Kmart - What went wrong? :: essays research papers

Kmarts main weakness was that it had an aspiration to be all things to all people its dabblings in drug stores, home improvement stores, bookstores, cafeterias and specialty stores in the eighties and early 1990s seemed to spread the company very thin. This focus on diversification is just one example of how the retailer has often non make the wisest choices when faced with a tight spot. By the 1980s, just before the rise of Wal-Mart, Kmart had become complacent. It believed it would be the king of discount retailing, now and forever. It didnt perform an accurate nerd analysis, but to be fair, who could have seen the rise of Wal-Mart to the position of the worlds number-one retailer? Still, as Wal-Mart built new stores in town after town, supported by merciless pricing and solid logistics, Kmarts complacency would cost them. Part of the problem was that as Wal-Mart was pouring money into information technology (IT), Kmarts IT budget continued to shrink not just once, but severa l years in a row. While Wal-Marts logistics and supply chain management got sharper, Kmarts stagnated. And while Wal-Mart was able to squeeze more assess out of its stores and its systems, Kmart lost ground. By the time Kmart had finally decided to start devoting more resources to IT, it was so far behind Wal-Mart that catching up would have been a near-impossible task without the recession in the early part of this decade. With the effects of the recession taken into account, Kmart instead was consigned to also-ran status among discount retailers.Another problem was that Kmart did not correctly anticipate customer needs. For instance, lets say that Kmart buys a new style of shirt and stocks it in pink, yellow, green and blue. Further, lets say that the blue shirts sell out forthwith the store is left with inventory of the three other colors. Yet Kmart doesnt reorder the blue ones because 75 percent of its inventory is still unsold its still got heap of that style of shirt to se ll. Wal-Mart, meanwhile, would order a new shipment of blue shirts. Their model takes the customer into account, not the inventory Wal-Mart understands that its the color the customers want, not the style (in this case, anyway). genius of Kmarts biggest marketing miscues was the use of newspaper as its primary ad medium. Until about the 1980s, Kmarts primary form of advertising was flashy, expensive sales fliers that did not generate large sales to offset their costs.