The Big Chain that Could (Maybe)

Sep 26, 2002

By George Anderson

Fresh off the biggest sales day (last Saturday) since filing for Chapter 11, Kmart is looking to emerge from bankruptcy protection as early as next summer. James Adamson, chairman, Kmart told the Detroit News, “I think we have a shot at doing it this July or earlier.”

Mr. Adamson and Kmart president Julian Day recently expressed optimism about the retailer’s future, despite a loss of $1.83 billion for the six-month period from February through July. September sales appear headed to an increase over the same period last year and the company is looking for further strengthening through the Christmas holiday season.

Company plans include:

  • Launching a new ad campaign with the theme, “You have to have it”.

  • Giving store managers more authority on goods sold in their stores.

  • Not having to close any mores stores or cut jobs.

Giving store managers more control over inventory selection represents a major shift from Kmart’s previously centralized approach. Management hopes that the move “will empower local management, improve morale and give Kmart an advertising theme against rivals Wal-Mart and Target.”

Kmart’s new philosophy is about to get its first real test in Detroit and Chicago area stores. According to a Tom Walsh column in The Detroit Free Press, the retailer is confronting one of its biggest problems, out-of-stocks, with an in-stock guarantee program. If a sale item is not in stock, the Kmart store manager will give a consumer a rain check and the option of purchasing a comparable item at the same price. Essentially, the consumer gets a two-fer deal.

The chain will begin promoting its guarantee in inserts beginning this weekend. It will also use radio and television spots as well as in-store POS to support. The program is starting out as a five-week test in Detroit and Chicago and plans are for it to be rolled-out in markets nationwide after that.

Moderator’s Comment: What is your reaction the latest
Kmart news?

We’ve been critical of some of Messrs. Adamson and Day’s
statements and actions in the past, so let’s give them their due. The store
manager as hero concept is great. Let’s hope they have managers and associates
that can do the walk and talk at the same time.

Also, perhaps the smartest thing we’ve heard a Kmart executive
say since forever came from Mr. Adamson. “Being big is not important. Being
right is important.” Here’s to hoping that Kmart can get it right this time.
Anderson – Moderator

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