Kmart Wants Cheap Chic Niche
By George Anderson
Cheap chic – it worked for Target and Kmart plans on making it work for itself, too.
According to a report by The New York Times, Kmart is hipper than it used to be and plans on becoming even more closely identified with products
that are both cool and inexpensive at the same time.
The retailer’s new Essential Home line of tableware, rugs, lamps, towels, bedding and furniture has made a positive impression.
Sarah Gray Miller, editor in chief of Budget Living magazine, said of the Essential Home furniture line, “It’s the best thing to happen to
affordable furniture since Ikea.”
Kim France, editor in chief of the shopping magazine Lucky thinks the new line, which is said to be a contemporary complement to the Martha
Stewart Everyday catalog of products, is a positive move by Kmart since the retailer has not sacrificed quality to get to a reasonable price point.
“They’ve got the Martha stuff covered,” she said. “The test for people is getting their hands on it. That was the delight of the Martha line: It
was all good.”
Moderator’s Comment: Is Kmart moving in the right direction under the design leadership of Lisa Schultz and Matthew Morris? Can the retailer compete
for the same space as Target?
We’re not ready to call ourselves believers in Kmart and Sears yet. We do have to acknowledge, however, that Kmart has made fairly sizeable strides since
it set up its design group in New York. –
George Anderson – Moderator
I think that this would be an interesting space for Kmart. They seem to be doing well with their brand-within-a-brand approach and actually may be better situated to sell cheap if they can become convincingly chic. It may be a long shot for this challenged retailer, but at least they are taking a step to better define themselves to the consumer.
Kmart seems to have been in a very gray area with little hope for upside. Wal-Mart and Target cover both ends of the spectrum, with Kmart in the middle, being hit on both sides. If there is a longer upside, I would believe its on the Target side of moving into the department store world with higher traffic counts. Kmart’s move towards cleaning up their offerings with higher quality and more desirable product is a point in their favor, and competition is good so this should be a good thing for all consumers.
I think they are just putting on a facade. This is the same idea they talked about a few months ago and are just recycling it again.
Personally, I have doubts about anything with “mart” in its name becoming truly hip. Target scores a bulls eye with a name that can be pronounced with a French “tar-jay” twist for a touch of suburban shabby chic. Maybe they should bring back the Kresge name! Fashion is fickle; building a business strategy on it is tricky business.
Kmart tried to “out-walmart” Wal-Mart, with disastrous results. Now they are trying to “out-target” Target…
Well, I’ll give them credit for not sticking with a bad strategy. The question is whether or not they have gone from one bad strategy to another bad strategy.
It seems to me they would be better off being their own thing instead of constantly imitating this competitor or that competitor. They need to differentiate, not emulate.
When you have slid to near the bottom of the merchandising barrel, you have lots of organizational grief, but also a some
options. Kmart’s former Board allowed Kmart to go through a series of sour-note management musical chairs in the 80s and 90s only to slide farther down the retailing slope. Then in came a new Tiger at Troy, the opportunistic Mr. Lempert. The company was plunged into bankruptcy. That dinked a lot of folks and saved Kmart lots of important bucks for future application.
Kmart has now gone thru a series of cleansings – store sales and the burial of dead stores; merged with a struggling hardware giant, Sears; washed away any remaining old Kmart loyalists whether effective or not; have Martha Stewart and her products under contract (and Miss Martha has new momentum today); plus they have Sears’ hardware hammer and Scultz and Morris are hipping things up in the softer areas. That formula should work in those urban areas where Kmart stores are
more closely geared to neighbor stylishness than is competition.
Can Kmart compete for the same shoppers as Target? They may not have to; there may be a large enough available niche for Kmart to slip into and survive. Generally speaking, Target shoppers perceive themselves as being upwardly-ascending and quality conscious, and they are loyal to the social status “psychic income” that Target extends to them. Meanwhile, Kmart can appeal to that large audience that wants what it perceives to be “hip” and “chic” but at a cheaper price than current Target levels. Thus, unless Wal-Mart were to expand into designer-oriented “cheap chic” at prices lesser than Kmart, the continuing game of market penetration should be interesting in the months ahead. But for now, let’s wipe off our analytic glasses and watch carefully to see what territories – if any – the Trojans of Troy can conquer in the near future.
Is Kmart, I mean Sears Holding Company, making the right move with their apparel strategy? Yeah, they are, darn tootin’.
No one seems to find fault with Wal-Mart’s everyday low prices, apparel consumers, and consumers in general, for that matter — with the prospect of this summer’s regular gasoline prices running about $2.50 a gallon — are going to still want to feel “chic” about their clothing, getting what perceives to be a lot for their shrinking disposable incomes. So why not a strategy of “out-chicing” Target’s cheap chic? It’s a fantastic strategy. How about some kudos for the merchandising team Lampert is putting together? Lisa Schultz is doing a terrific job.
On a side note, did everyone notice that while Sears’ current CEO Alan Lacy doubles his salary in the deal, he does not have any long term incentives in his contract as filed on the SEC website? Why not? My thinking is that in the relative short term, Mr. Padilla, currently at Sears (formerly of Target Corp.), will be taking over the helm of the new Sears Holding Corporation.
Let’s also not forget Edward S. Lampert has the blessing of Kmart’s current Board of Directors to spend Kmart’s profits any way he deems worthy. This combination of Sears and Kmart is only the beginning.
Yes, and one day, even Mr. Livingston will find something good to say about Kmart.
Now that Kmart has access to higher quality Sears products, this strategy may actually have a chance of succeeding. If Kmart will remodel their stores and include an extensive line of smaller ticket Sears brands, they may just pull it off.
Also Kmart needs to hire more checkers to work the front line. My local Kmart is always understaffed. I used to work there before attending college. In spite of this problem, the store is cleaner and better stocked than it used to be. There are already noticeable improvements since the merger. The Die-hard batteries and Craftsman tools are flying off the shelves!