02/22/02 - Not-So-Special K
Know what the "K" in Kmart stands for? Well, it might soon stand for kaput.
Shortly after the previous installment was posted detailing Kmart's blue light blues, warnings from Wall Street and its suppliers indicated the retailer's decade long flirtation with bankruptcy would finally be consummated.
And today it was.
Kmart dodged this bullet in the mid-90s by closing more than 200 stores and unloading acquisitions picked up during an 80's empire-building spree.
Though these businesses were retailers, they were unrelated ones like Office Max, Walden Book Company, Builders Square, PayLess Drug Stores Northwest, PACE Membership Warehouse, the Borders bookstore chain and the Sports Authority.
Having obviously lost its focus, it's not surprising that by 1990 Wal-Mart passed Kmart as the largest retailing company. Today, Kmart's fallen to third behind Target.
It's interesting to note that the top three retailers all got their start in 1962. By the way, the "K" in Kmart comes from S.S. Kresge, its five-and-dime parent company founded in 1899.
So what's the point of this history lesson? Well, the current incarnations of the top three retailers all left the starting line at the same time.
Target steered in the direction of cheap chic. Wal-Mart followed the route of low prices. And Kmart lost control of its identity, crashed and burned (through billions).
During the past year, Kmart has been pathetically weaving between its two rivals.
After a brief, failed attempt to revive its famous Blue Light Special in the spring of 2001, Kmart slashed prices on 35,000 items and launched a campaign that clearly copied Wal-Mart's long running yellow smiley face spots.
In it, little blue lights instead of smiley faces danced around a store lowering prices. It also did a twist on Wal-Mart's tagline "Always low prices. Always" with "Bluelights Always."
Rather than sue, Wal-Mart just dropped their prices even lower and blew the Bluelight Boys out of the water.
Target, however did take legal action against Kmart's "Dare To Compare" ads which stacked the deck with inaccurate prices. Then, Target kicked off 2002 with a shift to a low-price message that wasn't just hype like Kmart's.
Strangely enough, the only shred of identity Kmart has left comes through its association with a living, breathing brand--Martha Stewart.
What's more, over $1 billion in sales comes from her linens, kitchenware and decorative accessories.