A

CASE

PRESENTATION

ON

Presented to:

Prof. K. Ravindran Presented by:

Pranay RagabhagatDeepak R GoradMunaf ShaikhKalpesh BhasgareShrund kalseAmol Kakde

271 kmart opened

1976

Kamrt acquirees border inc.

1991Kmart raises 1$1 billion

1996

1992

Ended relationship with suppliers

kmart files for chapter

11 bankruptcy protection

KMART | TIMELINE

2

Firststore

2002

Kmart opens store in

maxico & singapore Big kamrt

store format intorduced

the u.s. Bankruptcy

court approves the comapny’s reorganisation

plan

Kamrt buys walden book comapnt

1984

The Ten Deadly Sins

Brand Mismanagement

Not Knowing Its Customers

Underestimating Wal-Mart

Lousy Locations

Ignoring Store Appearance

Technology Aversion

Supply Chain Disconnect

Loss of Focus

Strategy du Jour

Repeating the Same Mistakes

Deepak R Gorad

“The golden rule is that you don’t wait until something is broken to fix it. Kmart never

believed this. Unfortunately for Kmart, as its brand name faltered, so did its sales. Since nearly two-thirds of most customer purchases are driven by the brand, as brands weaken, so do purchases.

Kmart broke the

“golden rule

of retailing,

Poor Positioning

It‟s not about being better,” he

says. “It‟s about being different.”

Determine what it is that makes

Kmart unique, in a good way

“Kmart used to have a private label that had a K in front of it. “That really is a total indictment that you can’t even put your own label on a product. That your brand equity is so pathetic that you can’t even brand your own products.”

•“One of the key problems of Kmart is that they have not created

• a niche outside of pricing.

Lack of a niche

• communicating poorly with its suppliers and

• shareholders

Lack of Communication • Failure in

targeting & positioning

Advertising

What Today’s Consumers Want

clean, well-maintained stores, visible prices, and

easy-to-navigate layouts” matter more

hassle-free

returns policies

“prices that don’t fluctuate

day-to-day” to the absolute lowest

price.

“consistently good merchandise

quality” and don’t expect

top quality

convenient

store location

There are three ways to grow a business

sell to new customers

sell a greater quantity to

existing customers sell higher

value products and services to

existing customers

Munaf Shaikh

Key Drivers for Footfall Improvement

Quality of

Products

used

Overall

Service

Quality

Ambience and

Hygiene at

Salon

Overall

Quality of

Service by

Service

Provider

Ease in

scheduling

an

appointment

Proximity

Top 2 Box Summary

Importance of Factors

Reception Overall Quality

of

Service Operator

who attends you

Value for Money

KEY FINDINGS( Derived from Online Surveys and Professionals in Industry)

Key Drivers Obtained

Reliability Responsiveness Assurance Empathy Tangibles

Kmart doesn‟t have customer focus

Loyal Kmart customers preferred

promotional shopping over „consistent

value.‟That‟s why they shopped at Kmart

in the first place.

Kmart‟s early customer was the low- to middle-income

consumer Those customers have been seduced by Target

and Wal-Mart and will never go back

in 1983,most attractive customer group

baby boomers

$20,000 to

$35,000

25- to 44-year-old college

developed a “culture of expansion, where expansion was the

goal, not serving the customer.

Kmart completely lost sight of its customer

too busy

opening new stores.

Amol Kakde

A Collection of Stores

Scaling Back

The Fallout

Population

Shifts

No Relocat

ion

Ignoring Financial Realities

No Takers

“Kmart used to be out of stockon about 20 percent of its inventory, which they seemed to feelwasacceptable

Kmart does not win for pricing, product assortment, service,easeof shopping or an enjoyable shopping experience,”

Overwhelmed EmployeesFindingemployees for assistance is

often hard not because they are working in the back, but because

there simply aren’t very many on the clock

Kalpesh Bhasgare

The Supply/Demand Disconnect

results in higher

inventory carrying

costs, poor buying

decisions, and

it has resulted in

lower sales and lower

profit margins per square foot

as its regular out-of-stock notices on hot items indicate,whilecausing an overflow of less popular products

Lack of a powerful

information system

Too Low a Priority

Without knowing its customers and their needs, Kmart is unable to effectivelystock merchandise in a timely manner to meets those needs

Kmart should have gotten to know its customers on a store-b ystore

Personal Needs

External Communicati

ons to consumers

Expected Service

Perceived Service

Service Delivery

Translation of perceptions into service-quality specifications

Past experience

Word of Mouth

Communication

Management perceptions of

consumer expectations

Consumer

Marketer

Gap 1

Gap 2

Gap 3

SHRUND KALSE

10 recommendations for getting back on track.

• They have to go back to where they’re profitable and get out of the areas where they’re not profitable

Scale Back

• narrowing its focus to the highest- value, highest-opportunity consumer for its particular brand image. That niche could be celebrity brands

• using micromerchandisingto tailor its inventory

Carve Out a Niche

• Kmart’s other private-label brands also need to be highlighted and showcased, Martha Stewart brand name

Promote Its Brands

• The company also needs to give its CIO more authority to do what is needed with the entire IT system, as well as championing the cause of improved information functioning company-wide

Get Ahead of the Information Technology Curve

• new design is an excellent startat implementing needed cosmetic and layout improvementswithinKmart stores.

Expand the Store of the Future—Quickly

10 recommendations for getting back on track.

•Employee incentives need to be expanded to benefit associates who come into direct contact with customers

Boost Employee Incentives

•Wal-Mart can coexist

•as long as Kmart finds a way to differentiate itself from its competition.

differentiate from Wal-Mart

•Ask customers directly what they like and don’t like about Kmart’s merchandise,itscheckouts, or its in-store restaurant.

• let customers know that

• the changes they suggested were actually implemented

Find Out What Its Customers Want

•Once Kmart fully develops its plan for the future, stick with it

• longer than a season, or a year, or a CEO.

Stick with a Strategy

• The corporate culture needs to be

• adapted to allow for new thinking, new approaches, and new

• ways of doing business. Kmart needs to be willing to emerge

• from the conservative corporate mantle that has held it back

Foster Creativity