Want a great blueprint for dismantling a retail operation? Look no further than Kmart, one half of the sputtering retail juggernaut that makes up Sears Holdings (Sears, of course, is the other part of this fascinating retail duo).
In early March, Kmart announced its latest attempt to survive in a retail arena that it is becoming more sophisticated and crowded by the moment. The chain will start acquiring products from bankrupt companies or through mass liquidations and start offering them for sale throughout its 962-unit chain. The company plans special eye-catching kiosks and displays featuring discontinued merchandise at great price points.
I get why Kmart is trying this somewhat desperate measure. The chain has been on a downward spiral for at least two decades now, hurt by a combination of savvy retailers stealing market share, older store formats and some really bad merchandising ideas. The result has been seemingly endless reports of same-store sales declines, store closings and layoffs. Kmart has been the butt of many jokes for years. Now it seems that things are so sad that no one even thinks its funny anymore.
So there is little else left to try besides rolling the dice on a merchandise strategy that focuses on a carnival-like atmosphere that will inspire treasure hunt behavior with consumers. As one retail analyst noted, “there is never too much liquidating product on the market these days.” The only other thing left, I believe, is throwing in the towel and shuttering the entire chain.
Will Kmart suddenly become a fun place to shop? The hope, of course, is that cost-conscious shoppers will quickly take notice of the hot deals at Kmart and start visiting more often and telling their friends. More traffic always leads to more sales, of both liquidations and traditional inventory. More sales leads to more profits and, eventually, happy shareholders of Kmart (Sears) stock. Somebody slap me.
But it is an interesting attempt by a down-and-out retailer to re-invent itself in the digital era. Kmart might not succeed here, yet this is a bold attempt to catch the attention of a certain niche of consumers who are always on the lookout for a better deal. The result could be an uptick in much-needed sales volume or, at a minimum, a proverbial coat of new paint to cover up the blemishes.