginning of Kmart's sustained decline, with the chain's U.S. store count falling below 1,300 by the end of fiscal 2010 to 1,307 locations across 49 states and U.S. territories.^[23] This contraction reflected broader failures to modernize inventory management and adapt to shifting consumer preferences, leaving Kmart increasingly marginalized within the combined entity.^[24]

Bankruptcies and Store Closures

On October 15, 2018, Sears Holdings Corporation, the parent company of Kmart, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, with Kmart operating as a key subsidiary amid the proceedings.^[25] The filing was precipitated by mounting debts exceeding $5 billion and failure to secure alternative financing, following years of operational struggles after the 2005 merger with Sears.^[26] The court quickly approved $300 million in debtor-in-possession financing from existing lenders to support ongoing operations during the restructuring process.^[27] In February 2019, a bankruptcy judge approved the sale of Sears Holdings' assets to ESL Investments, a hedge fund led by Edward Lampert, for approximately $5.2 billion, allowing the retention of about 425 stores and 45,000 employees under the newly formed Transformco.^[28] As part of the post-bankruptcy optimization, Transformco announced the closure of 96 additional locations by early 2020, including 45 Kmart stores, to streamline costs and focus on viable operations.^[29] The COVID-19 pandemic further intensified financial pressures on Transformco, accelerating store rationalization efforts as reduced foot traffic and supply chain disruptions compounded existing challenges.^[30] Between 2020 and 2021, at least 45 Kmart stores were shuttered, contributing to a significant reduction in the chain's footprint amid widespread retail sector turmoil.^[31] Liquidation continued into 2023, with closures including the last Kmart in New Jersey (Westwood) and other mainland locations, as Transformco prioritized asset efficiency.^[32] In 2024, the final full-sized Kmart store on the mainland United States, located in Bridgehampton, New York, closed on October 20, marking the end of large-format operations in the continental U.S.^[33] By the end of 2024, following the Bridgehampton closure, Kmart's presence in the continental U.S. was limited to a single small-format store in Miami, Florida, alongside a full-sized store in Guam and multiple locations in the U.S. Virgin Islands.^[34] In 2025, additional closures occurred in the U.S. Virgin Islands, including the Sunny Isle store in St. Croix and the Lockhart Gardens store in St. Thomas, reducing the territory's locations to one.^[35]

Current Corporate Status

Following the 2019 liquidation of Sears Holdings, Kmart has been owned and operated as a subsidiary by Transformco, a privately held company focused on retail and real estate assets. Transformco is headquartered in Hoffman Estates, Illinois.^[36] As of November 2025, Kmart maintains a minimal physical presence in the United States, with three stores operational: a remnant small-format location in the Kendale Lakes Shopping Center in Miami, Florida; a full-sized store in Tamuning, Guam; and a store in Tutu Park Mall in St. Thomas, U.S. Virgin Islands.^[37][38][34] The company has shifted primarily to online retail through Kmart.com, which continues to offer a range of products including electronics, clothing, and home goods, supplemented by limited in-store pickup options at the remaining locations.^[39] Kmart's international operations are entirely separate, with Kmart Australia having been sold to Wesfarmers in 2007 as part of the Coles Group acquisition and now operating independently as a successful discount retailer under Wesfarmers' ownership.^[40] Financially, Kmart generates minimal revenue from its limited retail activities, with Transformco emphasizing the liquidation of intellectual property, real estate holdings from former stores, and licensing deals rather than expansion.^[41]

Operations

United States and Territories

Kmart's traditional big-box stores, typically spanning approximately 95,000 square feet, ceased operations on the U.S. mainland following widespread closures, with the last full-size location shuttering in October 2024.^[42] In their place, the chain maintains a single small-format store in Miami, Florida, at the Kendale Lakes Plaza, which operates in a downsized space of about 20,000 square feet focused on essential goods such as groceries, pharmacy items, and basic apparel.^[43] This compact model emphasizes convenience and core discount offerings to serve local communities amid the brand's overall contraction. In U.S. territories, Kmart sustains fuller operations with one big-box store in Tamuning, Guam, which remains open 24 hours daily and functions as a key retail hub for groceries, apparel, and household essentials in the island market.^[44] There are no locations operating in Puerto Rico as of November 2025. In the U.S. Virgin Islands, one store at Tutu Park Mall on St. Thomas continues to operate, offering groceries, apparel, and household essentials, though its pharmacy closed in September 2025.^[38][45] These territorial stores represent the chain's most robust physical presence outside the mainland, supporting local economies through everyday low pricing on necessities.^[4] The product assortment in these U.S. and territorial stores centers on discounted clothing, home goods, and toys, with apparel lines featuring affordable basics and seasonal items from in-house brands.^[46] Following the 2005 merger with Sears, select stores integrate Sears-branded products, such as tools and appliances, to broaden offerings while maintaining Kmart's discount focus on value-driven essentials like bedding and small electronics.^[39] As of November 2025, Kmart operates zero full-size stores on the mainland, one small-format location there, and two stores in U.S. territories, reflecting a minimal footprint under parent company Transformco.^[4] The supply chain for these remaining outlets relies on a limited network of distribution centers, including facilities in Georgia and Illinois, to handle inventory for the reduced store base and online fulfillment.^[47]

Australia and New Zealand

Kmart Australia was established in 1969 as a joint venture between Australian retailer G.J. Coles & Coy Limited and the U.S.-based S.S. Kresge Company, the parent of the original Kmart chain, with the first store opening in Burwood East, Victoria.^[48] In 1978, Coles acquired full control of the Australian operations by exchanging stakes, solidifying its ownership.^[49] Following the 1985 merger of Coles and Myer to form Coles Myer Ltd., the company continued to expand Kmart's presence, and in November 1994, Coles Myer bought back the remaining 21.5% stake held by Kmart Corporation (U.S.), achieving complete independence from the American parent.^[50] This separation marked Kmart Australia as a distinct entity, operating without ties to the U.S. Kmart, which faced its own challenges leading to its current limited status under Transformco.^[2] In July 2007, Wesfarmers acquired the Coles Group—including Kmart, Target, and Officeworks—for A$22 billion in Australia's largest corporate takeover at the time, integrating it into its portfolio. Following the 2018 demerger of Coles supermarkets as a standalone listed company, Kmart became a core part of Wesfarmers' Kmart Group division, alongside Target, functioning as an independent retail operation focused on the Australasian market.^[51] As of 2025, Kmart operates 323 stores across Australia and New Zealand in a hypermarket format, with sales floor areas typically ranging from 3,000 to 15,000 square meters to accommodate broad merchandise ranges.^[52] Of these, approximately 295 are in Australia, emphasizing suburban and regional locations for accessibility, while the 28 New Zealand stores, including a new large-format outlet at Westgate in Auckland spanning 6,700 square meters, cater to similar demographics.^[53][54] The chain specializes in affordable general merchandise, particularly homewares, apparel, and toys, positioning itself as a value-driven retailer for everyday essentials and lifestyle products.^[48] Its in-house Anko brand, launched in 2013, has become a flagship private label, offering budget-friendly clothing, home decor, and accessories designed and sourced primarily in Asia, accounting for over 80% of Kmart's product offerings and driving customer loyalty through trendy, low-cost items.^[55] Recent expansions have bolstered Kmart's digital presence, with online sales penetration reaching around 15% of total revenue by FY2025, supported by omnichannel strategies like click-and-collect from stores and partnerships with platforms such as Catch for broader e-commerce reach.^[56] Although traditionally non-food focused, Kmart has explored adjacent growth through collaborations, including limited grocery-adjacent offerings via third-party integrations on its app and website to complement core categories.^[57] Annual sales for Kmart alone exceeded A$7.5 billion in FY2025, contributing to the Kmart Group's total revenue of A$11.4 billion, reflecting steady 3% comparable sales growth amid economic pressures.^[58] Cultural adaptations have been key to Kmart's success in the region, including high-profile Boxing Day sales events that draw massive crowds for deep discounts on seasonal items, aligning with local holiday traditions.^[59] The retailer also emphasizes local sourcing for select products, such as apparel and homewares produced in Australia and New Zealand, to reduce supply chain risks and appeal to community preferences for domestic manufacturing.^[48]

Other International Markets

Kmart's operations in Canada began in the 1990s but were short-lived under the brand. In 1998, Hudson's Bay Company acquired Kmart Canada's 122 stores for $240 million and merged them with its 298 Zellers discount stores to form a stronger competitor against Walmart.^[60][61] The Kmart name was phased out immediately, with stores rebranded as Zellers. By 2011, Hudson's Bay sold the leases for most Zellers locations to Target Corporation, leading to conversions that completed by 2013.^[62] Target Canada operated until 2015, when it discontinued all 133 stores due to ongoing losses exceeding $2 billion, marking the full exit of former Kmart sites from major discount retail under any related branding.^[63] In Europe, Kmart made a brief foray during the early post-communist era. In 1992, the company acquired 13 department stores in the former Czechoslovakia, which became the Czech Republic and Slovakia after the country's split in 1993.^[2] These stores faced challenges adapting to local consumer preferences and economic conditions, including resistance to American-style discounting.^[64] Due to unprofitability, Kmart sold the operations in 1996.^[2][65] Kmart entered Mexico in 1994 through a joint venture with El Puerto de Liverpool, opening four supercenter stores in suburban areas near major cities.^[66] The partnership aimed to test big-box retailing in the region but struggled with market saturation and operational costs. In 1997, Kmart and Liverpool sold the venture to Controladora Comercial Mexicana for an undisclosed amount, ending direct involvement.^[66][2] The acquired stores continued briefly under the Super Kmart name before closing by the early 2000s. Similarly, Kmart's Singapore expansion occurred in 1994 via a joint venture with Metro (Private) Limited, resulting in three stores at locations including Marina Square and Tampines' Century Square.^[67][68] The outlets operated for only a few years amid intense local competition and small market size before the partnership dissolved in 1996.^[2][3] Kmart also maintained a presence in the Caribbean, operating stores in Bermuda and the Bahamas through the 1990s and into the 2000s.^[69] Most locations in Bermuda and the Bahamas closed during the early 2000s as part of broader international retrenchment.

Corporate Structure

Management and Leadership

Kmart was founded in 1899 by Sebastian S. Kresge as the S.S. Kresge Company, establishing a chain of five-and-dime variety stores that laid the foundation for its later discount retailing operations. Kresge served as the company's leader until his death on October 18, 1966, at the age of 99.^[70] In 1959, Harry B. Cunningham was appointed president of S.S. Kresge, where he spearheaded the shift to a discount store model by studying competitors and developing a strategy for larger, low-price formats.^[1] Under Cunningham's leadership, the first Kmart discount department store opened in Garden City, Michigan, in 1962, marking the beginning of rapid expansion with 17 additional stores that year alone.^[71] Cunningham remained president until 1972, overseeing the opening of approximately 150 Kmart stores annually and transforming the company into a major retail force with sales reaching nearly $15 billion by 1980.^[3] Following Kmart's Chapter 11 bankruptcy filing in January 2002 and emergence in May 2003, Julian Day served as president and chief executive officer from January 2003 to September 2004, focusing on reorganization and cost-cutting measures during a transitional period.^[2] The 2005 merger with Sears, Roebuck and Co. created Sears Holdings Corporation, where Eddie Lampert, founder of ESL Investments, assumed the role of chairman from 2005 to 2019 and briefly as CEO from 2013 to 2018. Lampert's influence, exerted through ESL's significant ownership stake, shaped corporate strategy, including decisions to divest real estate and other assets, which a 2019 lawsuit by Sears Holdings alleged stripped the company of over $2 billion in value, contributing to its operational decline.^[72] Alan J. Lacy, former CEO of Sears, transitioned to vice chairman and CEO of Sears Holdings upon the merger but served only briefly until 2006, amid ongoing integration challenges.^[73] After Sears Holdings filed for bankruptcy in October 2018, its assets were acquired in February 2019 by an ESL Investments affiliate, forming the private entity Transform Holdco LLC (rebranded Transformco), which ended the public company structure and consolidated board control under ESL's oversight with a streamlined, non-public board dominated by Lampert's interests. Under Transformco, executive leadership remains minimal as of 2025, with Lampert continuing as chairman and Omar Khan serving as CEO; strategic direction is influenced heavily by his hedge fund's priorities, focusing on asset management rather than expansive retail operations.^[74][75] The company operates with a small team of functional executives handling remaining brands like Kmart and Sears Home Services.^[76]

Headquarters and Subsidiaries

Kmart's original headquarters were established in Troy, Michigan, in 1972 at 3100 West Big Beaver Road, when the S.S. Kresge Company relocated from Detroit to a new facility serving as the central hub for its growing discount store operations.^[2] This location functioned as the corporate base until 2006, when Kmart, following its 2005 merger with Sears, Roebuck and Co., moved its headquarters to Hoffman Estates, Illinois, to consolidate with Sears' existing campus. The Troy site, spanning over 40 acres and known internally as "Fort Kresge," was sold in 2012 to the Forbes Company and later demolished in 2023-2024 for redevelopment. Under its current parent company, Transformco, Kmart maintains minimal headquarters operations at 5407 Trillium Boulevard in Hoffman Estates, Illinois, with a significantly reduced corporate staff reflecting the company's scaled-back retail footprint of about 5 U.S. stores as of 2025.^[36][4] Transformco, formed in 2019 to acquire Sears Holdings assets, oversees these limited functions from the site, which it sold in 2023 to Compass Datacenters for redevelopment into a data center amid ongoing restructuring.^[77][78] Kmart currently operates without major subsidiaries, instead relying on brand licensing agreements for online retail through platforms like kmart.com and select international territories, managed directly by Transformco.^[1] In contrast, its international operations, such as Kmart Australia Pty Ltd, function independently; established in 1969 as a joint venture with G.J. Coles & Coy (with S.S. Kresge holding 51% ownership), it was fully divested by the U.S. parent in 1978 and later acquired by Wesfarmers in 2007 via its purchase of the Coles Group, operating over 300 stores in Australia and New Zealand today.^[2][48] Among former subsidiaries, Builders Square represented Kmart's entry into home improvement retailing, acquired in 1984 as Home Centers of America and rebranded as a warehouse-style chain with 168 locations by the mid-1990s.^[2][79] Facing declining sales, Kmart sold Builders Square in 1997 to Hechinger Company, which operated it until full closure in 1999.^[2][80] Pace Membership Warehouse, a bulk discount club founded independently in 1983, was acquired by Kmart in 1989 for $322 million, expanding to about 165 locations focused on membership-based sales of groceries and general merchandise.^[81][6] Kmart divested Pace in 1994 amid competitive pressures from rivals like Sam's Club, with many sites converted or sold off.^[82] Borders, originating from Kmart's 1984 acquisition of Walden Book Company for $295 million, grew into a major bookstore chain through the integration of the Borders bookstore concept acquired in 1992.^[83][2] To streamline operations during financial difficulties, Kmart spun off the Borders-Walden Group as an independent public company in 1995 via an initial public offering, retaining no ongoing ownership.^[84] Kmart acquired PayLess Drug Stores in 1985 for $500 million, operating as a chain of drug stores primarily in the western United States, before selling it to TCH Corporation in 1994, after which it merged into Thrifty PayLess and was later acquired by Rite Aid.^[85] In 1990, Kmart purchased The Sports Authority, a chain of sporting goods superstores, which expanded under its ownership before being sold in 1995.^[2] Kmart also acquired a controlling interest in OfficeMax, an office supplies and furniture retailer, increasing its stake to over 90 percent by 1991, and divested it in 1995.^[2] Additionally, in 1999, Kmart launched BlueLight.com, a dial-up internet service initially provided for free and supported by advertising, which was spun off as an independent company, reacquired amid financial challenges, and sold in 2002 following bankruptcy.^[1]

Marketing and Culture

Advertising Campaigns

Kmart's advertising campaigns have long emphasized value and urgency through in-store tactics and memorable slogans, helping to build its brand during its expansion in the mid-20th century.^[86] One of the most iconic elements was the Blue Light Special, an in-store discount alert system introduced in 1965 by a store manager in Fort Wayne, Indiana, who used a flashing light to promote slow-moving merchandise like wrapping paper.^[87] The program expanded nationwide within months, featuring a mobile cart with a strobe light and siren that signaled limited-time deals, often announced over the intercom with the phrase "Attention Kmart shoppers."^[88] It became a cultural staple, running for over 25 years before discontinuation in 1991 amid efforts to reposition the brand away from discount perceptions.^[87] The feature was briefly revived in 2001 as part of a $25 million marketing push, complete with themed music and 20-minute sales on brand-name items, and again in 2015 to evoke nostalgia and drive traffic.^[89][90] Kmart's slogans reinforced its discount positioning, with "The Saving Place" prominently used from the 1960s through the 1990s to highlight affordable everyday goods.^[86] In the 1990s, the chain shifted to taglines like "Your Lowest Price is a Kmart Price" to underscore competitive pricing. In Australia (operated separately by Wesfarmers), Kmart adopted "Low prices for life" in its campaigns, emphasizing consistent value across product lines.^[91] Celebrity partnerships brought prestige to Kmart's offerings, starting with the 1997 launch of the Martha Stewart Everyday line, which included bed, bath, and paint products sold exclusively at the retailer.^[92] The collaboration, which generated significant revenue for Martha Stewart Living Omnimedia, was extended multiple times but ended in 2009 after failed renewal talks, with Kmart citing declining royalties.^[93] In the 2010s, Kmart stocked Katy Perry Collections footwear, featuring playful designs like platform heels and sandals that aligned with the singer's bold aesthetic and appealed to younger shoppers seeking affordable trendy styles.^[94][95] Post-2010, Kmart embraced digital marketing with humorous social media campaigns to highlight shipping perks and fuel savings, such as the 2013 "Ship My Pants" ad, which amassed over 10 million views in a day by playing on double entendres to promote free delivery.^[96] These efforts, including follow-ups like "Big Gas Savings," went viral on platforms like YouTube, repositioning Kmart as a fun, value-driven option amid e-commerce competition.^[97]

Sponsorships and Promotions

Kmart has been actively involved in motorsports sponsorships, particularly in NASCAR during the late 20th and early 21st centuries. The company served as the title sponsor for the Kmart 400 race at Michigan International Speedway from the 1990s through the early 2000s, enhancing brand visibility among racing enthusiasts.^[98] In addition, Kmart backed prominent drivers, including those racing the No. 66 Big Kmart Ford in the NASCAR Winston Cup Series such as Darrell Waltrip and Todd Bodine, contributing to the team's competitive presence in events like the early 2000s races.^[99] Beyond NASCAR, Kmart supported the IndyCar series in the 1990s through partnerships with teams such as Newman/Haas Racing, aligning its marketing efforts with high-profile events like the Indianapolis 500 to appeal to a broader demographic.^[100] The retailer also extended involvement to the ARCA series during the late 1990s and early 2000s, sponsoring entries that participated in developmental racing to build grassroots brand loyalty.^[101] In the realm of philanthropic promotions, Kmart established a significant partnership with St. Jude Children's Research Hospital starting in 2006, integrating fundraising into its retail operations through in-store campaigns and customer donations. This collaboration raised over $100 million by 2016, with continued efforts pushing the total to more than $116 million by 2019, primarily via the Thanks and Giving program that ties purchases to support for pediatric cancer research.^[102][103] These initiatives often featured promotional tie-ins, such as special product sales where a portion of proceeds benefited the hospital, fostering customer engagement while advancing charitable goals. Kmart's in-store events and promotions have emphasized accessible shopping during peak seasons, with layaway programs serving as a cornerstone for holiday preparations since the early 2000s. These no-money-down options allowed customers to secure items early, avoiding end-of-year rushes, and were heavily promoted through television spots highlighting family-friendly benefits like stress-free gifting.^[104] Holiday specials further amplified this, including campaigns that encouraged early planning with incentives tied to seasonal purchases, reinforcing Kmart's role as an affordable retail destination. In Australia (operated separately by Wesfarmers), Kmart has engaged in sports promotions through merchandise collaborations, particularly with the Australian Football League (AFL) since the 2020s. The retailer offers official AFL apparel, such as team jerseys and accessories priced affordably to attract fans, creating promotional tie-ins that boost in-store traffic during the season.^[105] Similarly, Kmart has promoted cricket via Big Bash League product lines, including team jerseys sold at low prices to capitalize on the sport's popularity and drive sales among sports enthusiasts.^[106] These efforts align with broader advertising themes like "Expect More. Pay Less.," briefly referencing slogans to integrate promotions seamlessly.

Controversies and Issues

Data Breaches

In October 2014, Kmart experienced a significant data breach when malware infected its point-of-sale (POS) systems, compromising credit and debit card information from transactions at its stores. The intrusion, which began in early September and was detected on October 9, 2014, involved malicious software that scraped track data from the magnetic stripes of payment cards during checkout. No personal identification information, such as Social Security numbers, email addresses, or debit PINs, was affected, and the company contained the breach by removing the malware and notifying affected customers and card issuers.^[107][108] Kmart faced another POS system compromise in May 2017, marking the second such incident in three years and highlighting ongoing vulnerabilities within Sears Holdings, its parent company at the time. Hackers deployed undetectable malware that targeted card data in select stores, leading to unauthorized transactions on affected cards; however, the adoption of EMV chip-and-PIN technology since the 2014 breach limited the exposure to magnetic stripe data only. The exact number of impacted cards remained undisclosed, but the company swiftly isolated the systems, enhanced monitoring, and advised customers to monitor their accounts.^[109][110] A separate incident in late September 2017 involved the exposure of customer data through a third-party service provider, ^[111]7.ai, which handled online chat support for Kmart and Sears websites. Between September 27 and October 12, 2017, malware on the provider's platform allowed unauthorized access to information from online orders, including names, email addresses, phone numbers, and physical addresses for approximately 100,000 customers across both retailers; a subset also had partial payment card details compromised. Kmart was notified in March 2018, promptly investigated, and offered credit monitoring to potentially affected individuals.^[112][113] In June 2021, Transformco, the entity managing remaining Sears and Kmart operations post-bankruptcy, disclosed a network intrusion affecting employee data. An unauthorized actor accessed the company's systems from June 3 to June 15, 2021, potentially via phishing, exposing sensitive information such as Social Security numbers, financial account details, and health insurance data for current and former employees. The breach did not impact customer data, and Transformco responded by notifying affected individuals, providing identity theft protection services, and strengthening employee training on phishing awareness.^[114] Following these incidents, Kmart and its affiliates implemented remedial measures, including the widespread rollout of EMV-compliant POS systems after 2014 to reduce reliance on vulnerable magnetic stripe data, along with improved antivirus detection and network segmentation. The 2014 breach resulted in multiple class-action settlements, including a $5.2 million agreement with affected banks and credit unions to cover reissuance costs and fraud losses, approved by an Illinois federal court in 2017. No major regulatory fines were imposed, but these events underscored persistent cybersecurity challenges amid Sears Holdings' financial struggles.^[115][110]

Environmental and Welfare Concerns

In 2025, Kmart Australia faced legal scrutiny over allegations of misleading consumers regarding the sustainability of its cotton products. The retailer advertised certain cotton items, such as bedding and apparel, as made from "100% sustainably sourced cotton" on its New Zealand website from August 2023 to October 2024.^[116] New Zealand's Commerce Commission investigated and determined the claim was potentially misleading, as the cotton was sourced from a mixed supply chain combining "Better Cotton" (a sustainability initiative) with conventional cotton, preventing verifiable guarantees of full sustainability.^[116] The Commission issued a formal warning to Kmart, requiring removal of the claims from e-commerce platforms, though it noted that only courts could confirm a breach and reserved the right for further action if similar conduct recurred.^[116] This incident highlighted broader greenwashing risks in retail, where unsubstantiated environmental assertions can erode consumer trust.^[117] Kmart Australia has also drawn environmental criticism for selling seasonal products that pose risks to wildlife. In October 2025, conservation groups urged the retailer to discontinue fake plastic spider webs used for Halloween decorations, citing entanglement hazards to birds in suburban areas.^[118] Wildlife rescuers reported cases of small birds, including honeyeaters and magpies, suffering injuries to wings and legs from the synthetic webs draped on trees and fences, with fragments potentially leading to ingestion.^[118] BirdLife Australia advocated for alternatives like wool-based decorations to mitigate plastic pollution and support local farmers, emphasizing the product's contribution to avian decline amid Australia's biodiversity challenges.^[118] On welfare fronts, Kmart Australia encountered significant controversy in 2025 over potential forced labor in its supply chains. The Australian Uyghur Tangritagh Women’s Association (AUTWA) initiated federal court proceedings against Kmart, seeking preliminary discovery of documents to investigate links between the retailer's products and Uyghur forced labor in China's Xinjiang region.^[119] The action targeted suppliers like the Jiangsu Guotai Guosheng garment factory, amid UN reports of mass internment, forced detention, and labor exploitation of Uyghurs under brutal conditions.^[119] AUTWA president Ramil Chanisheff stated, “We’re demanding answers from Kmart so we know whether its actions live up to its words about addressing forced labour risks in its supply chain.”^[119] The case underscored limitations in Australia's Modern Slavery Act 2018, which mandates corporate reporting but imposes no penalties or import bans on tainted goods.^[119] Kmart Australia denied the allegations, asserting no sourcing from forced labor-linked factories and expressing disappointment in the litigation after 12 months of engagement with AUTWA.^[120] The company highlighted its Ethical Sourcing Program, operational for over 15 years, which includes third-party audits, site visits, and public disclosure of its factory list—the first among Australian retailers—to identify and mitigate modern slavery risks, including forced labor.^[120] As of November 2025, the court case remained at the discovery stage with no final ruling, prompting calls for stronger regulatory enforcement to ensure supply chain transparency.^[119] In September 2025, the Australian Privacy Commissioner determined that Kmart Australia violated the Privacy Act 1988 by deploying facial recognition technology (FRT) in more than 80 stores to combat refund fraud. The technology captured facial images and biometric data from customers at self-checkout kiosks without obtaining meaningful consent or demonstrating necessity, breaching Australian Privacy Principles on collection, use, security, and disclosure of personal information. The investigation, spanning three years, found that Kmart failed to conduct adequate privacy impact assessments and retained data longer than necessary. Although Kmart ceased using FRT in stores by November 2023, the ruling emphasized the risks of biometric surveillance in retail environments and called for stricter guidelines. No monetary penalties were issued, but the decision may influence future regulatory actions on emerging technologies.^[121][122]