2. ￭ Founded in 1952
￭ Third largest discount store
￭ In 2013 it had operated 1,221 stores in 49
states in U.S.A
￭ Kmart became known for its “Blue Light
Specials”
￭ Headquarter is located in Hoffman Estates,
Illinois in Chicagoland.
￭ Started off with the name S.H. Kresge that
was founded by Sebastian Spering Kresge and
John McCrory.
4. K-Mart’s Blue Light Specials
Surprise moments when a store worker would light up a mobile police
light and offer a discount in a specific department of the store, while
announcing the discounted special over the store's public address system.
At the height of Kmart's popularity,
“Attention Kmart shoppers”
6. STRENGTHS
Clothing lines
• Exclusive Joe Boxer product line
• Route 66
• Carry a variety of products at a low cost
Martha Stewarts products
• Home Goods
• Able to get a large multi-cultural consumer
group
• Offered lay away plan for people who need
to pay on installments
SWOT Analysis of K-Mart
Store Locations
• Urban areas
• Stores located in easily accessible
areas
• Market in the Urban areas effectively
7. OPPORTUNITIES
SWOT Analysis of K-Mart
Re-position store
• Adopt Urban Strategy
• Integrate Supply Chain
Management
• Sell to Carrefour (Paris based
retailer)
• Need to change the negative image of
K-Mart
• Improve the product line carried to
keep the middle class
• Design the store to be more organized
and attractive
8. WEAKNESSES
• Low marketing budget
• Many low profit suburban stores.
• Ineffective Supply Chain
Management
• Negative publicity
• Marketed the suburbs like the
urban areas
• Did not change the image of the
company as the demands of the
consumers changed
• Did not offer variety that appealed to
the middle class
SWOT Analysis of K-Mart
9. SWOT ANALYSIS - THREAT
!
THREATS
SWOT Analysis of K-Mart
• Wal-Mart and Target
• Increasing Market Share
• Having to liquidate company
• Suppliers raising prices
• Profits declining
• Martha Stewart getting bad press
• Urban areas are becoming more
suburban like
• Youth’s rejects K-Marts Urban
strategy
10. K-Mart
◎ K-Mart opened 1899
◎ In 2012, 980 outlets
◎ Market share 16%
◎ In 1994 $36 billion in
sales
◎ In 2014 $17 billion
sales
K-Mart vs. Wall-Mart
Wall-Mart
◎ Wal-mart opened
1962
◎ In 2012, 11,200
outlets
◎ Market share 38%
◎ In 1994, sales $28
billion
◎ In 2014 sales $ 52
billion
11. 3. Improving IT
Supply Chain Management2. Implementing CRM Strategy
1. Leveraging Urban
Minority Market Strengths
Marketing key for K-Mart
12. Leveraging Urban Minority Market Strengths
￭ Kmart strongest locations are it’s urban clusters (away from Target
and Wal-Mart) where Kmart is uniquely popular among (multicultural
population) African Americans and Hispanic customers
￭ Multicultural consumers represent 39% of the nearly 30 million
people who shop at Kmart each week.
￭ African Americans and Hispanics alone account for 32% of
Kmart's shoppers.
13. Kmart Market Profile by Race
32%
7%
61%
African American
and Hispanic
Consumers
Other Muliticultural
Consumers
Majority
Consumers
14. Urban Minority Strategy Recommendation
￭Kmart develop niche marketing strategy to concentrate on Urban and
Minority Gen X and Gen Y Market
￭Make Kmart the “hottest place to shop” & “trendy” place to shop
￭Eventually strategy will penetrate Suburbia
￭Partner with rap/music artist and professional sport players to endorse and
promote shopping at Kmart
￭By capturing the urban market you can capture the mainstream market
17. K-Mart CRM
How can CRM help K-Mart
￭ Refine the Customer Focus (Positioning)
￭ Create value for the Customer
￭ Enhanced Automated Checkout
￭ Personal Online Shopping (EchoMail)
￭ Re-Focus the Retailer approach
￭ Targeted Incentives vs. Visible Incentives
18. K-Mart CRM-Recommendations
￭ K-Mart should recognize the importance of creating unique ways to
delight the customers
￭ Targeted Incentives vs. Visible Incentives
￭ Effective ways to personalize Online Shopping.
￭ Identify every non-value-added cost from each element of its supply
20. K Mart – IT Incompetence
￭ Five CIOs in seven years (One step forward, another step back)
￭ Incompetence SCM technology in retail industry
￭ In 2001, $195 million write off in H/W & S/W
￭ Real time data not shared with suppliers
IT Recommendations for K-Mart
￭Involve suppliers during system development and enhancement
￭Share On-line data with suppliers
￭Engage best CIO in retail industry and sign long term contract
￭Adopt offshore model to reduce substantial IT cost
21. Porter’s Five factors model affecting K-Mart’s growth
Existing rivalry
Bargaining
power of
the
suppliers
Threats of
substitute
products
Threats of
new
entrants
Bargaining
power of
the buyers
23. Threats of substitute products
Shopping in brand name stores for a certain item, rather
than going into a huge store with everything.
Relatively low threat
Shopping online. Both Kmart and Target have an online
store.
24. Threats of potential entrants
Large capital is necessary for operating
(big workforce, chain of stores, etc.).
Difficulty of creating reliable suppliers and
distribution channels. Threat of new
entrants is rather low.
25. Bargaining power of BUYERS
Buyer power is high. Many competitors available, stores as
well as online.
For Kmart, bargaining power is high, since the Kmart
brand is going through difficulties for the last decade.
26. Bargaining power of SUPPLIERS
The companies rely on suppliers to deliver quality
products. But both companies sell nationwide and offer
store locations in prime shopping locations. Suppliers are
abundant.
The power of the suppliers in the industry is fair.
Kmart’s supplier power will be higher because of payment
problems in the relatively near past.
28. Diversity of Products
• Operate on a nationwide level and reaching customers with products that appeal to different
needs.
• Inventory management and trend predicting is constantly being upgraded
• The large scale of products has allowed the companies’ to contract a wide range of suppliers,
giving high bargaining power, creating stable, trustful relationships with long term
contracts, and a holdup advantage.
• It is utilizing technology and implementing it into its information systems, to control inventory
stock, checkout systems, etc. One of its strength is its ability to anticipate the demands of the
customers ahead of time. Target is exploiting and maximizing fully its’ competitive advantage
and continue to show growing sales.
29. Quality in Retail Discount
Private information- K-Mart is doing an excellent job with technology and improving the inventory
system, as well as analyzing their clients preferences
Switching costs, the quality products at low prices policy makes it difficult for competitors to
compete..
