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Kmart insights

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  1. 1. K-mart: The Bleeding Giant
  2. 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.
  3. 3. USA K-Mart outlets in different parts of the world CANADA MEXICO EASTERN EUROPE
  4. 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”
  5. 5. SWOT Analysis of K-Mart S W O T
  6. 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. 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. 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. 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. 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. 11. 3. Improving IT Supply Chain Management2. Implementing CRM Strategy 1. Leveraging Urban Minority Market Strengths Marketing key for K-Mart
  12. 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. 13. Kmart Market Profile by Race 32% 7% 61% African American and Hispanic Consumers Other Muliticultural Consumers Majority Consumers
  14. 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
  15. 15. Marketing key for K-Mart 3. Improving IT Supply Chain Management 2. Implementing CRM Strategy 1. Leveraging Urban Minority Market Strengths
  16. 16. Implementing CRM Strategy ■What is CRM? Customer Relationship Management ■CRM Process Discover Assemble Deliver K-Mart CRM
  17. 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. 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
  19. 19. Marketing key for K-Mart 3. Improving IT Supply Chain Management 2. Implementing CRM Strategy 1. Leveraging Urban Minority Market Strengths
  20. 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. 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
  22. 22. Existing Rivalry K-Mart has some major competitors. Which are:
  23. 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. 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. 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. 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.
  27. 27. Distribution network Pricing Quality in Retail Discount Diversity of Products Customer service Competitive Advantage of K-Mart
  28. 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. 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..
  30. 30. Thanks! ANY QUESTIONS?