Kmart (Maybe) Makes a Comeback
An early version of an Advertising Age article online yesterday
offered a surprise for Kmart fans. According to the initial draft that went
online, Kmart saw its sales dip only two percent in the most recent quarter
while rivals Target and Wal-Mart Stores were down by a higher number. Alas,
the joy in Blue Light land was not to be enjoyed for long when a correction
was made showing Wal-Mart Stores’ performance was actually in positive territory.
Target, on the other hand, did see a bigger sales drop than Kmart.
Even though Kmart did not outdo rival Wal-Mart, there is some hope that
the chain is finally getting an idea of how to turn itself around. For one,
although year-over-year comparisons are against a pitiful base, the chain
has found ways to minimize some of the worst effects of the recession.
The chain’s layaway program offers core customers an opportunity to save
for gifts that is not available at Wal-Mart and Target locations.
The company has also sought to offer “bargains” to its shoppers without
getting into an unwinnable low price tit-for-tat with Wal-Mart. Kmart recently
reintroduced its “Blue Light” specials with unadvertised sales on select
items in stores for an hour at a time.
Mark Snyder, chief marketing officer at Kmart, is encouraged by the initial
results of the Blue Light test.
“We know it has a lot of equity, and we know that when it’s done well it’s
meaningful to the customer and has the ability to energize our associates
and store experience,” he told AdAge.com. “We got some great traction
through apparel, home electronics and a couple of other categories like sporting
goods and seasonal. [Continued testing] will tell us whether this is a great
long-term strategy for us to have in the promotional arsenal.”
Serving a less affluent demographic was the impetus behind Kmart’s decision
to resurrect layaway. It also is behind the chain’s test of the Smart Assist
program in Michigan. The program offers the unemployed a 20 percent discount
of store brands for up to six months. With unemployment at high levels across
the country, an expansion of the program could bring in large numbers of
new shoppers to Kmart stores.
“Everyone else is talking about things on sale and food and consumables,
and Kmart has all of those things,” Mr. Snyder said. “But even in a recession,
where price and value are so important, you can’t forget about the importance
of going to the marketplace with a differentiated message.”
A point of difference for Kmart has been the addition of Sears brands within
dedicated sections in its stores. The company recently converted a garden
center at a store in Alabama to offer the first full-line major appliance
department in one of the mass merchant’s stores.
One area where Kmart has yet to gain traction is in apparel. The company
now has several hundred designers working in its studios and has plans to
run a major print campaign this fall in Vogue, Glamour and Lucky.
“[We’re] building credibility around quality and trend-forward style while
we have the opportunity with a very willing audience,” Mr. Snyder told AdAge.com.
Discussion Questions: Has Kmart hit on a strategy that will enable it to
succeed in the competition for consumer dollars? Where do you see strengths
or weaknesses that it can build on or address to strengthen itself going