keys to success
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Kmart – Keys to Success
Presented by:Robert Shaw
Yasmin AnandwalaEric Findley
Ardita KalajaWinfield Pollidore
Sanjay Mengi
Kmart - IntroductionKmart - Introduction
Yasmin Anandwala
Kmart – Keys to Success Industrial Analysis
– Kmart Profile– SWOT (Strength, Weakness, Opportunity, and Threat)– Kmart versus Wal-Mart– Survey
3 Marketing Keys to Success
– Leverage Urban Minority Market Strengths
– Implement CRM Strategy
– Improve Supply Chain Management - IT Conclusion
Kmart - AnalysisKmart - Analysis
Robert Shaw
Yasmin Anandwala
Kmart’s Strength Clothing lines
– Exclusive Joe Boxer product line– Route 66– Carry a variety of products at a low cost
Martha Stewarts products– Home Goods
Store Locations– Urban areas– Stores located in easily accessible areas– Market in the Urban areas effectively
Able to get a large multi-cultural consumer group Offered lay away plan for people who need to pay
on installments
Kmart’s Weakness
Chapter 11 Bankruptcy Protection Low marketing budget Many low profit suburban stores Ineffective Supply Chain Management Negative publicity Marketed the suburbs like the urban areas Did not change the image of the company as the demands
of the consumers changed Did not offer variety that appealed to the middle class
Kmart’s Opportunities
Re-position store– Adopt Urban Strategy
Integrate Supply Chain Management Sell to Carrefour (Paris based retailer) Need to change the negative image of K-Mart Improve the product line carried to keep the
middle class Design the store to be more organized and
attractive
Kmart’s Threats Wal-mart and Target
– Increasing Market Share Having to liquidate company Suppliers raising prices Profits declining Martha Stewart getting bad press Urban areas are becoming more suburban like Youth’s rejects K-Marts Urban strategy
K-Mart Opportunity Threat Matrix
1 – Credit can be down rated
2 – K-mart getting bought
3 – Supplier raise costs
4 – Martha Stewart pulls out
Level of Impact on Company
High Low
High 1 2, 4
Low 3
Probability of Occurrence
Market Share Analysis
Kmart vs Wal-Mart
Kmart opened 1962 (Originally Kressege) In 1987, 2,200 outlets Market share 34% In 1994, sales $34
billion
Wal-Mart opened 1962
In 1987, 980 outlets Market share 22% In 1994 $82 billion in
sales
Retail Preference Survey
Selection Criteria– 15 Female and 5 Male– Wayne County area– Average age over 35– All were frequent shoppers
Survey Results
80% people preferred Kmart Favorable location 100% visited store in last six months 50% would not care if Kmart went out of
business 100% never visited web site
Marketing Key #1Marketing Key #1
Leverage Urban Minority Leverage Urban Minority Market StrengthsMarket Strengths
Eric Findley
Facts Kmart strongest locations are it’s urban clusters
(away from Target and Wal-Mart) where Kmart is uniquely popular among (multicultural population) African Americans and Hispanic customers– Multicultural consumers represent 39% of the
nearly 30 million people who shop at Kmart each week.
– African Americans and Hispanics alone account for 32% of Kmart's shoppers.
Kmart Market Profile by Race
32%
7%
61%
African Americanand HispanicConsumers
Other MuliticulturalConsumers
MajorityConsumers
Demographic Trends Hispanic population going to increase at a faster
rate than the rest of the nation Multicultural consumers control $1.2 trillion in
joint-purchasing power at a market segment growth rate seven times faster than the general population
Urban African-American community's $560 billion in buying power
Urban youth consumer has become big business because of their buying power ($300 billion) and influence over the mainstream consumer market
Market Trends and Attitudes
Shoppers are increasingly bypassing its aging mall stores to shop at newer urban and suburban strip malls
Emerging trend of retail development in inner-city districts around the United States
Market Trends and Attitudes
Urban youths:– Tend to be individualistic, they don’t respond
to anything outside of their reality– Don’t care about the status quo
Urban youth consumers: tend to be trend and style conscious
Market Trends and Attitudes
"What works in urban cities, works in suburbia, but not vice versa," – Generation X & Y influenced by urban culture
(70% of hip-hop music sold to whites living in suburbs) and fashion that characterizes its identity
Minority groups last year accounted for 27.3 percent of the suburban population in the 102 largest metropolitan areas
Urban Minority Strategy Recommendation
Kmart develop niche marketing strategy to concentrate on Urban and Minority Gen X and Gen Y Market– Make Kmart the “hottest place to shop” & “trendy”
place to shop Eventually strategy will penetrate Suburbia Partner with rap/music artist and professional sport
players to endorse and promote shopping at Kmart– Youth market responds well to role models and
celebrities (Master P and Converse)– By capturing the urban market you can capture the
mainstream market
Popular Apparel Urban Brands
Kmart would do best to understand and promote brands similar to those represented by Urban Minorities– Popular Urban Brands
• Phat Farm • FUBU • Rocawear • Ecko • Sean John
Other Popular Apparel Urban Brands
Other Popular Brands– Levis – Nike– Kangol– Kenneth Cole– Rockport
Urban Minority Strategy Recommendation
In understanding and targeting urban minorities:– Kmart needs to tailor it’s products to each
community’s ethnic mix– Give store managers autonomy to stock
merchandise that suits their customer’s tastes since urban trends change quickly
To stay popular Kmart may want to change it’s image from discounter to reflect premium discounter (Urban discounted Marshall Fields)
Marketing Key #2Marketing Key #2
Implement CRM StrategyImplement CRM Strategy
Ardita Kalaja
Winfield Pollidore
K-Mart CRM
What is CRM?– Customer Relationship Management
CRM Process– Discover– Assemble– Deliver
Does partnership make sense?
K-Mart CRM
K-Mart CRM How can CRM help K-Mart
– Refine the Customer Focus (Positioning)• Create value for the Customer
– Enhanced Automated Checkout– Personal Online Shopping (EchoMail)
– Re-Focus the Retailer approach• Targeted Incentives vs. Visible Incentives
CRM-Creating value for the Customer
Recognizing the importance of creating unique ways to delight the customers
- Self-Service Technology (NCR Self-Checkout, Pre-Cashier
Checkout) - Bilingual Capability Meets Needs of More Shoppers
Personal Online Shopping (EchoMail)
Link the Blue Light Special to In Store Incentives Personalization tools help customers with purchases and let merchants cross sell The product keeps track of customers' actions
over time, building a broader base of knowledge about the individual and driving proactive marketing, such as prompting new offers at the site or triggering E-mail advertising
K-Mart CRM-Recommendations
K-Mart should recognize the importance of creating unique ways to delight the customers
Targeted Incentives vs. Visible Incentives Effective ways to personalize Online Shopping. Identify every non-value-added cost from each
element of its supply
Marketing Key #3Marketing Key #3
Improve IT Supply Chain Improve IT Supply Chain ManagementManagement
Sanjay Mengi
K Mart – IT Incompetence
Five CIOs in seven years – (One step forward, another step back)
Incompetence SCM technology in retail industry In 2001, $195 million write off in H/W & S/W Real time data not shared with suppliers
Wal Mart – IT Facts Information technology matters—when it
delivers "everyday low prices" Mastery of technology by treating IT as core
competency Just-in-time inventories - Best SCM in retail
industry Continuous improvement in technology by
intelligent IT spending – Over 5 Year period invested over $600
million in IT Running technology with a vision
Wal-Mart IT Integration Real time data and mission-critical information
shared with suppliers worldwide Wal-Mart use telecommunications to link directly
from its stores to its central computer system and from that system to its supplier's computers. This allows automatic reordering and better coordination– Some 3,800 vendors now get daily sales data
directly from Wal-Mart stores– 1,500 have the same decision and analysis
software that Wal-Mart's own
Ord
er
Siz
e
Time
CustomerDemand
CustomerDemand
Retailer OrdersRetailer OrdersDistributor OrdersDistributor Orders
Production PlanProduction Plan
Trend of Weak Supply Chain Management
DISCRETE MANUFACTURING PARTNERSSPECIFIC PRODUCT MANAGER FOR COMMUNITY
PRIMARY MANUFACTURER OF SPECIFIC PRODUCT
PRODUCT EQUITY FOCUSED
PURCHASING IS INTEGRATED / DRIVEN BY MANUFACTURING
DIRECTLY SUPPORT CPG PARTNERS
PROVIDES PRODUCT MOMENTS OF TRUTH
PROCESS MANUFACTURING PARTNERSSPCEIFIC PRODUCT MANAGER FOR COMMUNITY
PRIMARY MANUFACTURER OF SPECIFIC PRODUCT
PRODUCT EQUITY FOCUSED
PURCHASING IS INTEGRATED / DRIVEN BY MANUFACTURING
DIRECTLY SUPPORTS DISCRETE PARTNERS
PROVIDES SUPPLY MOMENTS OF TRUTH
CONSUMER PRODUCTS GOODS PARTNERSBRAND / CATEGORY MANAGERS FOR COMMUNITY
USUALLY BOTH MANUFACTURER & SERVICE PROVIDER
PURCHASING IS CORE COMPETENSE
PROVIDES MARKETING MOMENTS OF TRUTH
BRAND / CATEGORY EQUITY FOCUSED
RETAIL PARTNERS
CONSUMER CHANNEL MANAGERS
BRICKS & MORTAR
CATALOGUES
INTERNET
LAST POINT OF VALUE CREATION
CONSUMER DELIVERY FOCUSED
PURCHASING IS CORE COMPENTENSE
MANAGES THE DELIVERY MOMENT OF TRUTH
TRANSPORTATION / LOGISTICS PARTNERS
FINANCIAL SERVICES PARTNERS
RA
W M
AT
ER
IAL
SCO
NS
UM
ER
S
Local and Global Optimization in Supply ChainLocal and Global Optimization in Supply Chain
Push-PullPush-Pull Supply Chains Supply Chains
Push-Pull BoundaryPush-Pull Boundary
PUSH STRATEGY PULL STRATEGY
IT Recommendations
Involve suppliers during system development and enhancement
Share On-line data with suppliers Engage best CIO in retail industry and sign long
term contract Adopt offshore model to reduce substantial IT
cost
Conclusion Restate Recommendations
– Urban Strategy
• Introduce clothing line which continue to appeal the youth
• Locate stores in newer strip malls– CRM
• Focus on putting customer’s first
• Make shopping easier on line and in the stores– IT Integration
• More involvement with suppliers
• Use a electronic system to replenish stock