Swot Of Kmart
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EXECUTIVE SUMMARY
Kmart was the largest retail discount with competitors such as Wal-Mart continually increasing their profit, Kmarts market share has dwindled to 13% and continues to decline. Wal-Marts early use of IT within the industry was a major factor to Wal-Mart rise about Kmart and the fall of this once mammoth retail chain. Wal-mart was the first within the industry to operate on a large-scale format, operate a computerized inventory system, use bar codes and wireless scanners, allow electronic data interchange with suppliers, and expand around central distribution centers.
With its recent Chapter 11 bankruptcy filing and the once loyal customer going to their competitors, it does not seem as though they can find any key strengths to attract customers – or potential shareholders. Kmart needs to focus on their strongest competitive advantage–their private brand labels such as (Martha Stewart Everyday, Jaclyn Smith, Disney, and Sesame Street) and a value-for-the-money proposition on all the products that the store carries.
The competition of Wal-Marts low prices is a weakness for Kmart, because they are unable to match these prices. Another weakness is their stores are considered old and outdated, their distribution systems is not very efficient. Kmart does have some opportunities that could improve their sitituation, with the purchase of the IBM systems this will give them an improvement in customer relations and processing, update the old store with a new look, increase advertising of their strongest brands, work on developing a new supply chain management that can handle data efficiently, this will eliminate unnessacerry inventory in house. If Kmart puts these opportunities in place they might be able to stay in the game.
With Kmart coming out of Bankruptcy and acquiring Sears for 11 billion was a bold move which should position them as the number three discount realter. The key to this merger is they should be able to maximize their cash flow and they should be able to capitalize on cross selling of the exclusive priviate brand that each store currently sells.
Company History
Sebastian S. Kresge founded the S.S. Kresge Corporation, the predecessor of Kmart, in 1899 in Detroit, Michigan. Kresges first retail establishment. The store grew into a chain known as S. S. Kresge. By 1912, the chain operated 85 stores. By the 1920s, Kresge operated larger stores that offered a wider variety of merchandise and prices–precursors of the modern discount store. The first Kmart opened in 1962. At the time of Kresge death had 735 variety stores and 162 Kmart stores in 1966, Kresge stores had annual sale of more than $1billion, eventually all Kresge store were replaced with Kmart stores because 95% of there sales were coming these stores. In 1977, SS Kresge Corporation changed it name to Kmart Corporation, they began diversify by acquiring different companies to focus on their business strategy in the early days to increasing the number of visit a customer comes into the store, improve their appearance and image , improve on their inventory management , customer service, advertising their exclusive brand, eliminate items not being in stock.
Companys Mission Statement
“Kmart will become the discount store of choice for middle-income families with children by satisfying their routine and seasonal shopping needs as well as or better than the competition.”
Kmarts Decline
During the 1970s, Kmart put a number of competing retailers out of business. In 1977, S. S. Kresge Corporation changed its name to Kmart Corporation. In 1987, Kmart Corporation sold its remaining Kresge stores. The companys fortunes began to change; as many of Kmarts stores were badly outdated and in decaying condition. Inventory piled up, checkout lines grew, and customers abandoned the stores. During the 90s projecting a better image by updating some of their older stores. The company also began to offer exclusive merchandise by Martha Stewart, Kathy Ireland, and Jaclyn Smith. Other recognizable brands included Sesame Street and Disney.
In the 1990s, Kmart continued to make mistakes, again by closed 110 stores. Unlike its competitor Wal-Mart, it failed to invest in the future potential of computer technology and how it could effectly mange their inventory and supply chain. Furthermore, Kmart maintained a high dividend, which reduced the amount of money available for improving its stores. Many business analysts also faulted the corporation for failing to create a coherent brand image. The Martha Stewart scandal in 2001 hurt the companys image, at this point Kmart could not afford to match Wal-Marts low prices. Still yet Kmart was dealt another blow with the terror attacks in United States on September 11, 2001. Kmart stop selling guns and ammunition This resulted in a boycott by gun owners.
In January 2002, Kmart filed for bankruptcy protection; Here are some of the reason that Kmart had to file for bankruptcy, they failed to differentiate their image from other discount retailer, the companys supply chain management had a lot of problem, starting with outdated distribution centers that were inefficient, outdated IT Technology, unsuccessful marketing techniques with their best products, not being able to match Wal-Marts compentencies and capabilities, inability
to excute a merchandising strategy that would appeal to customers, buget cutting, poor performing stores, declining profits.
It shut down more than 300 stores in the United States and laid off around 34,000 workers as part of a badly-needed restructuring. On May, 2003, Kmart officially emerged from bankruptcy protection as Kmart Holding Corporation and on June 10, 2003 it began trading