Kmart's Past Struggle

Kmart Past Struggles

Management is a key to success, and Kmart needs proper management to help create a positive image that attracts more customers. Kmart's disorderly management and bankruptcy caused many customers to shop with other retailers. According to Carr, Wal-Mart and Kmart were the same size in 1990. Since then, Kmart has grown far slower than its rival or the industry. Once one of the largest discount retailers, Kmart filed for the biggest Chapter 11 bankruptcy for discount retailing in the United States (2002). Struggling to find the right type of management has been one of Kmart's problems that ultimately helped lead the company to its downfall. Kmart is constantly changing CEO's, and thus focuses. Kmart has had four different CEO's since 2000, all with different management objectives.

Youdath illustrates some of Kmart's management changes, Charles Conway wanted to turn Kmart into an "Everyday low price destination," making Wal-Mart Stores a direct competitor. Conaway cut back on advertising and the results were not profitable. After an unprofitable holiday season in 2001 the company filed bankruptcy. In 2002, James Adamson hoped to improve customer service and restock the shelves within the Kmart Stores. While Kmart was taking time to recover from filing Chapter 11, its rivals like Wal-Mart and Target were stealing its customers. When Kmart was focusing on random in-store discounts, Wal-Mart and Target were pitching low prices, broad inventories, hip products, and a pleasant shopping experience (2002).

Jalexson states that in 2003 Edward Lambert rescued Kmart from bankruptcy. Lambert wanted to attract customer's back, but the closing of 28% of Kmarts over the last two years hurts the chains ability to attract customers and forced the remaining stores to pay a higher portion of advertising costs. Then, in January of 2003 CEO Julian Day said that when a company exits bankruptcy it should emphasize the exclusive brands like; Joe Boxer, Sesame Street and of course Martha Stewart (2003). As mentioned by Karush, starting in October of 2004 Aylwin Lewis was named CEO of Kmart and will be involved in merging Kmart with Sears (2005). With inconsistent management and objectives, Kmart has been struggling to create concrete guidelines necessary to improve store performance.

Effects of Past Struggles on Local Stores

Kmart's reputation of poor management and insolvency has made customers hesitant to shop at Kmart Stores. Youdath mentions that customers tend to shop at Wal-Mart, Target, and Meijer instead of Kmart due to the stores under-stocked shelves, tacky merchandise, poor service and overall appearance (2002). Kmart's national struggle has affected the well being of many of its local stores. Since, Kalamazoo, Michigan contains two stores one located on Stadium Drive and the other on Gull Road the impact in this area is no exception. Local stores have suffered and need improvement, surveying a random group of 12 students at Western Michigan University found that Kalamazoo stores have a very uninviting appearance influencing consumers' decisions to shop elsewhere, this survey was conducted in March of 2005, Appendix A. Surveying these students has shown that most have no interest in Kmart, due to lack of selection, quality, and untidiness. Store hours that end at ten o'clock are not convenient for students. Even though these stores have an excellent location, changes are necessary to improve Kmart's image and therefore attract more customers.

Changes that can Benefit Kmart

Kalamazoo Kmarts can improve their image and marketing strategy to catch the attention of more Kalamazoo students. According to city-data, there are 29,471 college students attending one of the three major colleges in the Kalamazoo area, these students make up 40% of the total population in this region (2002). If local Kmarts were able to reach these young adults they could increase their profits tremendously. Surveying the 12 college students that attend Western Michigan University and live in the college's surroundings areas has shown the impact that Kmart has on their everyday lives.

A list of questions and responses that the students had pertaining Kmart is attached in Appendix A. When asked about particular items that the students were interested in purchasing at a store, some of the responses were: food, clothes, school supplies, household products, and entertainment merchandise. If Kmart offered wider range of these items at relatively low prices more students would be interested in shopping there. According to the survey, specials that persuaded 4 out of the 12 students to shop at Kmart were: sales on bathroom supplies, kitchen appliances, school materials, and pet food/toys. When asked how often the individuals went to Kmart the response was once or twice every couple of months. The number one reason that all twelve of the students ever stopped or considered stopping at Kmart was the convenient location.

A better marketing plan should be implemented to help differentiate Kmart from its competitors. The Kmart located on Stadium Drive is right off U.S. 131 and is only a few miles away from Western Michigan University and could generate more sales if more students and residents knew more about weekly sales and product selection. Below are a few changes that this Kmart could make to increase sales:

1. Radio and television ads could be created to show annual, monthly, and weekly deals on merchandise encouraging people to shop at Kmart.

2. Internet specials and discounts could be established to persuade customers to stay at home and shop online to help save on inventory in the stores.

3. Advertising in local newspapers and sending coupons or promotional packages to residents would also help spark interests.

This marketing plan should be executed to increase customer awareness of quality merchandise and promotions that Kmart has to offer. Kmart's negative image needs to be improved by designing a more customer friendly, well-organized store environment. One of the students surveyed elaborated on the bad lighting and narrow aisles in the store and suggested that Kmart should try and promote greater cleanliness. Other suggestions that students had that would change Kmart's negative image were to update the store to better suite customer needs, stay open later, and have a wider selection of merchandise.

In summary, to attract more customers to Kmart changes need to be made both nationally and locally to improve the image of Kmart in the eyes of the consumers.