News recently came out that Kmart isn’t doing so hot right now. However, don’t outsiders always have the best perspective on issues like this? We don’t have a dog in the fight or any care or reason to not give our utmost honest opinion about what someone else “shoulda, woulda, coulda” done.
With that being said, I don’t work for Kmart, Target, or Walmart, so I really don’t know what’s being done behind closed doors. I just have my opinions about what Kmart “shoulda, woulda, coulda” done to prevent themselves from being in the position they’re in right now, which is last in their market category.
I honestly can’t remember the last time I was in a Kmart. I always forget about them in the great “Target or Walmart” debate that my coworkers and I frequently have at the lunch table. Apparently, though, I’m not the only one. Sears Holdings, Kmart’s parent company, recently announced plans that could close stores (more about that later on, though). Kmart has done a lot in the past to get them where they are now, and that’s a major blessing for other companies out there. None of this happened overnight, but rather it was a slow and steady, slippery slope to the pit they seem to be sitting in right now.
What exactly went wrong with Kmart?
Whether you see it as good news or bad news, there were several decisions that helped bring Kmart down. To start with, they failed to update and upgrade their stores. Compare a Walmart or Target that was built in the 1980s with one that was recently built and you’ll see the differences right away. The lights are brighter, the store seems airy, and the fixtures have been remolded to look modern and clean. Kmart chose a different path during the mid-1980s and early 1990s; they were out shopping for (and buying) Walden Book Company, Borders, and OfficeMax when they should have been focusing on their stores. If you’re confused as to what those companies have to do with Kmart, then you aren’t the only one. Many analysts attribute Kmart’s demise to their lack of focus, which let their competitors swoop in and swipe their customers.
Kmart’s advertising played a huge role in their market position as well. When you think of Walmart, you think of ads showing families saving money. Target gets you thinking of a Broadway-style musical about polo shirts. And then…there’s Kmart. Their advertisements probably get you thinking about a blue lightbulb character yammering on about their new layaway program.
Guess which store has the strongest message to deliver to customers? Not Kmart! Customers want to shop somewhere where they feel a connection. When they really need to get their finances in line, they’ll shop at Walmart. When they want to go somewhere for designer-looking, but still affordable home accessories, they’ll head to Target. Why do customers go to Kmart? Your guess is as good as mine.
Analysts and economists may have seen the recent global recession coming, but to consumers it was like the rug was pulled out from underneath them. They saw their 401(K) and the stock market plunge and they clutched their pocketbooks tightly to their chests. Because of this, many consumers started to trek over to the local dollar store for their weekly grocery shopping. Dollar General saw a strong 10.5% increase in sales from 2009 to 2010 as a result of customers’ more careful spending. Hindsight is 20/20, as we know, but Kmart should have taken a more aggressive approach to wooing customers in order to prevent competition from dollar-store chains – someone they probably didn’t think would be a competitor.
Unfortunately, Kmart’s damage has already been done. Sears Holdings announced they have plans to close between 100 to 120 Kmart and Sears stores, since sales at both chains have steadily declined. At Kmart, their same-store store sales dropped 2.7% in the fourth quarter of 2011 (which ended January 28th), which brought them down 1.4% for the full fiscal year. Not exactly a good sign! However, with their remaining stores, they could (and should) focus on the customers that could maybe bring them back. For example, their locations are found primarily in urban environments where low-income Hispanic consumers are the main market of customers. Why not give them a reason to choose Kmart over competitors?
Did Kmart do anything to prevent it?
In their defense, they haven’t just been idly sitting by, waiting for things to turn around. Kmart has tried a few things, including partnering with Univision (a Spanish-language television network here in the United States) by creating a game show that’s actually set in a Kmart store. If you ever watched ‘Supermarket Sweep’ in the 1990s, then you know the premise of this game because it seems to be the same thing. Last year, they also featured a collection from popular Colombian actress Sofia Vergara (Gloria from ABC’s Modern Family) and have had her appear in both general-market and Spanish-language ads to promote her collection and the store itself.
Baby steps for sure, but steps nonetheless.
How can I keep this from happening to my company?
You’ve heard the back story of what Kmart did wrong and how they’re trying to get out of the rut they’re in, so now how do you prevent this same problem from plaguing you? Don’t overthink it; it’s actually a lot easier than you’d assume.
1. Be aware of trends. You don’t have to jump on every single trend, because some may turn out to be fads that no one remembers in two months. However, if a trend seems to have some staying power (or if your customers have asked you why you haven’t backed the trend yet), then by all means, have at it. Remember, social media was thought to be just a fad too, until people realized how easy it was to create further engagement with customers.
2. Develop a strong brand personality. Walmart has the market cornered on rock-bottom prices and Target has a wide product offering available of just about everything, but what does Kmart have? Be sure that customers are aware of what your brand offers them, all year long. While it’s important to advertise sales individually, they aren’t the only piece to the puzzle. Know what you stand for and what you do, and make sure consumers know it too!
3. Always look at what your competitors are doing. If you’ve been in business for any length of time, chances are you know who your competitors are. Don’t just look at them though – look at all potential competition as well. In Kmart’s case, they should have known that dollar stores would eventually become a competitor when the economy sunk. Think about where your customers would shop if your store wasn’t around. Why would they shop there? What could you do to make sure they keep shopping with you?
4. Don’t lose focus. This seems like basic Business 101 information, but I guess Kmart missed that day in school. You must run a diverse company in order to reach the greatest number of customer markets, but don’t lose sight of what first got you success.
I’m not a retail analyst by any stretch of the imagination, but I don’t see Kmart being around in the next five to ten years. But, I welcome being proved wrong. What do you think? Do you think they’ll be around? When was the last time you shopped at a Kmart? Leave a comment below!
Amy Swanson is part of the content department at Quality Logo Products. When she’s not writing killer content for giveaway items like promotional pens, she’s blogging about business inspiration. She is a marketing nerd and TV enthusiast who cites Parks and Recreation as one of her favorites. But don’t ask her to put in a good word with Ron Swanson – she unfortunately can’t help you there.