Molly EllisBUAD 642

December 14, 2015

Case Analysis - Kmart

The Kmart chain of discount department stores was founded in 1899 by SS Kresge, and as

part of the Sears Holdings, is currently the third largest in its category, behind Walmart and

Target, according to the National Retail Federation website (nrf.com). Kmart has been

known for its “Blue Light Special” deals, where specific merchandise is offered at a discount

for a brief period of time.

Sears Holdings has declined 12.9 percent in growth from 2013 to 2014, a much better

outlook than the 41 percent decline in growth for the previous time period. According to a

company profile history on the Funding Universe website (fundinguniverse.com), Kmart’s

sales peaked in 1993 at $37 billion, and has declined ever since, largely due to competition

with Walmart.

Kmart stores are still prolific, and number 979 across 49 states, plus Guam, Puerto Rico,

and the Virgin Islands, according to the Sears Holdings 2015 Annual Report (available

online at searsholdings.com). To increase sales and grow internationally, I would

recommend the following four measures: expansion to Mexico, increased celebrity

endorsements, greater promotion of the layaway service, and greater brand recognition.

Currently Kmart does not operate any international stores, which means there is great

potential for Kmart to expand. I would recommend starting with NAFTA countries, namely

Mexico. Kmart has stores near the border of the US and Mexico in several states, and I

would take advantage of location awareness to expand their stores. An expansion into

Mexico could help Kmart broaden their international presence into Central and South

American countries.

Such an expansion can also capitalize on their current and past celebrity endorsements that

have featured popular Hispanic entertainers, including Thalia and Sofia Vegara. I would

use television, radio, print and digital advertising to create greater awareness of their

Molly EllisBUAD 642

December 14, 2015

current popular endorsers – Adam Levine and Nicki Minaj. I would also add another one to

two celebrity endorsers, who may just promote the company as a whole rather than a

celebrity brand of clothing, etc.

Kmart’s layaway program sets them apart from Target and Walmart (who does not offer

layaway year round, according to their website, walmart.com). I would increase awareness

of the program during the summer months, beginning in June, to get consumers prepared

for the holiday season. Layaway may be a popular draw for international consumers as

well.

I would also increase promotions of the well-known brands Kmart currently offers, like

Kenmore, Craftsman, Samsung, etc. By reminding consumers that Kmart carries the same

sought-after brands that Walmart and Target carry, consumers can price compare.

In addition, Kmart, like Ford or General Motors, can also capitalize on its history as a long-

standing American company as a way to appeal to the international market. With its

affiliation with Sears, Kmart is poised to capture the sentimentality of US consumers and

the appreciation of American products and companies that other countries enjoy.