Service station salvation.

Kmart close 01

The news over the past few months that Sears Holdings Company is closing a slew (over seventy) of its two primary chains (Sears and Kmart) should come as no surprise to anyone who reads this blog…or anyone with a pulse, for that matter. I’ve rung the death knell on this formerly legendary budget department store several times in the past, noting in particular how its failure to compete with Walmart has consigned it to struggling inner-ring suburban neighborhoods—the only areas where it can retain a toehold, because Walmart does not typically locate there. The only shocking thing about this latest announcement is that the parent company couldn’t even wait until the holiday season, which usually serves as the bellwether for retail health.   Most of these Kmarts and Sears will close before Christmas.

Earlier this fall, a spokesperson for Kmart/Sears announced that two Kmart locations would face the axe in metro Indianapolis. Then, a few weeks later, a second announcement revealed the closure of yet another. At the end of this pruning, this Midwestern metro of slightly under 2 million will have only three Kmarts left—a proposition that would have seemed impossible as recently as 1985, before Walmart’s ascendency, when a metro the size of Indianapolis could claim at least a dozen Kmart stores, and at a time when the metro was a half million smaller than it is now.

This location, essentially on the edge of the Garfield Park neighborhood just two miles of downtown, exemplifies what has passed for “Kmart territory” for the last decade. While Garfield Park remains one of the city’s most favored urban greenscapes, and the nearly century-old homes of the neighborhood are generally well-maintained, many of the other neighborhoods nearby are struggling, and the area in general generally has a poverty rate above the metro average. And now this Kmart is closing.

kmart close 02Kmart close 03Floundering though Kmart may be, its closure is unlikely to yield any net benefit to the surrounding community. Not only does it deprive a fairly densely populated area of a reliable source for budget clothes, electronics, household items and groceries, it would leave a vacant grayfield site of considerable size—probably somewhere around 100,000 square feet. And, since the neighborhood itself is of widely variable economic health, it may be hard to attract another tenant to this site any time soon. Walmart? Not bloody likely.

Then again, this particular Kmart at the intersection of Madison and Southern Avenues does have one ace up its sleeve:Kmart close 04While the majority of Kmarts offer a time warp to the mid 1980s, this Kmart took the ambitious leap to include a gas station on site—a trend that has exploded in the last decade or so.Kmart close 05kmart close 06The station might already be closed (at the time of the post, the Kmart itself was still liquidating its inventory), but it has not been out of service for long. At this point, physical alterations to the station to get it running again would be minimal.

It’s rare that any urban advocacy blog will get excited about a gas station. After all, they have become the default LULU (Locally Unwanted Land Use). They serve as an easy, uninspiring infill development at corner parcels throughout lower-income urban neighborhoods, and they are usually permissible under conventional Euclidean zoning. They might be ugly; they might harbor unpleasant fumes, excessive vehicle traffic and loiterers; they might lower the property value of adjacent residences. But they are reliably profitable and often represent an easy return on investment for an unimaginative landowner. Most of urban America has far more gas stations than it needs, because the market drive supersedes the political will to stop them.

But in the case of this Kmart on South Madison Avenue, the gas station may be a saving grace. The parcel was never pedestrian-scaled, even if many of the surrounding neighborhoods are fairly walkable. The pumps just sit in the corner of a big parking lot. And, as many of us have come to notice, it has become increasingly desirable for big box retail establishment to offer a gas station on the periphery of their own properties. Walmart has been doing it for quite some time. So has the powerful Midwestern discount competitor Meijer. National grocery chains like Kroger took up the practice as well, in more recent years. (I haven’t seen it yet with Target, but it’s probably only a matter of time.) Even much smaller regional grocers, such as Weis Markets in the Mid-Atlantic, have started building gas stations on site or in close proximity to their primary buildings, so that shoppers can accrue points for purchasing groceries, which they can then apply to get discounts on gasoline.

In fact, it has become so desirable for big boxes to include a gas station that some major developments refuse to have it any other way. A few years ago, the Indianapolis Business Journal recognized a small, dreary, long-underperforming Kroger in a historical low-income but steadily gentrifying neighborhood, in which the community had pushed aggressively for renovations that might make it desirable again to the increasingly affluent surrounding population. Kroger was interested in rebuilding on that exact site, but only if they could include a gas station. The new Kroger would also be larger—according to the spokesperson for the chain, it would ideally triple in size, expanding onto the site of three nearby 1930s apartment buildings that would get demolished. Needless to say, the local neighborhood associations were vigorously opposed both to a gas station going up in their community, as well as the destruction of those old apartment buildings, one of which the owner had significantly refurbished. These neighborhood associations envisioned a much more urban configuration in keeping with the surrounding character: that is, a Kroger built flush to the street, in which the development could either discreetly tuck the parking in a garage behind the store or place it on the roof of the building. Kroger refused and the redevelopment proposal collapsed. The dingy little Kroger remains.

But here, at this long-standing Kmart on Madison Avenue, the footprint and infrastructure for the grocery/gas combo are already there, which significantly boosts the parcel’s likelihood of redevelopment, with a reduced need for expanding the existing building’s floorplate. Meijer could easily pick up the property. While it might be smaller than the usual Meijer supercenter, the Michigan-based chain has taken on economically challenging environments in the past, the city of Detroit among them. And while Walmart typically balks at locating in areas that are below that area media income, the mega-corporation has been known to take slightly greater risks in the expansion of its “Neighborhood Market” concept. And Kroger? Not bloody likely, but since the company insists on “food, fuel, pharmacy and floral”, the space could allow for it.

Kmart close 07Gas stations will continue to proliferate wildly if they go unchecked. But it’s equally important to recognize that even undesirable uses have their place in the landscape of commerce. For the most part, the negative externalities elicited from an unwanted land use are still less than if that same property languishes in desuetude through years of vacancy. The residents of Garfield Park should be so lucky if a major grocery store replaces the Kmart—and the points they earn from groceries should give them access to a much lower-cost gas station as well.

11 thoughts on “Service station salvation.

  1. Matt E.

    Side note – the Sears in the King of Prussia Mall just closed a few weeks ago…right after they refurbished the place. That Sears left nation’s largest mall (by retail SF) – and just ahead of Black Friday – is astounding. Sears is now subletting the space to two tenants, one of which is Dick’s Sporting Goods.

    Interestingly, Dick’s is now in at least 3 malls in the Philadelphia area (KoP, Montgomery, and Coventry) according to my count (and maybe more), rather than in nearby power centers.

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  2. Sarah M.

    I went in that Kmart yesterday and it was creepy! I was thinking about what it will become…drug den, “meet up” spot, who knows.

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    1. AmericanDirt Post author

      Hey Sarah, let’s hope it doesn’t turn out that way….I could honestly see it becoming a Meijer, or maybe a Walmart Neighborhood Market. Fingers crossed!

      Reply
  3. Paul Kane

    I usually go to the Kmart in Billerica, which is a dump. I went to the Kmart in Tewksbury for Black Friday, what a difference. Having said that, I don’t see it being able to compete with Walmart, Target, etc forever…. Even with Sears muscle behind it.

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    1. AmericanDirt Post author

      Thanks for the message, Paul. Yeah, it doesn’t really compete, and I’d say that the “muscle” of Sears is looking scrawnier by the day as well…

      Reply
  4. Jeffrey Jakucyk

    Sad to hear about Kroger’s inflexibility, but unfortunately not the least bit surprising. Here in Cincinnati, where Kroger is headquartered (!!!) they can’t do a proper urban store to save their lives, despite all the requests from neighborhood councils and residents. Instead it’s just suburban store after suburban store turned sideways presenting a blank wall and parking lot to the sidewalk. To say it’s offensive would be an understatement.

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  5. AmericanDirt

    Thanks to you both for your comments. Matt, you’re dead-on that Sears left at such a time is really strange, and it no doubt speaks volumes about how obsolete the Sears brand is…that the company doesn’t even anticipate enough of a boost during the holidays to keep it open that long, and in a successful super-regional mall, of all things. I’ve seen Dick’s in other malls in the country (it replaced Service Merchandise way-back-when in the mall where I grew up), but to replace a flagship department store isn’t necessarily a great sign. Even Target, when it replaces a department store, has not shown much influence on the prosperity of the in-line tenants in the mall. It might be fine for Dick’s/Target, but not for the overall health of the mall.

    Jeffrey, it does seem like Kroger is pretty committed to its suburban model…increasingly with a gas station in the corner. I just learned today that the mega-grocer purchased the smaller, mildly upscale mid-Atlantic chain Harris Teeter, which has implemented successful urban grocery stores in places like Washington DC. Now that Kroger owns the Harris Teeter brand, it’s hard to say if we’ll see any more smartly designed HT locations in the future.

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  6. Jon White

    Kroger also owns Fred Meyer, which has several urban-oriented locations in Portland, OR – so the expertise exists within the corporation if they wish to be more creative. Though I’ve not seen them mix their chain brands within a single community, perhaps that might be an approach as well?

    Sears and KMart have never really figured out an identity. With the Sears catalog, they could have transitioned into what Amazon has become but has already been mentioned; not an especially creative company.

    And on a personal note, as someone who grew up in that area it is sad to see it continue its decline. The south side never had ‘good bones’ outside of Garfield Park, University Heights and Southport/Homecroft so I suspect it will be a very long while before it becomes profitable to transition it into a true urban landscape.

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  7. AmericanDirt Post author

    Thanks for the message, Jon White, and sorry for the delay in getting back to you. I’d be curious to know more about that Fred Meyer. From a quick fact-check, it appears the chain was bought by Kroger in 1998, well before most of the urban grocery store chains really caught fire, so you’re probably right that several of them were built after Kroger’s ownership–despite the fact that Kroger is resolutely suburban in its layout/design through most of the Midwest where it’s presence is strongest.

    As for the near south side, I’m not really sure I’d describe the decline as all that uniform. South of I-465 is generally fine, and the neighborhoods you mention are generally strong in terms of internal organization. (Not as sure about Southport, which I think suffered heavily from foreclosures and is now a major destination for first-time foreign born homeowners, but Homecroft is still strong.) Incidentally, even in the area where this Kmart is finishing its long reign, the areas with clear decline parallel strongly with the IPS district boundaries (Garfield Park and University Heights excluded). For example, east of U.S. 31/East Street is definitely struggling, but west of it, along South Meridian, many homes are still stable and well-maintained all the way along the corridor…but then, of course, they are in the Perry Township school district, not Indianapolis Public Schools.

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  8. Chris Barnett

    There’s a similar former Kmart between Shadeland and I-465 on Pendleton Pike. It’s been closed a couple of years, partially replaced by a “Rose’s Discount”. Unfortunately, the gas station still stands empty, perhaps because local low-price competitors Speedway and Thornton’s are within a quarter mile.

    Unfortunately, these old “big box” stores with really good truck access aren’t quite big enough (ceilings too low) to serve their next-best use: smaller distribution centers.

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  9. AmericanDirt

    Thanks for the observations, Chris. You may be right about the low-cost competitors. Then again, I also suspect that “Rose’s Discount” isn’t a national chain, so it may not have the capacity to leverage it’s operations into both discount goods AND gasoline. Out here in the East Coast, the chain grocery stores (even the small ones) seem to be learning the trick, that combining groceries with the opportunity to earn “points” for gas is a cash cow. But a small chain grocery store is still probably a bigger enterprise than Rose’s Discount, so it may be a long time–if ever–before Rose, or Rose’s landlord, is able to find a tenant for the vacant station. And then it will require a greater investment to refurbish it after years of disuse.

    Reply

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