Kmart
Encyclopedia : K : KM : KMA : Kmart
- This article refers to Kmart in the United States as it existed prior to its merger with Sears, Roebuck and Company. For information following this date, see Sears Holdings Corporation. For the Australian department store chain, see Kmart Australia.
Kmart Corporation is an international chain of discount department stores in the United States, Australia, and New Zealand. Kmart merged with Sears in early 2005, creating the Sears Holdings Corporation.
The company competes on an average price level on par with Wal-Mart and Target.
History
Sebastian S. Kresge founded the S. S. Kresge Company, the predecessor of Kmart, in 1899 in Detroit, Michigan. Kresge's first retail establishment, a five-and-ten-cent store, resembled Woolworth's, a chain operated by Frank Woolworth. The store grew into a chain known as S. S. Kresge. It was incorporated in 1912, by which time it operated eighty-five stores.
In the 1920s, Kresge operated larger stores that offered a wider variety of merchandise and prices, precursors of the modern discount department store. The first Kmart store opened in 1962 in Garden City, Michigan. A total of eighteen Kmart stores opened that year. Kmart Foods, a now defunct chain of Kmart supermarkets, opened in that same decade.
Kmart became known for its "Blue Light Specials." They occurred at surprise moments when a store worker would light up a mobile police light and offer a discount in a specific department of the store. The phrase "attention Kmart shoppers" also entered into the American pop psyche. Kmart was also featured in the Oscar-winning 1988 film Rain Man, in which Tom Cruise and Dustin Hoffman both exclaim, "Kmart sucks!"
During the 1970s, Kmart put a number of competing retailers out of business. In 1977, S. S. Kresge Corporation changed its name to Kmart Corporation. In 1987, the Kmart Corporation sold its remaining Kresge stores.
Kmart opened their first Kmart Super Center in 1991 in Medina, Ohio. Kmart also opened the first Big Kmart in Chicago, Illinois on April 23, 1997. While many Kmart stores were converted to Kmart Super Centers, most were converted to Big Kmarts.
Trouble for Kmart
During the 1970s, the company's fortunes began to change; many of Kmart's stores were considered to be outdated and in decaying condition. In the late-1980s and into the 1990s, the corporate office shifted much of its focus from the Kmart stores into other companies it had acquired, such as The Sports Authority, Builder's Square and Waldenbooks.
In 1990, in an effort to change their image, Kmart introduced a new logo (dropping the old-style italic "K" with a turquoise "mart", created in the early-1970s), and renovated many stores. However, most stores were not re-modeled until the mid-1990s, some of which are not completely renovated today. This logo was replaced in 2004 with the current logo. In the early-1990s, Kmart tried to reinvent themselves by using the short lived Today's Kmart name.
The company also began to offer exclusive merchandise by Martha Stewart, Kathy Ireland and Jaclyn Smith. Other recognizable brands included Sesame Street and Disney. Rosie O'Donnell and Penny Marshall were among the company's most-recognized spokespersons.
In 1993, Kmart closed 110 stores. Unlike its competitor Wal-Mart, it failed to invest in computer technology to manage its supply chain. Furthermore, Kmart maintained a high dividend, which reduced the amount of money available for improving its stores. Many business analysts also faulted the corporation for failing to create a coherent brand image.
The original Blue Light Special had disappeared in 1991, due to changing consumer habits and misuse by individual stores (according to the company's official explanation). The company later brought back the Blue Light Special in the early-2000s, which was planned to have the manager announcing a promotion in-store every hour, on the hour, with said special lasting for twenty-five minutes. When the announcement of the special took place over the public address system, music would fill the store and all employees would stop their current actions, clap twice and pump their fists in the air, shouting "Blue Light, Blue Light!" This scheme aimed to generate more interest in Kmart from shoppers and the media, but failed because stores did not follow the procedure.
In 2001, the stock scandal involving Martha Stewart tarnished the corporation's image. In addition, Kmart attempted to compete against Wal-Mart on price by introducing the "Blue Light Always" campaign, which revamped the original blue light concept for lower prices in general. In August 2001, Target Corporation sued Kmart for false advertising; Target claimed that its "Dare to Compare" campaign routinely misstated both Kmart's and Target's prices.
Two days after the terror attacks of September 11, 2001, Kmart stopped all sales of guns and ammunition, citing their concern for the safety of their customers.
Bankruptcy
In January 22, 2002, Kmart filed for bankruptcy protection; led into the bankruptcy by its then chairman Chuck Conaway and president Mark Schwartz. Similar to the Enron scandal, Conway and Schwartz were accused of misleading shareholders and other company officials of the company's financial crisis, while they were allegedly making millions and allegedly spending the company's money on planes, houses, boats and other luxuries.
After dismissing Conaway and Schwartz, Kmart closed more than 300 stores in the United States and laid off around 34,000 workers as part of a restructuring. In May 6, 2003, Kmart officially emerged from bankruptcy protection as the Kmart Holdings Corporation and on June 10, 2003, it began trading on the NASDAQ as "KMRT". Kmart introduced five then new prototype stores with a new logo, layout and color scheme (lime green and gray) with one in White Lake, Michigan and four in Peoria, Illinois. The new layout was touted as having wider aisles, improved selection and lighting. However, Kmart could not afford a full-scale rollout. The lime green prototype was abandoned for the new Kmart "orange" concept that rolled out at 9 test stores nationwide.
Kmart was once a major presence in Canada. However, after being sold to Zellers' parent Hudson's Bay Company in the late-1990s, all Kmart stores there were either closed or converted to the Zellers brand.
Like Target stores, Kmart-branded stores in Australia belong to Coles Myer; Coles Myer also holds the rights to the Kmart brand in New Zealand.
Merger
In November 17, 2004, Kmart announced its intentions to purchase Sears, Roebuck and Company. As a part of the merger, the Kmart Holdings Corporation would change its name to Sears Holdings Corporation. The new corporation announced that it would continue to operate stores under both the Sears and Kmart brands.
Store concepts
Current
- Kmart: Discount department stores usually free-standing or located in strip malls. They carry electronics, music, movies, bedding, hardware, sporting goods, clothing, toys, jewelry, office supplies, health and beauty products, home décor, and a limited selection of food items. Many stores also have a pharmacy and snack bar. About 84,000 to 120,000 square feet (7,800 to 11,000 m²). Few traditional Kmart stores still exist, with most having been converted to the Big Kmart format.
- Big Kmart: Stores carry everything a regular Kmart carries, but with an emphasis on home decor, children's clothing, and more food items. Stores ranged in size from 84,000 to 120,000 square feet (7,800 to 11,000 m²). Big Kmart stores also feature the Garden Shop, and a K-Cafe or Little Caesars Pizza station.
- Kmart Super Center: Stores carry everything a regular Kmart carries, but has a full grocery section with meat, produce, bakery, seafood, deli, frozen foods and dairy. The Super Centers are about 140,000 to 190,000 square feet (13,000 to 18,000 m²). These stores are also known as Super Kmart and Super Kmart Center. Several also include Kmart Express gas stations. Fewer than 50 Super Ks are still open, with most having been closed during the two rounds of closures during 2002 and 2003. Some of the surviving Super Kmarts were those in regions without a strong Wal-Mart presence, including Ohio and Michigan. A typical Super Kmart sells around 30 million dollars' worth of merchandise during one fiscal year.
Former
- Kmart Foods: Kmart Foods was a grocery store chain founded in 1962. Most Kmart Foods were together with Kmart stores. The chain was discontinued in the 1970s, but reintroduced in 1991 with Kmart's launch of the Kmart Super Center concept.
- Builders Square: Builders Square was big box home improvement chain of stores owned by Kmart. It was sold to Hechinger in 1997. Hechinger closed all the Builders Square stores in 1999.
- Borders Books: Borders is a chain of book stores acquired by Kmart in 1992. In 1994, Borders merged with the Kmart chain Waldenbooks to form Borders-Walden Group and was sold off in 1995.
- OfficeMax: A chain selling office supplies and office furniture which was acquired by Kmart in 1990, and sold off in 1995.
- Waldenbooks: Waldenbooks is a chain of mall book stores which was acquired by Kmart in 1984. In 1994, Kmart chain Borders merged with Waldenbooks to form Borders-Walden Group, and was sold off in 1995.
- PACE Membership Warehouse: PACE was Kmart's wholesale club brand, until the chain was purchased by Wal-Mart, which converted all the stores into Sam's Club stores in 1993.
- PayLess Drugs: PayLess Drugs was a chain of drug stores acquired by Kmart until it was sold to TCH Corporation in 1994. The resulting entity, Thrifty PayLess was acquired by Rite Aid in 1996, which converted all of the PayLess and Thrifty stores into Rite Aid stores in 1999.
- The Sports Authority: The Sports Authority is a chain of sporting goods stores which was acquired by Kmart in 1990, and sold off in 1995.
List of CEOs
- S. S. Kresge, Founder
- Aylwin B. Lewis, President of Sears Holdings Corporation
- James Adamson
- Joseph Antonini
- Charles Conaway
- Harry Cunningham
- Julian Day
- Bernard Fauber
- Floyd Hall
See also
- Kmart Australia, operated by Coles Myer
- Sears Holdings Corporation
External links
- [Kmart Official Website (Online Store)]
- [Kmart Official Website (Corporate)]
- [Column on Kmart's demise]
- [FBI investigates Kmart (BBC)]
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