Will Kmart Ever Be Relevant Again?

The 50 year old company called Kmart is likely to have seen its best days given the rapid growth of the dollar store industry and the major competition from Walmart and Target that have pushed it into national irrelevancy. It can be fairly asked to any person on the street what is it about Kmart that you prefer above other retail stores. The answer, if any, will likely be more about local convenience or sale prices. But these types of responses will come from people who are not likely to have access to a Walmart, who specializes in low prices. The current opinion is that once Walmart comes, Kmart will leave.

One of the more common criticisms of Kmart was its purchase of Sears in an attempt to broaden its store base and draw in many of the Sears customers who loved the Sears brand. What many people do not know is that Kmart has bought a number of smaller businesses back in the 1990’s, including booksellers Waldenbooks and Borders. Those businesses were soon sold off by Kmart in an admission of bad business judgment. But the problem is that this appears to have been a precursor to the larger mistake Kmart would make by buying Sears.

Once Walmart and Target appeared on the scene, Kmart needed to find a way to offer low prices that would match or be lower than Walmart’s, yet avoid trying to market itself like Target by being slightly chic yet lower priced. Truth be told, Kmart was a combination of Target and Walmart for decades, but its time has come and gone. The question that must be answered is what does Kmart have to offer that cannot be found at Walmart, Target, or online that will separate it from the pack?

The management of Kmart apparently is not optimistic about its future, as both Walmart and Target outpace Kmart advertising by at least 2 to 1, if not actually closer to 3 to 1. When was the last time you saw a Kmart ad that gave you a reason to get up and go to their store? So if the company isn’t offering anything wildly competitive, it is being crushed by the sheer weight of advertising dollars being spent by its major competitors.

It needs to be noted that Kmart not become completely irrelevant. A company that has more than 1900 stores across the country is relevant, even as there are currently rumors of additional store closings. Sears is a drag on Kmart – that’s no secret. But Kmart has been restructuring itself to appeal to a specific niche of the American population: Hispanics. The Hispanic population has been steadily growing in the United States, and some experimenting is being done on changing store inventories to better reflect the needs of the Hispanic community. This is not happening everywhere, but the initial results show promise for the future of the brand. Kmart may be looking ahead another 10 or 20 years, when population projections are favorable for continued growth of Hispanics.

Geographically, that would make the retail chain more relevant in the Western and Southwestern parts of the country, where Hispanic populations continue to steadily grow. Conversely, the Northern and Eastern parts of America will witness the steady decline of Kmart stores as the brand name truly becomes irrelevant in these areas.

Kmart’s recent marketing theme is “Kmart Smart.” Apparently the appeal is to customers who believe they are actually smart shoppers for choosing Kmart over other retail stores, but why they are smarter is something the company needs to convince them of. This does not seem to target younger generations of shoppers who have a firm belief that shopping online at Amazon or other online store from their mobile device is the definition of smart shopping. What can be missed here is that Sears may have been the addition Kmart believed would keep customers coming into their brick and mortar stores to shop for and buy big ticket items such as washers and dryers. The decline of Sears may drag Kmart down with it.

The answer to how Kmart can avoid becoming completely irrelevant seems to lie in the possibility of becoming a niche retail store. It did not recognize its days of a national chain retail store were left behind once it bought Sears, followed by the competition of Walmart, Target, and mobile shopping. The former was a repeat mistake it failed to learn from, while the latter was just a matter of progress leaving a company behind that failed to adjust to changing market conditions.