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Kmart – Keys to Success Presented by: Robert Shaw Yasmin Anandwala Eric Findley Ardita Kalaja Winfield Pollidore Sanjay Mengi

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Page 1: Keys To Success

Kmart – Keys to Success

Presented by:Robert Shaw

Yasmin AnandwalaEric Findley

Ardita KalajaWinfield Pollidore

Sanjay Mengi

Page 2: Keys To Success

Kmart - IntroductionKmart - Introduction

Yasmin Anandwala

Page 3: Keys To Success

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

Page 4: Keys To Success

Kmart - AnalysisKmart - Analysis

Robert Shaw

Yasmin Anandwala

Page 5: Keys To Success

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

Page 6: Keys To Success

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

Page 7: Keys To Success

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

Page 8: Keys To Success

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

Page 9: Keys To Success

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

Page 10: Keys To Success

Market Share Analysis

Page 11: Keys To Success

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

Page 12: Keys To Success

Retail Preference Survey

Selection Criteria– 15 Female and 5 Male– Wayne County area– Average age over 35– All were frequent shoppers

Page 13: Keys To Success

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

Page 14: Keys To Success

Marketing Key #1Marketing Key #1

Leverage Urban Minority Leverage Urban Minority Market StrengthsMarket Strengths

Eric Findley

Page 15: Keys To Success

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.

Page 16: Keys To Success

Kmart Market Profile by Race

32%

7%

61%

African Americanand HispanicConsumers

Other MuliticulturalConsumers

MajorityConsumers

Page 17: Keys To Success

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

Page 18: Keys To Success

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

Page 19: Keys To Success

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

Page 20: Keys To Success

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

Page 21: Keys To Success

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

Page 22: Keys To Success

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

Page 23: Keys To Success

Other Popular Apparel Urban Brands

Other Popular Brands– Levis – Nike– Kangol– Kenneth Cole– Rockport

Page 24: Keys To Success

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)

Page 25: Keys To Success

Marketing Key #2Marketing Key #2

Implement CRM StrategyImplement CRM Strategy

Ardita Kalaja

Winfield Pollidore

Page 26: Keys To Success

K-Mart CRM

What is CRM?– Customer Relationship Management

CRM Process– Discover– Assemble– Deliver

Does partnership make sense?

Page 27: Keys To Success

K-Mart CRM

Page 28: Keys To Success

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

Page 29: Keys To Success

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 

Page 30: Keys To Success

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

Page 31: Keys To Success

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

Page 32: Keys To Success

Marketing Key #3Marketing Key #3

Improve IT Supply Chain Improve IT Supply Chain ManagementManagement

Sanjay Mengi

Page 33: Keys To Success

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

Page 34: Keys To Success

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

Page 35: Keys To Success

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

Page 36: Keys To Success

Ord

er

Siz

e

Time

CustomerDemand

CustomerDemand

Retailer OrdersRetailer OrdersDistributor OrdersDistributor Orders

Production PlanProduction Plan

Trend of Weak Supply Chain Management

Page 37: Keys To Success

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

Page 38: Keys To Success

Push-PullPush-Pull Supply Chains Supply Chains

Push-Pull BoundaryPush-Pull Boundary

PUSH STRATEGY PULL STRATEGY

Page 39: Keys To Success

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

Page 40: Keys To Success

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