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Kmart Corporation
Revitalizing the Blue Light Special
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In 18, A Detroit businessman by the name of Sebastian Kresge opened a five and dime store under the company name S.S. Kersge Corporation. Kersge continued to expand his vision by opening and opened his first Kmart store in 16. Early in the 170's Kmart set the tempo for other discount stores by continuing to expand and eliminate other retailers in the process. However, the 10's brought new marketing ideas and lower prices with the likes of Wal-Mart and Target. The failure of Kmart to innovate and offer competitive prices eventually continued to reduce the dividends and stymied the future improvement of the existing Kmart stores. Kmart's inability to compete, combined with the stock scandal of Martha Stewart forced the company to file Chapter 11 on January , 00. However, after store closings and restructuring, Kmart is beginning to show signs of a comeback. (www.kmartcorp.com)
Kmart Corporation
Revitalizing the Blue Light Special
For the past 100 years, Kmart Corporation has been a leader in the retail business. However on January , 00, the company filed Chapter 11 bankruptcy protection. Since then, Kmart Corporation has made some tough decisions in an effort to eliminate waste and begin its recovery process. Kmart Corporation has seen through many changes in the past year such as store closings, employee layoffs and corporate philosophy to name a few. As a result of these changes, Kmart is beginning to show signs of recovery. This paper will serve as a means to answer the following questions
1.How did a company that once held the number one spot as the nation's top retailers become bankrupt?
.What changes has Kmart Corporation made in an attempt to return to financial independence?
.Do any of the changes Kmart has implemented seem to be working?
Before trying to answer these questions, it is necessary to understand the longstanding background of Kmart Corporation.
Sebastian S. Kersge originally founded Kmart Corporation in 18 in Detroit, Michigan. At that time the company was known as S.S. Kersge Corporation and wouldn't become Kmart Corporation until 177. The first store was a five and dime store that competed for business with stores such as Woolworth. S.S. Kersge Corporation continued to grow and by 11 the company operated 85 stores. Mr.Kersge realized early that he would need to reach the consumer in a different way to continue success. (www.wikipedia.org) So, he created a newspaper-advertising program to improve customer awareness and generate sales. The rest of the country would wait 0 years later before the introduction of commercials and radio advertisements. In 16, the first Kmart department store opened in Garden City, Michigan. During the 70's, Kmart continued to gain momentum and was commonly known by many for having "Blue Light Specials" during various times throughout the day. These "Blue Light Specials" would begin when an employee would announce something such as "Attention Kmart shoppers, there is a blue light special in the woman's shoe department. All women's shoes are 0 percent off for the next 15 minutes" and a blue rotating light on a portable cart would be lit in that area. As popularity with this type shopping experience increased, many of Kmart's competitors were forced out of business. Kmart realized it needed to do something to retain its position at the top of the retail market. In 15 this change arrived in the form of a man by the name of Harry B. Cunningham. Cunningham became president that same year and by 16 had opened the first Kmart discount store in Garden City, Michigan. Later that year, Cunningham would open seventeen additional Kmart stores that would generate $48 million in sales. (www.kmartcorp.com) By 166, sales from
16 Kmart and 75 Kersge stores had generated $1 billion. Kersge set yet another first for merchandising by opening 71 Kmart stores in one year, becoming the first company to launch 17 million square feet of store in one year. By 177 the company realized most of its revenue was being generated by the Kmart stores and decided to change the company name from S.S. Kersge Corporation to Kmart Corporation. By the beginning of the 10's the company saw the need for change in order to remain competitive. To achieve this, Kmart changed its previous logo and introduced a five-year plan consisting of new store openings, updating and enlarging older stores. Thus came the Super Kmart, which offered all of the benefits of a general merchandise store combined with a full service grocery store that remained open 4 hours a day.
By 1 Kmart introduced BlueLight.com as a free Internet service, which we know today as Kmart.com. (http//sanjose.bizjournals.com) However, Kmart's reign at the top has been slowly eaten away by the likes of Wal-Mart and Target stores. Some believe that Kmart's demise can be attributed to three factors Price, product and location. Prices must be appealing, products must be desirable and store locations must be desirable. (http//sanjose.bizjournals.com) Kmart's narrow focus on price cuts and their inability to create a coherent brand image, combined with the stock scandal of Martha Stewart have all contributed to the January , 00 bankruptcy filing. (www.wikipedia.com)
With the growth and strength of Wal-Mart looming overhead, Kmart has made some very important decisions in the past year. Some of the changes include
1.Closure of 84 Kmart stores that lacked the most in profits.
.The elimination of over ,000 jobs.
.A different logo. The new logo will have a large gray and lime green K with mart in white on the upper diagonal of the K.
4.Changes inside of the stores such as wider aisles, brighter lighting, brighter colors, lower shelves and different floor plans.
5.Spending over $ Billion for new software to assist with inventory control. (www.businessweek.com)
6.Managers now have the ability to stock the shelves with items that appeal to markets regionally.
7.Employees are receiving training to deal with customers and provide the best care possible.
8.A reorganization plan that would generate over $ million in stock. (http//milwaukee.bizjournals.com)
.Reorganization of the company website which includes changing the name from BlueLight.com to Kmart.com.
These changes suggest that Kmart is going to do business differently in the future. Kmart Corporation CEO James B. Adamson will be at the helm during this transition. Before Kmart, Adamson served as the chairman of Advantica Restaurant Group Inc. and CEO of Burger King. He is well known for having turned Advantica into a model of corporate diversity. (www.kmartcorp.com) CEO Adamson certainly has his work cut out for him and will no doubt draw from all of his past experiences in order to bail Kmart out of bankruptcy. His, changes are beginning to show signs of hope for the company.
On February 5, 00, Kmart filed its statement of
Reorganization. Assuming that the goals of the
Reorganization can be achieved, Kmart could expect to
emerge from Chapter 11 reorganization on or about April 0,
00. However, the company still has a long road ahead and
if they should fail Kmart does have the option to sell. One
of the many people considering the purchase of the company
if this happens is Carrefour. Carrefour is the Paris based
retailer that has found success in Europe with Hypermarket.
(www.adage.com) Only time and good sound business decisions
will determine the fate of Kmart Corporation and the Blue
Light Special.
References
1.Kmart Corporation (00) A Retailing Legend is Born.
Kmart Corporate History.
April 0, 00 http//www.kmartcorp.com
.Wikipedia, the free encyclopedia (March , 00)
Kmart Corporation.
April 0, 00 http//www.wikipedia.com
.Kmart Corporation (00) A Retailing Legend is Born.
Kmart Corporate History.
April 0, 00 http//www.kmartcorp.com
4.San Jose Business Journal (00)
American City Business Journals Inc. Retrieved 0
April 00 form http//sanantonio.bizjournals.com
5.Muller, Joann (April , 001) Kmart's Bright Idea
Business Week Online Retrieved April 0, 00
from http//www.businessweek.com
6.Memphis Business Journal (00)
Kmart seeks to block other reorganization plans.
Retrieved on April 0, 00
from (http//milwaukee.bizjournals.com)
7.Cuneo, Alice Z. (July , 00) Kmart struggles to find
effective marketing strategy. Retrieved April 0, 00
from (www.adage.com)
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