WalMart, Kmart, Target: why does one fail?

(written by Lawrence Krubner, however indented passages are often quotes)

Interesting

Kmart, the least successful of the group, is struggling to define its way to play, describing itself as a “mass merchandising company that offers customers quality products through a portfolio of exclusive brands and labels.” Yet, that definition could describe just about any retailer. As a Walmart customer, you know you’ll save money and still feel welcome. At Target, you know you’ll get fashionable products at prices that feel reasonable. What, then, is Kmart’s niche?

Walk through a Kmart store and you’ll discover designers like Jaclyn Smith in the low-budget ambience of a warehouse. They carry Kenmore appliances, which may require high-touch sales assistance that many Sears customers expect and many Kmart stores lack. In short, Kmart has not established an identifiable way to play that reflects both customers’ needs and its own capabilities. Harry Cunningham, the founder of Kmart, allegedly admitted that Sam Walton (the founder of Walmart) “not only copied our concepts, he strengthened them.”

The lack of a clear concept about how to reach the market, in our view, is the single most important factor in explaining why Kmart’s fortunes have fallen so far, compared to its two rivals. Without a clear way to play, and capabilities to support it, a company cannot achieve the coherence it needs to truly excel at what it does, and thus outpace competitors.