Publication: VMS3.info
Publication Date: 01-JUN-02
Format: Online - approximately 3137 words
Delivery: Immediate Online Access
Author: Levy, Mitchell ; Losch, Paul A.
Company: Kmart Corp.

Article Excerpt
Excerpted from the June 2002 issue of VMS3.info (http://vms3.info)

SUMMARY

The Discount Merchandising Category as a whole is increasing its total share of retail spending in the United States. Wal-Mart, Kmart, and Target have emerged as the three national market leaders. Each of these companies launched with distinct strategies for targeting customers, merchandising, distribution and logistics, and real estate management.

Kmart was the first major discount merchandiser in the United States, and enjoyed the 'first mover' advantage for several decades. Wal-Mart and Target started in the 1960's, and at this point both have by-passed Kmart on a number of strategic measures.

Wal-Mart has a formidable advantage in its position as the 'low price retailer' for the merchandise it features in its stores. Moving forward, it can selectively exploit the weaknesses that Kmart currently faces, and expand its store categories to further meet its customers' needs, such as the need for grocery products.

Flawless execution of strategy is imperative in this category. Target and Wal-Mart not only understand the need for a clear strategy, they also execute it. Kmart does neither of these well at present...

Target positions itself as providing 'higher-end, higher-image merchandise' at prices lower than found at boutiques or main line department stores. It can take advantage of the confusion of Kmart shoppers who react favorably to the Martha Stewart labeled products, but do not find the total shopping experience at Kmart to be consistent with the "store branded" approach Target has taken.

Kmart is in trouble. It has been squeezed by these two well-run competitors, and is struggling to figure out how its value proposition compares with that of Wal-Mart and Target. It has some loyalty among the urban and minority groups of consumers which its competitors have avoided, but needs to develop a complete strategy that effectively serves these targets. Moving beyond the groups that Kmart "owns," the company should selectively operate stores where it can profitably compete with Wal-Mart and Target, and exit markets that Wal-Mart and Target together dominate.

At the end of the day, most consumers come out as winners in this category of shopping. The exception may be the urban shopper, for whom Kmart has been the primary retailer, while being carefully avoided by Wal-Mart and Target. Flawless execution of strategy is imperative in this category. Target and Wal-Mart not only understand the need for a clear strategy, they also execute it. Kmart does neither well at present, and must develop a clear point of differentiation from its competition, and re-tool its operations to support the re-positioned entity. There is a great opportunity for Kmart if the management team creates the right strategy and deploys, manages and evolves the appropriate business models.

STRATEGY EVOLVED

The discount merchandising category is growing by gaining greater share of wallet (process share) from the mall stores and conventional department stores, so Kmart is in an even more ironic position of...



NOTE: All illustrations and photos have been removed from this article.



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