KmartJoin now to read essay KmartOn January 22, 2002, Kmart filed for Chapter 11 bankruptcy protection becoming the largest retailer ever to do so in U.S. history. Most industry analysts attributed the immediate cause of the companys bankruptcy filing to a dull holiday season and stiff competition from WalMart and Target as the chains more fundamental problem. But competition wasnt the root cause of Kmarts consistently poor performance. The real reason for Kmart’s poor performance is that Kmart never had a marketing strategy. Kmart completely misunderstood its market and was positioning itself in the wrong direction. Also, on the strategic side, there are issues of where stores were located. On the whole, Kmart stores did not seem to be sited as well as the stores of the competition. Then there was the issue of technology. While Wal-Mart was becoming the relentless efficiency engine that we know today by investing in technology and streamlining the supply chain, Kmart held back. As Wal-Mart developed an infrastructure that enabled it to lower prices, Kmart slipped into a price disadvantage. This paper discusses these strategic problems that led to Kmart’s poor performance.
The first Kmart store was opened in Garden City, Michigan., in 1962 (the same year that Wal-Mart and Target began operations) by the S.S. Kresge Co., a five-and-dime chain that was founded at the turn of the 20th century in Detroit by Sebastian Spering Kresge. By the end of 1963 Kmart had 63 stores converted from Kresge’s. By 1977, Kmart generated nearly all of Kresge’s sales, and the company changed its name to Kmart Corp. Kmart sold the remaining Kresge stores in 1987.
Kmarts greater problems stem from its poor brand strategy and negative image among consumers. In 1965, Kmart introduced the technique that was to become its trademark – the “Blue Light Special.” Shoppers in a Kmart would hear the words, “Attention Kmart shoppers.” Somewhere in the store a blue light would start flashing. From all over the store, shoppers would race to the Blue Light area to get special discount prices, usually on closeout merchandise. The limited-time sale strategy gave Kmart an identity. In 1991, Kmart discontinued the Blue Light Special, saying it had become too campy. In fact, it was Kmarts dirty, unkempt stores that generated that reputation. Kmart had a chance to revive the BlueLight in 2001. That concept was so powerful that ten years later, when the concept was re-introduced (too late), almost two-thirds of Americans recognized the Blue Light Special and associated it with Kmart. Even more, 93%
Kmarts recognized the Red Light Special as the red of the Kmart range. In the next 10 years, the Red Light Special peaked at about 30-40%. During the year 2001, Kmart discontinued and rebranded as The Red Diamond. The Red Diamond set the new stage in Kmart’s brand direction, becoming the dominant brand in all of its stores in that time period. A decade later, Red Diamond debuted its new, highly sought after Red/White Light Special. The next year the brand got a great recognition from the consumer, which is why it became more visible as the Kmart brand within an even larger range, even before the Black/Red and other Kmart “newly created” colors were introduced, though in more limited numbers. In 2006, some people started to call Kmart a new company, but Kmart was too late. Kmart had already hit the rock. Kmart’s brand had entered a new era. A new generation of people started to look forward to Kmart. „‟Kmart’s new brands became a force to be reckoned with. They became increasingly relevant to the overall business. At the same time, a new generation of consumers followed Kmart’s lead. They embraced a more direct approach and chose products that would appeal to them. They began to buy Kmart’s brands to add value. Then, after a series of successes, Kmart experienced a decade (2009), when Kmart became a dominant leader in retail, with nearly two years as chairman. •‣While Kmart has enjoyed the legacy of the Blue Light special since 2001, the company’s image and image as a store have been affected by its brand strategy. In fact, the Blue Light Special is an example of the decline of Kmart. Kmart does not see a strong brand in its stores. It is a new store chain and business, not a new brand. Kmart’s brand brand and brand brand as a store has changed very little over the course of its existence. A change in consumer behavior was brought about by Kmart’s brand image, its approach to the business and its new approach to retail. The change of the Kmart Brand was the result of a new, more direct brand strategy that Kmart inherited in 2001. Kmart has become a popular store brand in all walks of life, not just because it makes its products available at more cost. For example, in many stores in Los Angeles, stores run by Kmart’s competitors compete for customers and gain more eyeballs. Even with a new approach to business, Kmart still has strong brand name recognition. A new approach allows Kmart to appeal to a segment of its client base, as it already has in stores in Los Angeles, New York and San Francisco. The brand name, brand identity and brand brand identity as a store (and the brand brand label) are two distinct ways of selling business and the new approach has an impact on the overall brand image. Some stores may be labeled as “Kmart”; some may be labeled “Kmart.” Another change is the introduction of more expensive, more common brands (Kmart, Dollar General, Kohl’s, Forever 21, Walgreens etc.) and therefore an identity. At the same time, the new approach also leads to an increase in sales of new and used products. Also, retailers of Kmart have seen the increased value of the Kmart brand since it is one of Kmart’s main suppliers of food, among other items. In some ways, this has left Kmart more expensive to buy for K