Kmart COO: We’ve Got Product In Stock

Sep 17, 2002

Kmart’s sales have been hurt more by the consumer perception of out-of-stocks than actual product being absent from the shelf, according to the company’s chief operating officer.

Kmart’s same-store sales were off nearly 12 percent in August following a nearly 14 percent decline in July. The chain lost $126 million on sales of $2.09 billion during August.

Julian Day, COO, Kmart said, “Very little of our same-store sales decline was owing to actual out-of-stocks. A significant amount of it may have been related to perceptions.”

Mr. Day also believes that Kmart is changing those perceptions despite the difficulties associated with the company’s Chapter 11 filing. He said that the chain maintained an in-stock position on approximately 96 percent of important product skus.

Kmart is also giving its store managers more autonomy to make the retailer more responsive to customer needs. There has been, according to Mr. Day, an “emphasis on changing culture” at store level to improve customer service.

Moderator’s Coment: Does Kmart suffer from out-of-stocks
anymore than any other retailer? What can Kmart do to change consumer’s perceptions
on this issue?

A few thoughts after reading recent news accounts on Kmart.
Notes to Julian Day, Kmart’s COO:

  1. Perception is reality. Wall Street doesn’t care why
    you aren’t selling anything. Investors just want you to fix it.

  2. We understand that Kmart is adding part-time workers
    to increase scheduling flexibility. The Dow Jones Newswire piece, however,
    included this among the evidence of a culture change at the retailer. Our
    unsolicited advice is this: if you want to change the culture, then staff
    up with full-timers that have a real stake in how well a store performs. Also,
    make sure to train them (initially and ongoing) properly and reward them for
    achieving defined customer service objectives. [George
    Anderson – Moderator

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