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

SPEAKER_1 (0:00)

Picture this, it's 2026, and you need to run out and grab some household basics, maybe some discounted clothes. Right. And you decide, just for the nostalgia, you want to walk into a Kmart.

Well, if you want to do that, you basically have to book a flight to Guam.

SPEAKER_2 (0:15)

Wow, yeah.

SPEAKER_1 (0:16)

Or to the US Virgin Islands.

SPEAKER_2 (0:18)

Exactly.

SPEAKER_1 (0:19)

Or you have to track down a solitary, relatively small location in Miami, that is it. There are only three left.

SPEAKER_2 (0:25)

It's a staggering contraction when you actually visualize that map.

SPEAKER_1 (0:28)

Oh, absolutely.

SPEAKER_2 (0:29)

Because we're looking at the near total evaporation of an empire. And they didn't just sell products. I mean, they actively dictated how everyday people shopped, what they expected from a store, even how suburbs were built around them.

SPEAKER_1 (0:43)

So welcome to today's Deep Dive. We are looking at a stack of sources detailing the epic rise and the honestly agonizingly slow, painful fall of Kmart.

SPEAKER_2 (0:53)

Yeah, it was a long time coming.

SPEAKER_1 (0:54)

It really was.

Our mission here is to uncover how the second largest retailer in America completely lost its ground. We're tracing its journey from a humble five-and-dime store to a massive cultural phenomenon, and finally to what is essentially a master class in corporate hubris.

SPEAKER_2 (1:10)

And for you listening, you know, this isn't just a dry retail history lesson.

SPEAKER_1 (1:14)

No, not at all.

SPEAKER_2 (1:15)

It's a terrifyingly relevant look at how quickly a seemingly invincible entity, a business that feels like a permanent, unmovable fixture of society, how it can completely collapse if it stops paying attention to the invisible machinery running behind the scenes.

SPEAKER_1 (1:30)

Because size simply does not equal safety.

SPEAKER_2 (1:33)

Right.

SPEAKER_1 (1:34)

To understand the sheer scale of Kmart's collapse, we have to look at the original DNA of the company, how it revolutionized the way we shop over a century ago.

SPEAKER_2 (1:42)

Well, before it was a faceless corporate behemoth. The foundation was actually built by one person just traversing the country.

SPEAKER_1 (1:49)

Yeah, we have to start with Sebastian Spearing Kresge, SS. Kresge.

SPEAKER_2 (1:54)

Right. So in the late 1800s, he was a traveling salesman. He was driving out to hardware stores and general stores, basically selling tinware.

SPEAKER_1 (2:03)

His route actually had him selling to all 19 of Frank Winfield Woolworth stores.

SPEAKER_2 (2:08)

Exactly. So he was getting a firsthand front row look at the burgeoning five and dime concept.

SPEAKER_1 (2:15)

He's watching Woolworth pioneer this high volume, low margin model, you know, where everything is incredibly cheap, but the sheer number of customers makes up for it. And he realizes, hey, I can build my own version of that engine.

SPEAKER_2 (2:26)

And he did. By 1897, Kresge took his entire life savings, which was exactly $6,700.

SPEAKER_1 (2:36)

Wow. Yeah.

SPEAKER_2 (2:37)

And he partnered with one of his former tinware customers, a man named John G. McCrory. Together, they opened a five and dime store in Memphis, Tennessee.

SPEAKER_1 (2:46)

So that single Memphis location was the seed?

SPEAKER_2 (2:48)

It was. Kresge eventually bought out McCrory's share of another store they opened in Detroit, brought in his brother-in-law, and slowly but aggressively built this massive chain.

SPEAKER_1 (2:59)

And by 1912, he formally incorporated the SS. Kresge Company with 85 stores operating across the country.

SPEAKER_2 (3:05)

Which is incredible growth for that era. He amasses incredible wealth, a massive portfolio of real estate and a dominant market position over those next few decades.

SPEAKER_1 (3:15)

But the retail landscape, you know, it never stays static. By the time we jump forward to 1962, America is completely shifting.

SPEAKER_2 (3:23)

Right, the post-war boom is in full swing.

SPEAKER_1 (3:26)

The highway system is expanding. People are moving out of the cities and into the suburbs. The old downtown dime store model just isn't gonna cut it anymore.

SPEAKER_2 (3:34)

And the leadership at the SS. Kresge Company, they recognize that shift. An executive named Harry Cunningham had essentially taken the reins by then.

And he made a massive company altering pivot.

SPEAKER_1 (3:45)

He launched the very first Kmart.

SPEAKER_2 (3:47)

He did. In San Fernando, California, it was what they called a Bantam Kmart.

SPEAKER_1 (3:52)

Bantam. So like a smaller test store.

SPEAKER_2 (3:54)

Exactly. In retail terms, a Bantam store is basically a scaled-down prototype. They used it to test a new concept in a specific market before committing massive capital.

SPEAKER_1 (4:04)

They wanted to see if suburban shoppers would actually drive to a free-standing discount department store.

SPEAKER_2 (4:09)

And the test was a resounding success. Almost immediately after that San Fernando experiment, Cunningham pulled the trigger on a massive 80,000-square-foot store in Michigan.