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, especially when it comes to seeing the true marketing lesson? We don’t have a dog in the fight or any care or reason not to give our unqualified honest opinion about what someone else “shoulda, woulda, coulda” done.
photo credit BigDaddyAsh via flickr
What exactly went wrong with Kmart?
Whether you see it as good news or bad news, several decisions 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 need to get their finances in line, they’ll buy 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 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 primary 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 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 favorite Colombian actress Sofia Vergara (Gloria from ABC’s Modern Family) and 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.
Marketing Lesson: 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 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 an extensive 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 weren’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 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!
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Looking back, it’s funny to think Wal-Mart took flight the way it did, while K-Mart remained grounded, and ultimately, defunct (albeit adopted by Sears). The “blue light special” remains iconic, and the focus on competitive pricing earned them attention, but ultimately it was the store environment – and stigma that came along with it – that kept me from the store. Less is more, I’d say, in the end. Keep it big, keep it open, keep it stocked, and keep it clean. People don’t need a whole heck of a lot from a store, but give them that much, and they’ll remain good customers. K-Mart never could quite get it right, poor company it was.
I couldn’t agree more with your comment, “Less is more, I’d say, in the end. Keep it big, keep it open, keep it stocked, and keep it clean.” That’s exactly what I look for in a store, and I have never stepped into a Kmart that followed this same logic. It’s unfortunate, but like Bret said below about Kmart staying in business, “the ONLY stores that will remain open, if any, will be the ones in extremely rural areas where the only store for miles and miles IS the local KMART.” Couldn’t agree more with the both of you.
Thanks so much for stopping by and leaving a comment, Eric! I really appreciate it 🙂
I’m honestly surprised that KMART has lasted as long as they have. I have a feeling that the ONLY stores that will remain open, if any, will be the ones in extremely rural areas where the only store for miles and miles IS the local KMART. Even then I question whether or not those stores should be purchased or sold to individuals or follow a business model closer to that of Farm & Fleet.
I VIVIDLY recall the last time I visited a K-MART. It was the one in Naperville, IL just off of Ogden Ave. It looked like a tornado just blew through the entire store prior to my arrival. The shelves were not stocked, organized, and the store was super dirty. The moment you walked in you wanted to leave. The store smelled of death.
It’s one thing for the store to look like all hell, but their employees apparently didn’t want to “out due” their surroundings so they too were a mess. Looking for candidates for your next before and after info commercial? – just visit the Naperville KMART – it and its employees are a disaster.
I finally made my way to the back of the store to locate the product that I was in need of purchasing (and had I not needed it so desperately; I would have ran for the hills instead of navigating this swamp of a store!). It then became apparent to me, NO ONE had visited this part of the store in ages as the product on the shelf had about a quarter inch of dust on top of it.
Ok I said… I REALLY need this product (a space heater), so I blew off the dust, loaded it into my (broken) cart, and made a mad dash to checkout. No one was behind the counter ringing people up when I arrived but there were three female employees talking near bye about the BIG plans they had scheduled for the night (I can only hope that their plans involved taking a SHOWER beforehand!). They all sat there chewing their gum and twirling their hair while my wife and I waited next to the register to checkout. Finally, my wife grew impatient and approached the group of KMART employees asking them if anyone was working the register.
One snarkly replied “We be on break!”. She then proceeded to page all available associates to checkout. After about 5 minutes, and upon the line growing about 10 customers deep, a person emerged to start ringing up customers.
Needless to say, what would have taken me only 2 minutes at my local area Target store took me almost 30 minutes at KMART. This poor execution is the LEAST of their worries though. It’s going to take a lot more than Febreeze to get the smell of rot and death out of that store!
Oh man that’s quite a horrific story, Bret! I’ve never been to that location, there’s one in Montgomery, IL that’s just as bad though. I went there when I was in middle school for school supplies and all I remember was the horrible lighting. It wasn’t your typical bad florescent lighting, it was a million times worse. It was like they had yellow light bulbs (half of which didn’t work) on in the entire store, I left with such a headache! I have no plans on ever entering this Kmart again, and it’s going to a lot for me to ever enter another one.
Target and Walmart (in my opinion) shouldn’t be worrying about Kmart taking away any of their customers. Not by a long shot. Thanks so much for leaving your story, Bret!
Bret that seriously sounds awful! Working in retail for 5 years, I know crap like that never would slide at Menards.
And I agree. I havnt been in a kmart in years, but any time I had gone in there i was just always so grossed out. It was never clean, never smelled good, and like you said, the employees weren’t exactly eye candy either.
anyway, Amy you did awesome on this post!! You always cover topics perfectly!! keep it up!
Thanks for stopping by and leaving a comment, Jaimie! I think Kmart has their hole (or in this case, their grave) dug and now it’s only a matter of time before they close up shop for good. Time will tell.
I have fond memories of browsing the Electronics aisle of my local K-Mart store as a kid. My mom used to bring me along during shopping trips. If there was ever a chain store in recent years that I would have wanted to see age more gracefully, it would be K-Mart.
I’ll probably never set foot in a K-Mart store again, but strangely I can’t bring myself to feel bad about it. As you mentioned, there are a number of things they could have done differently over the years to retain their standing as a go-to retail destination. Sadly, they did (close to) nothing, and now they’re all but forgotten. They could have tried to stay current. They could have tried to stay competitive. They could have tried harder. Period.
Can they bring themselves back from the brink? Probably not. There’s no catching up to the likes of Target and Wal-Mart at this point. Seems like K-Mart will end up being more of a cautionary lesson than anything else. Hopefully the other retail giants take note. In a way, it’s a good thing for the consumer, as Target and Wal-Mart can now learn from K-Mart’s mistakes and avoid sharing the same fate.
Excellent stuff, Amy! Very thought-provoking.
Thank you so much, Joe! You hit the nail on the head with recognizing that Kmart could have done a lot of things, but yet they did nothing. I have a feeling that they’ll become a store that we remember, but our kids will have never heard of.
Target and Walmart are both expanding at an incredible rate, that I really doubt there’s a town in America that doesn’t have a Kmart and a Target or Walmart too. They will be a cautionary tale and a case study for future generations for sure. Excellent points, Joe! Thank you!
Honestly, I don’t even like going into a Kmart. There’s one by my house (surprisingly close to a Target AND Walmart), and I shopped there once…. never again. We bought a gazebo – no small purchase – and they had to get it out of the back room. That simple task took them well over an hour, and there was pretty much no one else in the store! And the place just felt…. dirty, like you were saying. Me no likey. Me no go back.
“And the place just felt… dirty”. I hear that, Jeff! I don’t know what management was telling store employees when things started going downhill, but it must have been, “stop cleaning!” The last one I was in just felt and looked tired. Time to put Kmart out of its misery!
Thanks for the comment, Jeff 🙂
Yeah, the only time that I go to Kmart is to grab some cheap candy before I hit up the second-run movie theater. Otherwise I just don’t go. When I need to do some serious shopping, I head to Meijer or Target. These stores are customer-friendly, clean, and always have what I need.
I can’t say I’ll be sad to see Kmart go. It might just be its time.
I completely agree, Mandy! I read Kmart’s Sunday fliers in the newspaper each week, but I never there and really have no plans to ever do so again. I think it is it’s time. Long live Meijer and Target! 😉
What a great post Amy! I remember shopping at Kmart all the time with my parents as a kid. As I got older the stores became more and more run down, like they didn’t keep up on the maintenance at all over the the years! Eventually the store closest to my home town closed its door for about 10 years. It’s open again, but I still always forget about it. I think it’s safe to agree with you Amy, the Kmart stores will be obsolete in 5-10 years.
That’s exactly how it seems, like they were focusing on everything else but basic maintenance! That’s bizarre that the one by you closed and then a decade later re-opened. I’ve never heard of stores doing that, after that length of time at least. Very interesting.
Thanks for stopping by, Jen!
Well there was a lack of focus & other thing is that they couldn’t establish their brand image compared to other stores.
I think my favorite factor to avoid the same doom as K-Mart is number 2. Develop a strong brand personality. I want people to know who and what I am and where I am going. This way they can jump right on board with me.
As for many people, I am sure Kmart is a child hood memory. I remember my mom taking us shopping there for clothes and I also remember that they had much better deals back then and prices were lower but again competition wasn’t as big back then either at least here in Phoenix. During this recession, I have been shopping at Kmart more than ever and its for one reason: Layaway plus their Shop Your Way Rewards program is a decent rewards program. The prices are still higher than Walmart but not by much but it is noticeable.
However, I do find the quality of clothes to be better than Walmarts. As far as electronics, for the most part, they have some of the same as others just not a big of selection.
Despite, the slightly higher prices I still find more value with Kmart because again their layaway program ( not limited or seasonal like Walmart ) and Shop Your Way Rewards program can not be beat and I will be using Kmart layaway for my Christmas shopping this year. Plus, as my four year old son continues to grow and eventually go to kindergarden next year I will continue to utilize layaway for his clothes since he’s not at the age to care about designer clothes etc.
Finally, the stores are old and dingy but what are you going to do ?
Eric I consider you correct to state that Kmart is a childhood memory for many people,having mentioned that, the chain does remind me of my childhood because I recall frequenting the Kmart in my birthplace/former hometown (Bathurst,New Brunswick,Canada) when I was at least 4 in a half /and or 5 years old. I have to agree that Kmart stores I’ve recently visited don’t appear to have been updated or upgraded lately but in my opinion the only advantage to Kmart stores having that “old” feeling is that they personally “take me back” (what I mean by that is that I feel I’ve returned to my childhood) even though I’m referring to Kmart stores in the U.S. (unfortunately Kmart is entirely defunct in Canada.) But in all seriousness if Kmart wants to stay afloat so to speak they should somehow tackle the “root” of the problem,after all it’s bad enough like I stated earlier that Kmart Canada is entirely defunct (been that way since 1998 I believe) so therefore I personally don’t want to see the entire Kmart U.S.A. chain in the same “boat” as their former Canadian counterpart.
It’s always cool when our blog posts get referenced on other sites. This one made an appearance at Ragan.com “Kmart’s ‘Ship My Pants’ ad: Genius or epic fail?”. Check it out!
Hi Amy,
this article is great. I find it very informative, and like that you told us what really went wrong with K-Mart and why they went downhill. Thanks for sharing this information,
Andrew
What I simply don’t understand is why Kmart has not done more to prevent this from happening or to change things around. They know they are at the bottom of the totem pole when it comes to Targets and Walmarts. And everyone else knows it too. So, why have they not found a way to change their image?
Great article, I think you definitely identified several of Kmart’s big business mistakes. They really didn’t have a main focus, and their marketing team certainly left something to be desired. You are right to identify Walmart and Target’s target audiences, but Kmart’s was always fuzzy. On top of those things, my experience with Kmart was that it was always Walmart’s less clean younger brother. Nothing ever drew me there. You really can learn from Kmart’s mistakes and hopefully avoid them for your own business and ventures. Thanks for sharing!
Glad it was useful Dannie!