Sears to close downtown Chicago location

A major piece of prime retail space in Chicago's Loop will soon be vacant, as Sears announced its Windy City flagship store will close for good in April. The retailer said it will start liquidating merchandise at the store at 2 N. State St. on Jan. 26.

"We don't make decisions to close stores lightly, and we know just how hard these decisions are on our loyal associates," Edward Lampert, the company's CEO and largest shareholder, said in a letter posted on Sears Holdings' website. "But we've also carefully studied where other retailers went wrong and how they failed to adapt to changes."

Sears has been making great efforts to cut costs lately, because the revenues for its parent company, Sears Holdings, have decreased every year since 2005, when Lampert, a hedge fund manager and billionaire, merged Sears and Kmart. This announcement apparently appealed to investors, as its shares increased more than 2 percent on Jan. 22, the Chicago Tribune reported.

Downtown drama
The retailer's relationship with downtown Chicago has been tumultuous, as its original store there closed in 1983 after 51 years, as many city residents flocked to the suburbs for a quieter lifestyle. Then, in 2001, it returned, opening a flagship store in the Loop, but ever since then, it's been losing money. The store employs about 160 hourly employees who will lose their jobs but will be given the chance to apply for open positions at other locations or Kmart stores.

Chicago's downtown retail market has been changing recently, most notably with the Macy's takeover of Marshall Field's and the fairly recent opening of an urban Target store, also on State Street.

Daniel Skoda, former head of Marshall Field's, told Crain's Chicago Business that retailers in downtown Chicago must adapt to the area's needs – most notably those of businesspeople who use their lunch hour to go buy clothing and other smaller items – not lawnmowers and dishwashers.

Still, experts tell the Tribune that the famous strip, despite expensive rents and huge pressure to succeed, is in demand. All eyes and commercial real estate companies' focus then will be on the former Sears space to see what retailer wants to establish a State Street location. 

"State Street is performing at the highest level that it has in decades," Michael Edwards, executive director of the Chicago Loop Alliance, said to the newspaper. "Retail volume, retail sales, everything's up … There's real demand for retail space on State Street and those corners are even more valuable than the mid-blocks."

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