Kmart company history and retail operations

¶ … Kmart case study. To this end, the business competitive strategies Kmart's competitors utilized will be detailed, including which were most effective. In addition, what strategies are recommended for Kmart, following the merger between the company and Sears will be discussed. Included in this will be a discussion of whether Kmart and Sears should maintain their own identities or combine in some manner for a new overall competitive strategy.

The Business Competitive Strategies the Kmart's Competitors Used:

Kmart's major competitors, prior to its merger with Sears, included: WalMart, Target, Sears, Kohls and JCPenney. Each of these organizations have a competitive strategy that differed from that of Kmart. WalMart had quickly become the leader in the industry with their strategy of a combination of a wide variety of merchandise, lowest prices possible, and convenience of location, with stores figuratively popping up on every corner. With it's founding in 1962, WalMart currently has more than 7,800 retail units and serves more than 200 million consumers a week ("About us," n.d.).

In contrast, Target offered a similar selection of products, yet they had managed to blend slightly upscale products with slightly higher pricing. Their tagline, "Expect more. Pay less" ("Target," 2009) doesn't mean that they're the lowest priced retailer, but instead have the brands that consumers were looking for at lower pricing. Collaborations with well-known designers like Todd Oldham and Mossimo have truly differentiated Target from its competitors.

Sears, Kohls and JCPenney followed completely different strategies. Their strategies involved focusing on certain product segments. Sears was a leader in hard goods -- such as appliances and tools. Kohls and JCPenney focused on competing in soft goods -- such as clothing. In fact, JCPenney has the largest apparel site on the Internet ("About JCPenney," 2009). Kohl's differentiated itself from their competitors by offering designer clothing at reduced prices. These organizations' focus on these core product lines allowed each of these retailers to become specialists in their industry.

In terms of volume, profitability and growth, WalMart clearly had the most effective strategy. They have enjoyed a level of global expansion never before experienced by a retailer. In terms of garnering a competitive advantage against a formidable competitor, Target's strategy was also exceedingly effective. Although in the beginning they were a format that was similar to WalMart, they were able to differentiate themselves from someone that they simply couldn't compete with on a level playing field. Target has since established itself as an upscale discount retailer, which is the advantage they needed in order to compete.

Strategies for Kmart:

If I were the CEO of Kmart there are several strategies I would recommend for the company. First, the company needs to determine who they are -- what their mission is. If they want to be a low-cost leader and compete head-to-head with WalMart, increasing their economies of scale is critical. However, I don't think this is truly feasible. Instead, I would suggest that they find a way to differentiate themselves from WalMart, much like Target did. They attempted a very similar approach with hiring Martha Stewart and Joe Boxer, but these names were not powerful enough to pull the entire company through the financial trouble they were in and rebuild the Kmart name. For this reason, they need to discover a different mode of attack -- something that Target and WalMart don't offer.

With their merger with Sears, I would suggest that they keep the brands and strategies separate, but utilize whatever economies of scale they can manage from the merger. Kmart could utilize the electronics buying power of Sears and become a low-cost department/grocery store, as they are, but who specialize in electronics. Although Target and WalMart both offer electronics, if Kmart were to offer well-trained and helpful employees, much like you'd find at a store that solely sells electronics, this would give them a significant advantage.