Strategy: This is what Sears stores could look like in the future

Sears stores are shrinking. Here's what one of those shrinking stores looks like now.

Sears is closing hundreds of stores, and many of its remaining locations are shrinking.

That's because Seritage Growth Properties, the landlord of more than 260 Sears and Kmart stores, is siphoning off chunks of the stores it owns and renting that space out to higher-paying tenants like Shake Shack and Dick's Sporting Goods.

In some cases, that means another retailer will take over an entire floor of a Sears store.

In others, like at Pembroke Mall in Virginia Beach, Virginia, the stores are redeveloped and carved up into multiple sections for several retailers.

Seritage, whose chairman, Eddie Lampert, is also the CEO of Sears, has been picking up the pace of these redevelopments because it earns a lot more rental income from tenants other than Sears.

Sears pays Seritage about $4.45 per square foot in rent, whereas Seritage's non-Sears tenants are paying about $15.23 per square foot.

What does that mean for shoppers?

We took a look at the Virginia Beach Sears to find out.

Here's what the Virginia Beach Sears store looked like before the redevelopment.

It's a typical, boxy department store.

A bird's-eye view of the area shows the 120,000-square-foot Sears store, built in 1965, surrounded by a parking lot with its former auto center nearby.

Now it looks much different. Seritage carved up the building into four sections and turned the auto center into an REI store. The project cost more than $12 million, according to Seritage filings.

Here's the former Sears Auto Center.

And here's what the outside of the Sears building looks like now. It's unrecognizable, with an entrance to Fresh Market on one corner.

Another corner of the store is now home to a DSW shoe store.

The downsized Sears store is sandwiched between Fresh Market and Nordstrom Rack. Shoppers across the US could see similar changes at their local Sears stores — if they aren't shut down.

Sears stores are shrinking. Here's what one of those shrinking stores looks like now. Read Full Story