Anyone in the toy business lived through the seemingly endless “new format” efforts Toys R Us went through in the past decade. Some of them would have generated exactly the same description applied to the new Kmart format. Strangely, none of the “stores of the future” provided the silver bullet the chain was looking for. TRU’s issue, and Kmart’s challenge, was the sustainability of the expense and business model inherent in the new format. Wider, cleaner aisles mean more frequent stocking, more frequent cleaning, and one hopes, faster turning merchandise. More visual displays implies trained people to set them up, and more importantly, to rotate the product displayed. The additional expenses associated with the new store format can be modeled. What is paying for them? Increased sales per square foot? Why? How reasonable are those assumptions? How sustainable are the early gains? Higher net gross margins? Why? What merchandise management and planning changes are in effect to produce lower markdowns or better initial buying? Kmart would be well advised to drive into the nuts and… Read more »

I have no idea who their target consumer is and how they are different from Sears with these new additions. Are they going upscale and looking for new consumer targets or are they trying to get current consumers to trade up? They certainly need to do something with their stores because all the ones I have been in are in pretty bad shape. My recollection was the early Kmarts with the Blue Light Specials were organized well and clean. The stores now are very different. Good luck, but I am not holding my breath on them making the transition work!

Everyone loves to bash these guys, but I give them lots of credit for moving so quickly to try some new things and leverage their mutual strengths. Before, they were dated store concepts who each had only a few interesting brands to attract shoppers. Now, pooling their strengths, they can offer a much broader product portfolio that offers a lot more suction into their stores. And it sounds like they are also upgrading the store experience to support the “new” offering. Obviously lots of bugs to work out, but I hope they keep moving in this direction.

Is it the right track? I think its the only track. Time will tell. If some of the early test stores are not immediately successful, my guess is they will just pull the plug, sell off what is left, and distribute the billions in cash to shareholders while they have it. It really makes no sense to invest the billions sitting around in cash into a format that will only make it disappear. Not sure who would buy all the real estate since Kmart bought their biggest real estate customer.

Most of us are taking this “wait and see” attitude. There are no Kmarts where I am but I do remember them being messy and cluttered. It would be good for business as far as Sears is concerned. From a logistics standpoint, it will help drum up business for us, though it also could be a nightmare as to which DC gets what stores. Some DC’s may actually close as a result of the takeover.

When the merger of Kmart and Sears was announced, I applauded as the two organizations each had assets and advantages which could work towards the revitalization of at least one of them. I haven’t had the chance to see the Burbank store, but now that I know what is going on, I will get there. I think that testing new store formats, merchandising crossover, and breaking from traditional thinking about what a discount store or for that matter a mass merchandising store, is all about, is exactly what Kmart/Sears needs to be studying. Both store groups weren’t created overnight, and recreating them won’t make this job any quicker. Sears/Kmart should document what these tests are meant to find out, record the real results of these tests, determine what refinements are needed, and test again. And for heavens sake, forget what all the retail periodicals have to say as they give their own critique about these tests. Wal-Mart has become respected for its determination to find the right answer, through many attempts, to introduce a new… Read more »

I think Jerry’s view about hits it. The difference in comparison, however, is confidence and message. There is a huge difference in the market’s confidence in Wal-Mart’s ability to try new paths, new products, new offerings – experiments – if you will, and that of Kmart/Sears ability to do the same. Neither have a strong record in confidence either in the industry or the market. They haven’t exactly had a clear message to the market or to the consumer from either [Sears or Kmart] about who they are or who they intend to be. Wal-Mart, on the other hand, never strays from their message, and intent on who they are in the market and who they intend to be. Even though they never became a used car dealer, no one ever doubted their ability or confidence that it might have worked. That’s the difference with Sears/Kmart. There’s not a lot of confidence in their ability to try things and create a formula for success. Now, on the other hand (that would make three), I give… Read more »

Kmart has had a number of things working for it over the years. Unfortunately, it has also had many things working against it. On a more positive note, I expect that the merger will do nothing but improve the market position of Kmart, and Sears for that matter. Working to its advantage over the years have been the prime locations that its stores have had. Many of these locations are free from big box competition simply because they lack the open parcels of land that would be necessary in order for big box competition to build. Although Wal-Mart is attempting to enter these markets with their “neighborhood markets,” I have observed that in many cases those markets do not compete head-on with the neighboring Kmarts, as the two sell vastly different arrays of merchandise. While Kmart has a full hardlines offering, and a wide softlines array, the neighborhood market next door will only have a grocery offering. Yes, this does compete with Kmart’s pantry offering, but Kmart shoppers utilize the pantry as a time and… Read more »