Third of Kmart's 2,114 outlets may close after bankruptcy filing

As many as 700 of Kmart's 2,114 outlets across the United States could close in the coming weeks following its bankruptcy filing, leaving many communities without the distinctive store that has typified US discount consumer culture for generations. From Conor O'Clery, International Business Editor, on Wall Street.

The impact will be felt in terms of lost taxes and jobs. Individual Kmart stores employ 75 to 250 people, and more than 100,000 of Kmart's 275,000 employees are likely to be laid off.

Kmart, which filed for bankruptcy on Tuesday because of declining sales, evolved from five-and-dime stores first opened in Michigan in 1899 by retailer Sebastian Kresge. It began the trend of discount warehouse-size stores in the 1960s, long before rivals Wal-Mart and Target began multiplying across the country. A quarter of a century ago Kmart was king of the big retailers with 1,206 stores, while Wal-Mart had 153 stores and Target 52. But as the competition expanded, Kmart began to lose money. Last year it closed 70 stores.

By contrast Wal-Mart is expected to open at least 600 stores and Target 100 over the next two years. Wal-Mart has leapfrogged Kmart to become the world's largest retailer with the lowest prices in the business. Target has carved out a niche as a specialist discount store for fashion and home furnishings. Kmart tried to maintain its place by joining forces with Martha Stewart, Walt Disney and Sesame Street in exclusive licensed partnerships, but analysts say Kmart's strategy lacked clarity and it failed to modernise.

While Wal-Mart modernised its distribution system, Kmart's checkout scanners did not relay information on what people were buying. The fate of Kmart mirrors that of many other discount and catalogue retailers as well as department stores in the face of aggressive pricing and improved quality in Wal-Mart and Target and another discount retailer Kohl's.