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Maverick's Morning Thoughts

How I Would Revitalize Kmart - Part 1

Maverick Steffen  -  1/9/2024

Just to set the record straight: I have no ties with Kmart; they've never reached out for my counsel, and honestly, I'm not even sure I'd be the right person to turn things around for them.

But last night, I had this unsettling dream about them.

In it, Kmart's higher-ups called me into a meeting at a store. But this place was nothing like a regular Kmart. It was more like a dilapidated warehouse, complete with torn boxes and crumbling walls, while executives scurried about in utter chaos.

As I was ushered into this meeting, amidst the constant coming and going of people, they posed a question that's been gnawing at me since. It kept me tossing and turning all night, and it's still on my mind:

How could I bring back Kmart's glory days in the retail world?

I suppose the bigger question is: what is the future of retail?

Today, buying things seem so simple: I click a button, and a package arrives the next day. If I don't like it, I drop it off somewhere (sometimes I don't have to), and the money is instantly credited to my account.

Why would I go out? Why waste my time or gas? If I do go out, why not go to Walmart, or Target as they are a few minutes away.

I believe there are 11 Kmart's left out of the thousands that once existed, and I have a sneaking suspicion these locations don't have much physical competition.

Actually, let's backup and go over a brief history of Kmart.

Kmart was once a leading American big box department store chain. It all began in 1899 as S.S. Kresge Corporation, which was a five-and-dime store in Detroit. It quickly expanded, rebranding as Kmart Corporation in 1977. Throughout the 1960s to 1990s, Kmart was a retail powerhouse, known for its blue light specials and wide range of affordable products, from clothing to home goods. It was a major player to the point where Sam Walton (according to his book) would interrogate their employees, scavenge through their dumpster and crawl around their displays to fully understand their business model.

However, by the late 1990s, Kmart started to struggle.

It faced intense competition from more efficient rivals like Walmart and Target, who had innovated better supply chain management and had a much clearer brand identity.

Kmart's failure to adapt to the evolving retail landscape, including the rise of e-commerce, led to its decline.

It's important to acknowledge that retail is far from extinct. For example, despite the ubiquity of online information, traditional media like newspapers still find their audience. After all, Walmart's sales at actual store locations makes up 87% of their overall revenue.

This culminated in a bankruptcy filing in 2002, making it the largest retailer in U.S. history to take such a step at the time. Post-bankruptcy, Kmart acquired Sears in 2005, forming Sears Holdings, but this did little to reverse its fortunes.

Today, Kmart's presence has significantly diminished.

From thousands of stores at its peak, it now operates a mere handful of locations, overshadowed by more successful competitors and online retailers. The brand, once synonymous with affordable shopping for American families, is now often cited as a case study in failing to adapt to changing market dynamics and consumer preferences.

Before we send Kmart to the woodshed, let's remember Al Reis' 22 Immutable Laws of Branding: every brand possesses the potential to evolve or die.

A business, in essence, is its brand – dynamic and malleable. It's not a place or a website, it's an identity with its own personality. That personality can be boring, or unique.

Take Marlboro as a prime example. Initially the brand targeted women, it pivoted dramatically to a masculine cowboy image, redefining its audience and brand perception.

If a brand fails to evolve swiftly and appropriately, it fails.

Radio Shack is the perfect example.

Their Super Bowl ad, which embraced nostalgia by highlighting past technological achievements and featuring bygone-era celebrities, inadvertently cementing their image as a relic in the fast-paced tech world.

Aligning their technological brand with notions of the past, even in jest, was a stupid strategy that accelerated their decline.

So now we know: the Kmart brand must change.

But to what? Obviously the future of retail.

And what is the future of retail? I'm reminded of how Howard Schultz traveled to Italy to swipe their unique drinks and bring them back to America, increase the price, and sell them at his newly acquired Starbucks.

So, is the answer overseas?

Japanese department stores like Tokyu Hands and Isetan seem to be an exciting examples of retail locations. These places are not just stores; they're experiential hubs where shopping blends with culture, art, and entertainment. They often host workshops, art exhibitions, and have sections dedicated to local crafts and gourmet foods.

However, the consumer markets in America and Japan are distinctly different. Additionally, with platforms like YouTube, people can easily enjoy local music, learn new crafts, or access expert advice from the comfort of their homes.

It's important to acknowledge that retail is far from extinct. For example, despite the ubiquity of online information, traditional media like newspapers still find their audience--me, for example.

Also, Walmart's sales at actual store locations makes up 87% of their overall revenue.

If the legendary business leader Jack Welch were here today, he would likely steer Kmart toward sectors where they could dominate as the market leader. This wouldn’t be in the realms of online presence, low pricing, or wide product ranges, given the competitive nature of these areas and the scale efficiencies Kmart's competitors snuck up from behind and stole from them.

At least now we've determined a few things:

  • The brand of Kmart MUST change, or die (like Marlboro)
  • They are currently throwing money into "red oceans," where they can't compete, can't be unique, and cannot grow
  • We must determine what is the future of retail, and how do we get there quickly

During my time working with Ron Rubin at PREIT, a key holder of numerous malls across Pennsylvania, our central challenge was consistently focused on one critical question: What strategies can we implement to effectively attract more visitors to the malls?

Let's explore this more in Part 2.

To your success!


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