They were caught flatfooted between being Wal-Mart and Amazon.

Sears had shifted so firmly into retail by the 80s. Then Wal-Mart ate their lunch on low price retail logistics.

Then Amazon came along, and solved last-mile delivery of catalog sales.

Perhaps Sears/Kmart could have filled the Target niche, and leveraged Sears' brand portfolio rather than selling them off to make crushing interest payments.

They invested heavily in Prodigy, when that failed, management thought the internet was a fad and didn't invest or even try. By the time they tried, they were way behind Amazon.