Kmart Goes Cheap Chic Route

Nov 05, 2004
George Anderson

By George Anderson

Having gone down the road of attempting to compete with Wal-Mart on price that ended with it in bankruptcy court, Kmart now appears to have set its sights on the cheap chic market staked out by Target.

According to a report in the Detroit Free Press, Kmart has upgraded its apparel offering under the direction of Lisa Schultz, the retailer’s senior vice president and chief creative officer. Ms. Schultz joined Kmart last year with a resume that included stints working at specialty apparel retailers Ralph Lauren, Calvin Klein and the Gap.

“Good taste doesn’t have to be more expensive,” Ms. Schultz told the Free Press. “You want to walk in and see a great jacket. You want to feel good about your purchase. For me, it’s about I want you to feel when you are buying Jaclyn Smith it isn’t that much different from buying a brand in a department store.”

During the Fall/Back-to-School season, Kmart focused its apparel line efforts on its exclusive Thalia Sodi Collection, Jaclyn Smith, Route 66, Athletech and Attention brands. For the Winter/Holiday season it is rolling out new designs from Attention, Jaclyn Smith and Thalia Sodi.

Kmart’s new clothing lines are making use of fabrics and styles not previously found in the retailer’s stores including leather jackets for $99.99, silk shirts for $19.99 and velvet holiday wear.

“This is not about turning Kmart into something completely different, but it is about evolving,” Ms. Schultz said. “I’d like to be first on everyone’s list. We are not going to be known as the trendiest store out there. We want to be known as a store you can trust for great stuff.”

Richard Hastings, chief retail analyst for Bernard Sands in New York, said Kmart’s apparel strategy is working.

“The apparel industry, thanks to cheap labor overseas and efficient production, they are able to source product from overseas for very little. That is part of the reason that Kmart’s gross profit margin has gone up,” he said.

Robert Passikoff, president of the Brand Keys research firm also thinks Kmart is on the right track.

“I think they are starting to do a great job with clothing, especially with Smith, who has not lost the allure. I think they are being smart for a change,” he said.

Moderator’s Comment: What is your assessment of the progress being made by Kmart?

Robert Passikoff made a good point in the Detroit Free Press article that hasn’t been discussed much.

He said Kmart’s marketing is out ahead of its apparel branding efforts but that with the new lines being introduced it would soon catch up.

If Kmart has not permanently lost shoppers because of promises broken in the past it might find that backing up its promotional words with a good product
in the store will begin to generate the kind of revenue that gets people talking about something other than its real estate.

In a separate story carried in yesterday’s Detroit News, Kmart’s new chief executive, Aylwin Lewis, said he plans to spend the next four months going to
stores, meeting customers and talking with retail industry experts to get a handle on where the retail chain needs to go.

George Anderson – Moderator

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