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Feb 01

What Happened to Kmart?

Photo Credit: Robertstinnett (Flickr.com)

The other day, I stopped in a Kmart store to pick up a couple of basic items. I hadn’t been in a Kmart in a long time, and it was an eye-opening experience for me.

Growing up in the 1980s, it seemed like Kmart was “the store” for big box shopping. At the time, I remember Kmart being a little classier than Walmart, and I remember phrases like “Blue Light Special” and “Attention Kmart Shoppers” being part of the popular culture lexicon.

But something changed in the 1990s. Kmart went from being a big name to a disreputable brand. Whereas you once saw Kmart stores everywhere in suburban areas, many began closing down. In the meantime, Walmart was really ramping up and going crazy with new stores and Supercenters. Target also began its own rapid expansion phase. In the meantime, Kmart struggled not only to hold on to customers, but to define itself in the marketplace. Eventually, it purchased Sears, another struggling retailer whose glory days were well behind it, and combined company has been on seeming life support ever since.

The Kmart I walked in to the other day definitely gave me some insight into why this chain is barely breathing. First of all, the place was empty. And I’m not just talking about the lack of customers — there were empty shelves, empty displays, and empty service counters. The only section that seemed to be remotely well-stocked was the clothing area, and even there, the items seemed to be spread out to cover the thinness of stock.

I was amazed at the amount of merchandise on clearance — clearly, surplus from the holidays, still unsold. Some items were drastically marked down despite being worthwhile. For example, I picked a copy of the PSP game LittleBigPlanet (a brand new game still priced $39.99 everywhere else) for a mere $10. The toy section was almost overflowing with markdowns and clearance items.

What’s interesting about the Kmart story is that it’s one of those retailers that really got hammered by not keeping up on the appearance of its stores or the technology of its supply chain. Walmart became dominant player in the big box discount stores because its supply chain practices allowed it to deliver better prices. Target became the second largest discount store because it improved the appearance of its stores and developed a marketing strategy that was geared towards women. Kmart continued to try to serve the segment of middle American that wasn’t shopping at Walmart… and it absolutely got killed as a result of it.

There’s a great book out there called The Innovator’s Dilemma which argues that the reason companies like Kmart and Sears faded is due to their unwillingness to invest in future technology, sticking to the status quo instead of preparing for the changes that the 1980s and 90s would bring. The disruptive technologies of supply chain management and advances in in-store marketing really made Kmart obsolete before it realized what was happening. The sad state Kmart is in today is a testament to how cruel the passage of time can be to businesses — if you don’t prepare for the future, you’re destined to become a shadow of the past.

3 comments

  1. Frankie

    Kmart began to decline in the 1990’s. Vero Beach, Florida had a Kmart that was dirty, lacking stock, and the clerks did not take time out from talking to each other to check you out. A few months later Walmart opened. Kmart soon closed. Soon most of them closed. Why is anybody surprised?

  2. Eddie

    So when is K-Mart/Sears going to be taken off of life support? Does anybody know?

  3. Manuel

    My wife and I used to shop at K Mart in the past. Last year we went to the K Mart in Burbank, CA. It was depressing, unorganized, and dirty.

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