Some Sears and Kmart stores are deteriorating as their parent company, Sears Holdings, struggles to turn the business around following years of plunging sales.
In interviews with Business Insider, half a dozen employees described signs of decay in the stores they work in. These include a rat problem, collapsing ceilings, empty shelves, and a lack of working toilets for weeks on end.
Some of these problems started several years ago, and have been getting progressively worse, according to the employees, who asked to remain anonymous for fear of retaliation from Sears.
Sears acknowledged some of the issues that employees highlighted, such as leakage problems and broken toilets, saying in an email that several of these have been addressed with repairs, but denied an employee’s claim that the store they work in has a rat infestation.
Workers from the store level to Sears’ headquarters in Hoffman Estates, Illinois — as well as critics outside the company — claim that the stores’ decline is the result of years of underinvestment in maintenance and other capital expenditures at the direction of Sears CEO Eddie Lampert.
“He has been clamping down on that from day one. This has been going on for over a decade,” Mark Cohen, former Sears Canada CEO and a professor at Columbia Business School, told Business Insider.
“Stores are your face to your customers and they have to be refreshed and renewed and maintained — and if they aren’t, the customer starts to treat you like a pariah,” he said.
Lampert has long faced criticism for not investing enough money in Sears’ physical stores. He addressed this criticism head-on in 2013.
“I was criticized for not investing enough in the stores,” Lampert said at the time. “My point of view is we couldn’t invest in everything.”
Lampert has invested instead in share buybacks and building up the company’s e-commerce operation and loyalty program, called Shop Your Way.
But the stores’ decline has stymied those initiatives, according to employees.
“We missed the basics so badly,” a senior Sears executive who recently left the company told Business Insider. Sears’ website and loyalty program “is icing on the cake and means nothing if the cake is fundamentally rotten.”
‘The store is infested with rats’
At a Sears store in Lafayette, Louisiana, maintenance delays led to a rat problem, according to a former employee who worked in loss prevention at the store.
“Sears turned into a disgusting, filthy place,” the former employee said. “The store is infested with rats… at night when we would all be in the office area waiting for the managers to finish, you would hear troops of rats running around the ceiling.”
He said there were frequent ceiling leaks in the store and in the stock room, which “smelled of rat urine and feces.”
“Every storm the ceiling would leak,” he said. “This water would sometimes get on the merchandise. There would be tiles so soaking wet that they would fall.”
Sears spokesman Howard Riefs said the store “experienced ceiling leaks during heavy storms.”
Riefs said the claim of a rat infestation is “false,” citing the store exterminator. He also said the store is closing in September.
The Sears store in Cockeysville, Maryland — which Sears recently revealed it is planning to close — has also had recurring ceiling leaks, according to one long-time employee of the store.
But “the biggest problem over the years has been the air conditioning,” the employee said. “At times, in the past, it was hotter inside than outside.”
Meanwhile the Kmart store in Eureka, California went three weeks in April 2016 without a functioning bathroom, according to an employee of that store.
“We were told to clock out and drive to the mall or go to a gas station” until the store rented porta-potties and set them up outside the store, he said.
There were problems in the Eureka store’s employee break room, as well, according to this employee. He claimed it lacked a working sink and drinking water, that the garbage cans regularly overflowed, and that light bulbs in the store parking lot were out for months.
Conditions aren’t much better in the corporate offices, according to a former Sears employee who worked at the company’s headquarters in Hoffman Estates, Illinois, for more than four years until he was laid off in late 2016.
“It is very typical to see garbage cans, buckets, and even large plastic dumpsters scattered all over the building to catch leaks,” the former employee told Business Insider.
He said leaks aren’t properly repaired, so water-damaged walls and ceilings are a common sight.
“Typically just a hole would be punched in the ceiling to keep the water draining vs. pooling,” he said.
Riefs said a glass atrium at Sears’ headquarters “experiences occasional leaks during heavy rains.”
He confirmed leakage problems at the Cockeysville store. He said the roof was replaced in 2016 and since two roof drains failed in May 2017, there have been no additional issues. The store’s air conditioning system was also rebuilt last year and “we actively monitor for issues,” he said.
The broken toilets and sink at the Eureka Kmart were related to a leaking pipe, and porta-potties were on the site within six hours of the water being shut off for repairs, he said. The parking lot lights adjacent to the building are currently functional and “a few on the perimeter away from the building will be replaced this summer,” he said.
When reached by phone, the Eureka Kmart store declined to comment. The Lafayette and Cockeysville Sears stores did not return requests for comment.
The problems that employees describe in Sears’ stores aren’t just structural. Some stores are running out of merchandise to fill the shelves as suppliers retreat from the ailing retailer, according to several employees.
“We used to have walls and aisles full of televisions — upwards of 100 on the floor,” one Sears store employee said. “Now we have six or so displayed and nothing in stock. I find it’s harder and harder to satisfy customer needs — can’t get things from other stores anymore because everything close has closed… we are like a ship adrift on the open stormy sea.”
Riefs said this shortage is intentional.
“In 2014, the company made a shift in its consumer electronics strategy from focusing on televisions to connected solutions,” he said. “As a result, we stock fewer television models in stores.”
A former employee of a Kmart store in Rochester, New York, told Business Insider in January that her store started moving freight straight from delivery trucks to the sales floor — skipping the stock room altogether — to fill empty store space, and that it led to an “appalling” mess.
The company has said it plans to reduce costs by $1.25 billion in fiscal 2017.
“We are making progress with the fundamental restructuring of our operations that we initiated in February,” Lampert said in a statement in June. “We remain focused on realigning our business model in an evolving and highly competitive retail environment. This requires us to optimize our store footprint and operate as a leaner and simpler organization.”
But store issues aren’t going unnoticed by shoppers — and they appear to be sending many customers away for good.
Sears’ annual revenues dropped by nearly 50% to $22.1 billion between 2011 and 2016, and the company recorded net losses of more than $8.2 billion over that period.
“Sears can only blame themselves,” Michael Looney, who worked at his local Sears store in Antioch, California in the 1970s, told Business Insider. The Antioch store has “suffered terribly” and now “looks like a flea market.”
“You could fire a cannon in any direction and not hit one sales person,” he said.