Question

Please read case article, "Attention Kmart Shoppers? Into and out of Bankruptcy" and help me come up with a solution for the case as well as action steps to implement the solution! Thank you!!

ATTENTION KMART SHOPPERS? Former Kmart CEO, Charles C. Conaway, failed in his 19-month effort to revive the iconic firm, resulting in the largest retailing bankruptcy filing in history on January 22, 2002 (Davies, et al., 2002). On March 11, 2002, bankrupt Kmart named James B. Adamson as its fifth CEO in seven years. Adamson was a Kmart insider who began his retail career at both Gap and Target. Adamson was picked for his experience in engineering turn-arounds at companies such as Advantica Restaurant Group (parent of the Denny's chain), Burger King, and Revco drugstores. The situation for Adamson looked dire. Many analysts speculated that Kmart should simply shore up financials enough for a sale (Schoenberger, 2002). Kmart was positioned as a low-price retail store offering a wide range of products and was one of the very founding discount store' chains that now dominated the retail landscape (Discounting, 1992). However, by 2002 it was no longer the leading discounter in the world, a position it had held for decades. Kmart was experiencing tough price pressure from the competing discounter Wal- Mart. Wal-Mart's superior logistics, identical retail strategy to Kmart, perceived same or better pricing, and a significantly superior in-stock position all effectively neutralized Kmart's national discount chain first-mover advantage (Zook, 2006). Further, Wal-Mart's "Everyday Low Pricing" (EDLP) was seen as a game changer in that customers perceived it as the uncontested price leader. EDLP resulted in significantly smaller marketing budgets and inventory costs for Wal-Mart as well as more evenly flowing sales reducing stock-outs (Ellickson, et al. 2012). Kmart's weekly price specials created spikes and surges in category volume that were hard to operationally facilitate, more costly to the bottom line, and left Kmart shelves bare in key merchandise areas. Combined, the results of heavy weekly price promotions made the Kmart stores look less inviting and contributed to poor customer service perceptions (Schoenberger, 2002). By 2000, Wal-Mart boasted almost three times the sales of Kmart and had become the world's largest retailer.

Answer 1

Investigation:

The Investigation of the case Kmart and effects on the growing competition, an inferior distribution network is depicted here. The Kmart which was One time leading retail chain fall out due poor store execution. Since 1990s Kmart had dominated 30% share of the retail market. While had experiencing the fierce competition from other discount retail stores Such as Wal-Mart and the Target, began to lose the significant market share as the K-mart is being positioned as the low-priced discount store that offers a wide variety of products. As Wal-Mart is highly advanced distribution network since its inception, the Target's trendiness and higher perceived quality brands, products and service which cut costs across all levels that allowed it to charge everyday lower prices and move away from weekly prices had found the discrepancy for the Kmart to no longer compete against them.

The Kmart began hemorrhaging market share due to the threat of Wal-Mart's challenge into the cockpit, its Target trendiness, wider aisles and updated stores were attracting customers away from the Kmart due to the lack of differentiation from the discount competition. Kmart declared its first bankruptcy on January 22,2002, at the time, the biggest chapter 11 filing in retail history.

Illustration:

The Importance of how not keeping up with current Technologies, Consumer demands and adapting to changing market wave analysis can have disastrous effects for a firm. The essential key factors for building a brand image, customer satisfaction apart from competition is very much considered in this case. The well-established giants can fall in the market if they fail to adapt to meet the challenges of a changing market Place.

By illustrating K-Mart's case, its being shown that it has came out of the Bankruptcy in May 2003,closing 599 stores and laying off more than 67,000 employees inorder to lower its cost structure. Kmart made a $1 billion investment in IT to enhance its distribution network by CEO behemoth Kmart, reducing operation costs by 21.4% and reducing inventories by 22.3% which ultimately went to decline of the firm.

Since the Kmart continued to stall after its stores closure and bankruptcy; It was purchased by hedge fund CEO Edward Lampert inorder to revamp the Kmart brand image. The little changes has been done by selling off upside down, Also merging with long-time largest retailer in the world, Kmart leases and less profitable Sears stores to ultimaely reduce the company which was purpoted $12 billion in sales in 2014 which once Ex-CEO Behemoth expected to eclipse Target stronger margins with $72 billion against Wal-Mart in the same year.

SWOT Analysis or Porter's 5 Ps:

The Strategic Decision making can be implemented only through the Strength Weakness Oppertunities and Threats of any firm.The Same has to be followed in Kmart case also;

Strenghts of K-mart:

- Kmart has a great strength in dealing with its excellent product lines.

- Kmart store is being located in an Urban area that has intense population

-Kmart has maintained its customer retention by providing them layway plans.

-K