Kmart

K-Mart: Creating the Forgettable Experience?

Many papers have been written, and many lectures given to business students about the fall of K-Mart. I suppose the reason for the widespread use of this case is based on the clear examples of what not to do. This is a much more interesting and compelling argument than focusing on all of the businesses that got it right. The beginning of the end for this retail giant began in Garden City, Michigan in 1962. K-Mart got its start as a spin-off of the chain of popular retail stores called Kresge, owned by Sebastian S. Kresge. K-Mart invented the concept of discount retailing and not long after it opened grew larger than its parent company, which before K-Mart, was the largest retailer in the country. K-Mart was definitely a change leader, focusing on low prices and understanding the customer (Zyman, 2002, p. 220). This was a huge hit with consumers. K-Mart enjoyed dominance over its competitors from the time it opened its first store through the mid 80s. Because of their superior business position and the size of the operation, K-Mart became complacent while their competitors, Wal-Mart and Target, were relentlessly pursuing improvements in supply chain management and marketing strategies (Zyman, 2002, p. 220). By 1990, Wal-Mart had moved past K-Mart and captured the lead in market share with its every day low price strategy. In the aftermath, K-Mart has struggled to come up with a strategy that would put them back on top of the discount retailer world. None of them have worked, and to be more precise most of them have failed miserably causing more damage. As a result of the failed business strategies, the company filed for chapter 11 bankruptcy in 2002. K-Mart merged with Sears Roebuck and Co. in 2004 to produce Sears Holdings Corporation. The purpose of the merger was to create a "broader retail presence and improved scale…improved operational efficiency in areas such as procurement, marketing, information technology, and supply chain management" (Kmart Holding Corporation, 2004). One of the strategies that have been implemented as a result of the merger is a hybrid store called Sears Essentials. This "off-mall" approach is basically a combination of Sears and K-Mart's most popular and convenient products. The first of these stores were opened in 2005, but did not produce the desired results. As a result, Sears announced that it would drop the Essentials plan altogether and begin implementing a new store format called Sears Grand, a superstore concept.