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THE MORNING BUZZ: Kmart Just Needs to Clean Up Its Act

28 Jan, 2002 By: Stephanie Prange

As a suburban mom, I often frequent the mass merchants. We shop Wal-Mart for price and Target (which we affectionately pronounce in French) for the more upscale, well designed, well merchandised items. We visit Kmart, which recently filed for bankruptcy, less often. Why? It just seems Kmart doesn't care.

Walk into any Target and the merchandise is pleasingly arranged. Walk into any Wal-Mart, which doesn't have the best merchandising around (I've actually seen prices scrawled in marker), and you'll be greeted by an employee and get great prices to boot. Kmart can't seem to get even one of these elements right. The stores are often in disarray and the employees missing. I've actually walked into a Kmart garden area in which a majority of the plants looked half-dead. How much trouble is it to neaten up the place and toss out some dead vegetation?

I certainly don't think the situation is hopeless. In my column for this week's magazine, I even ventured to predict that Kmart would come out of bankruptcy and get its act together. Why? Because the solution seems so simple. Kmart is in one of the hottest retail segments. It's not an overpriced department store; it's a discounter. It's got the right business model -- low prices, numerous items and the cache of homemaking diva Martha Stewart -- it's the execution that needs improving.

Kmart needs to get back to basics. Know what people want, give it to them in a pleasing environment and at a good price. All this takes is a good tracking system (Kmart is upgrading its outdated software) and an energized, well-trained workforce. It also takes a coherent management plan. A recent Forbes article mentioned the chain's "goofy organizational structure," which had the different sections of the company -- distribution and individual store -- basically working against each other. Each ran as a separate profitmaking entity with distributors unloading product as quickly as possible, even before orders, and stores unwilling to plunk the excess inventory into the store and on the books. The result: merchandise was left locked in trailers in the parking lot!

Kmart no doubt has lost ground and may fall, but the situation isn't completely hopeless. The chain just needs to clean up its act. Perhaps a Chapter 11 breather will have this purveyor of the Blue Light Special seeing green again.

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