Kmart’s Makeover

Oct 05, 2004

By George Anderson

Gary Ruffing, a retail consultant for BBK Ltd. in Southfield, Mich. and a former executive at Kmart says the company isn’t willing to be the Rodney Dangerfield of the retailing business anymore.

“There certainly is a big change at Kmart,” he said. “They are feeling good about what is going on at the store level. I think they still have major sales problems… But they want to be a leader again in the retail arena.”

Kmart took another step in that direction yesterday with the announcement it was remodeling 20 stores in what the Detroit Free Press called the first major investment the chain has made in its stores since emerging from Chapter 11 bankruptcy protection last year.

“This proves that Kmart is a retailing story, not just a real estate story,” said Richard Hastings, chief retail economist with Bernard Sands.

The remodeled stores are reported to be similar to the prototypes in White Lake Township, Mich. and Illinois with wider aisles and a new color scheme.

The first of the makeovers is expected to be complete by Nov. 17 in a Kmart located in White Plains, NY.

Tony Camilletti, vice president of strategic development for Design Fabrications Inc. in Madison Heights, Mich., said Kmart has been making some headway in turning its image around with a new fashion sense and advertising targeting younger consumers, but that those images needed to be reinforced in the retailer’s store.

“The final frontier of Kmart’s rebirth has to be the stores,” he said.

Moderator’s Comment: Does Kmart’s investment in its prototype stores indicate the chain is committed to becoming a player in the retail business again?

Gary Ruffing believes Kmart is serious but even he expects the chain will sell at least 400 more of its stores before it is finished.

It could cost Kmart up to $572 million to remodel all of its existing stores, according to Ulysses Yannas, an analyst with Buckman, Buckman & Reid in
New York. The chain got $847 million from its recent sale of 68 stores to Sears and Home Depot.

George Anderson – Moderator

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