The store that Kresge built has evolved into an empire. When Kresge opened his first store in , he sold everything for 5 and 10 cents. War and financial depressions hit America hard over the next decades, but Kresge stores were always there to offer families products at prices they could afford.
They also offered people what other businesses at the time could not -- jobs to support their families. As time went on, prices may have changed, but the business philosophy stayed the same -- offer consumers products they need at prices they can afford -- and they'll keep coming back. By the mids, the S. These ''green-front'' stores often were right next to the traditional red-front five-and-dime Kresge stores. Ten years later in , Kresge opened a store in the country's first suburban shopping center -- Country Club Plaza in Kansas City, Missouri.
The retail environment was getting more competitive, and again Kresge blazed the trail for future retailers by launching a newspaper advertising program to entice shoppers to its stores.
Those print ads were the precursor to radio promotions, which followed 20 years later, and then TV commercials, which began to air in By the s, it was evident that the company needed to change to continue to be a leader in the growing competitive retail environment. That change came through Harry B.
In our study, we benchmark Kmart with its main rivals using our methodological proposal that combines Frontier analysis with index number theory. Frontier analysis evaluates the performance of decision making units i. Index numbers have been used since the eighteenth century to measure economic performance at the national level.
Index numbers aggregates price and quantities data in a way that conveys information about the current economic situation. Our study shows how companies can use accounting data, beyond the traditional financial ratios, to identify the economic drivers behind the change in profits.
There are five economic drivers used by companies to generate and capture value for the shareholders:. Despite all their efforts, some of them temporarily successful, the company collapse and file for bankruptcy in The emerging company merged with Sears, another retailer, in and renamed the entity as Sears Holding Corporation.
Kmart case has brought to the news recently as the holding filed for bankruptcy in An Oregon-based chain of drugstores called PayLess joined the growing lineup in There was another change in this one in Kmart strategy when apparel division president Joseph Antonini launched a new line of clothes named for and designed by actress Jaclyn Smith that helped turn apparel into the company's fastest-growing business. By the time he succeeded to the company chairmanship in , Antonini's strategy had added racing driver Mario Andretti to the list for automotive accessories promotions, Fuzzy Zoeller for golf products, and domestic doyenne Martha Stewart for kitchen and housewares support.
Other factors in year-end figures were the sale of all U. New ventures in included a partnership with Bruno's Inc. The company changed its logo from red and turquoise to red and white, with "mart" written within the larger "K" in Kmart also began a long overdue six-year overhaul of its stores including openings, closings, enlargements, and refurbishings to help shore up its image.
By this time, Wal-Mart had emerged as a credible threat and overtook Kmart in sales and market share in The following year, Kmart opened the first Super Kmart Center in Medina, Ohio, combining a full-service grocery store with the Kmart general merchandise selection and opening 24 hours a day, seven days a week.
Still believing diversification was a good investment, the company purchased a By Kmart was still in an acquisition mode, buying 13 stores in the Czech Republic and Slovakia's Maj department store chain; Borders book superstores as a complement to Waldenbooks; and Intelligent Electronic's Bizmart chain.
Realizing that Kmart's future lay in its core retail business, the company began shedding noncore assets and sprucing up its stores. In came the spinoff of OfficeMax and the Sports Authority keeping a quarter interest in the former and 30 percent of the latter ; the sale of PayLess Drug Stores retaining 46 percent interest and its 22 percent interest in Coles Myer Ltd. More serious than ever in its reorganization, Kmart's newest journey began with the appointment of Floyd Hall, former chairman of Target stores, as president, CEO, and chairman of the board in June Next came the spinoff of the Borders Group Borders and Waldenbooks' combined corporate name , the sale of its remaining interest in OfficeMax and the Sports Authority, and the divestment of auto service centers to the Penske Corp.
With widespread rumors of bankruptcy, the downgrading of its rating, and analysts predicting Kmart's demise, many wondered if the nearly year-old retailer could survive increased competition from both Wal-Mart's and Target's newer, snazzier stores. Hall set out to prove Kmart not only was not going under--but had just begun to fight.
Its new merchandising credo centered around four simple words: brands, consumables, convenience, and culture. The latter involved the introduction of the Big Kmart format, which was cleaner and brighter and featured wider aisles for easier shopping. Other key changes were the addition of a section of consumable goods conveniently located near the front of the stores and an increased emphasis on the children's and home furnishings departments. By the end of , 1, of the company's stores or 62 percent of the total had been converted to the Big Kmart format.
Another important initiative was an expansion of popular brand-name and private-label lines, particularly the launch of the Martha Stewart Everyday line of bed and bath products through a strategic alliance between Kmart and Martha Stewart Living Omnimedia L. Proving successful as well was the launch of a line of Sesame Street children's apparel and juvenile products. Also in , Kmart announced the sale of its remaining interest in Thrifty PayLess to Rite Aid, refinanced its debt load, started leasing out hundreds of its largest parking lots, and built a hip new three-story Kmart in Manhattan near Greenwich Village.
By Hall was confident enough of the company's future to announce plans to open stores over the next five years, with half of the units to be Super Kmart Centers. About new stores were opened in , the same year that Kmart ventured into e-commerce with the formation of BlueLight. Kmart also signed agreements in with Fleming Companies, Inc. Despite this string of positive developments, underlying and significant problems remained, and Hall's expansion program quickly proved to be premature.
Hall retired as chairman, president, and CEO in early Conaway moved quickly to implement major changes as Kmart's financial performance began to once again head south. The new initiatives continued in The company inked a deal with Fleming, making that firm the exclusive supplier of food and consumables for Kmarts and Super Kmarts. The Martha Stewart Everyday line was expanded even further, and an agreement was reached to develop a new and exclusive line of Disney children's clothing.
On the marketing side, Conaway brought back the Blue Light Special--which had been shelved in in an attempt to instill some excitement into the stores, and prices were permanently trimmed on 38, everyday items in a new "Blue Light Always" pricing strategy.
This last maneuver, an ill-advised attempt at beating Wal-Mart at its own game that was launched in August , proved to be a critical mistake.
Not only did Wal-Mart move quickly and ruthlessly to match or undercut the prices, but Kmart also compounded its mistake by simultaneously and drastically cutting back its distribution of expensive advertising circulars.
Customers used to the circulars simply stopped shopping at Kmart, and same-store sales fell throughout the final months of , including during the crucial holiday selling season. The declining sales resulted in a liquidity crisis and halts in shipments from major vendors, leading the company to file for Chapter 11 bankruptcy protection on January 22, , becoming the largest retailer ever to do so. Just prior to the filing, James B.
As the company attempted to emerge from bankruptcy by mid, its biggest challenge was to find a niche to occupy. Many observers were doubtful that a major discount chain could find such a niche given the strengths of the two main rivals: Wal-Mart with its rock-bottom prices and extensive grocery aisles and Target with its discount prices for slightly upscale products. In February Kmart launched a new advertising campaign featuring television commercials directed by Spike Lee and sporting a "family values" theme and the tagline "Kmart.
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