Kmart Stores – Does It Be Cheaper Than This..

The penalty that companies pay when they ignore the power and worth of strategic branding is usually fatal, specially when facing experienced competitors. Attention Kmart Shoppers! The bankrupt discounter is ending its 40-year presence in Houston, closing all 17 area stores and eliminating countless jobs as the country wide chain sheds low-performing stores. The giant retailer, formerly one of the best known within the U.S., announced this past week it could shutter another 326 stores and lay off 37,000 workers nationwide. It is a classic demonstration of a company failing to comprehend the critical necessity for competitive positioning in a highly competitive economic environment.

Kmart had the pole position. Kmart originally resonated with the marketplace. It absolutely was unique in their own new retail category. Which had been an optimistic starting point in a two-step process for positioning a brandname. However they ignored the crucial step: They failed to identify themselves in the market with the category they created. How should they did that? Again, two steps: Craft a comprehensive and focused communications strategy built round the category concept, and then manage it diligently year-in and year-out.

Oh, yeah: Don’t forget to increase the bar to potential competitors by requiring they spend millions on advertising just to go into the video game. Promote the course instead of contest with competition. Unsophisticated management becomes distracted whenever they see their 100% market share decline to 90%, then 80%, etc., as competitors emerge, but competitors are important to get sales growth in a new category. 50% of any million dollar category is better than 100% of the $500,000 category.

The Blue Light Special Questions for today: How can a business selling goods for less than their competitors go bankrupt for lack of sales? Don’t buyers ferret out less expensive costs while keeping a company alive? Not if their brand sinks.

Category competition increased. It’s instructive to evaluate Kmart with Target and Walmart. Kmart’s ultimate failure in the market was virtually guaranteed by letting Target and Walmart to distinguish themselves successfully with Kmart’s low-cost notion of retailing. Perhaps Kmart expected their affordable prices to get enough. How wrong these were.

Retail sales success is caused by three intertwined factors: Product. Price. Location. Prices must attract buyers. Products has to be desirable. And store locations must be convenient. Kmart succeeded in many cases on all 3 fronts.

The Houston Chronicle (January 15, 2003) reported how Kmart customer Bob Franchville purchased a bath set through the Westheimer Kmart store for $9.95. “I had been at Home Depot earlier, plus it cost $60 there,” he stated. Kmart’s price was a fraction of a competitor’s as well as the store’s location is prime. But Home Depot was getting 6-times the price for the same product.

Less expensive costs, insufficient. The answer is that both Target and Walmart have built more powerful brands than Kmart. Neither have lower prices than Kmart. And yet, despite having the cheapest prices, is not really the preferred retailer among shoppers. Think it over. A lot of companies believe they could gain a competitive advantage by offering goods at a lower price and Kmart represents kjgvei startling, real-life case past of how wrong that strategy may be.

At this particular eleventh hour, the Kmart management’s prayer is always to improve cashflow, not by increasing sales but by reduction of costs. If the were a game of chess, Kmart is hearing the word “Checkmate!” from its competitors. Each time a company competes without having a preferred brand, the sole move left is always to reduce costs, close stores and abandon customers and markets. Where does which lead? The incredibly tragic ripple effect extends, unfortunately, to your legion of suppliers, manufacturers and related industries. And just how is it possible to overlook the devastation this caused with a multitude of shareholders and employees who had vested their trust in Kmart’s leadership?

The category is currently forever changed. Even if Kmart emerges from bankruptcy, Target and Walmart is still there, stronger than in the past. Their positions as category leaders are firmly established within the minds from the purchasing public. If Kmart’s answer to tomorrow’s concern is to seal more stores and surrender both customers and competitive turf, it won’t be a long time before Kmart’s Blue Light is switched off. Forever. Kmart abdicated the throne they built. Competitors could not have overcome Kmart’s leadership position if Kmart had not given it away.

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