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Kmart needs more than a new format

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The Kmart division of Sears Holdings recently garnered some favorable notice for the overhaul of its discount store in Des Plaines, Ill., not far from the parent company’s headquarters in Hoffman Estates. By all accounts, the outlet represents a significant step up for Kmart customers, who during the course of the chain’s long, slow decline became accustomed to a less than optimal shopping ­environment.

MMR OpinionThe Des Plaines store has a number of interesting features, including a new beauty bar, enhanced branded apparel shops, an upgraded pharmacy department staffed with a wellness consultant, and the so-called “Aisle of Wow,” which features promotional merchandise and products priced at $1. Lower shelving than is usually found in a Kmart, which results in better sight lines across the outlet, and wider aisles contribute to a more congenial shopping experience. Customers can also take advantage of Shoparazzi, a free concierge service that assembles merchandise for individuals who provide an online shopping list and come to collect the order at the store.

The retailer deserves credit for making incremental progress in Des Plaines, which is part of a broader revitalization program known as “A Whole Lotta Awesome.” Although that moniker considerably overstates the result, consumers should be much happier with what they encounter at the Des Plaines Kmart than what they found before the location was revamped.

That assessment, true as it is today, will have to stand the test of time. A number of years ago, when Kmart was still in the habit of opening stores on a regular basis, one supplier acknowledged that the chain had the wherewithal to launch competitive outlets, but a month or two after they debuted it often looked as if a bomb had gone off inside. Operating clean, orderly, well-stocked stores remains a major challenge for the retailer.

Even if Kmart succeeds in maintaining the Des Plaines store at its current level, it’s hard to see how the format, which is billed as a lab where lessons can be learned that may be more broadly applicable, could substantially improve the fortunes of the chain or Sears Holdings. Kmart’s store count has contracted from more than 1,200 in 2010 to around 800 today. Sales have followed a similar trajectory, with lost volume from the shrinking store base compounded by consistently anemic same-store sales.

Those issues, coupled with similar problems at Sears, make it very unlikely that the parent company — which last fiscal year suffered a $1.13 billion loss from continuing operations to bring the total amount of red ink since 2012 to more than $8 billion — can right the ship. To be fair, the two legendary retail chains that comprise the company were already in disarray when hedge fund manager Edward Lampert brought them together in 2005. He and the myriad retail executives who have passed through Sears Holdings since then haven’t been able to turn the tide (in part, at least, because Lampert often chose to disregard the advice of the experts he hired).

While Kmart finally seems to have turned its attention where it belongs and set about the task of improving the customer experience, it is very likely a case of too little, too late. After a lost decade or more, one in which its chief rivals invested heavily in their stores and Amazon has changed the retail equation while emerging as a potent force in the marketplace, it will take much more than “A Whole Lotta Awesome” if Kmart is to have any hope of returning to the top ranks of nation’s mass market retailers.


ECRM_06-01-22


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