Kmart - Its Current Problems and Its Future

Abstract:

In this project we will discuss the Kmart Corporation, how it evolved from a giant and a leader in its market to its current situation of almost chronic under-performance, seemingly ineffective management and a host of other problems that have become abundantly evident over the past decade. First we will provide an overall description of the Kmart organization including a timeline of the main corporate events since its foundation by S. S. Kresge, as well as its current economic environment. Next we will attempt to diagnose the apparent problems that the Kmart Corporation has and their historical origins. The paper will then present some suggestions, a "plan," for turning the company around. We will then evaluate the plan and discuss the effect the changes will have on the corporation.

Kmart Corporation - Description and Timeline:

Kmart Corporation, discount and general merchandise retailer, is a familiar fixture in American business life. We will begin with an abbreviated timeline, outlining the main events in Kmart's history (Corporate Timeline). It began as the S.S. Kresge Co., founded by Sebastian S. Kresge in 1899. (Yahoo Finance) It (re-)incorporated in Michigan in 1916 and began trading on NYSE in 1918. It expanded its operation throughout the United States and into Canada in 1929, and Australia in 1968. The name was changed to Kmart in 1977 and in 1981 the 2000-th Kmart opened.

Kmart, the outgrowth of the old Kresge chain of nickel-and-dime stores, became the pioneer in discount retail merchandising when its first discount store opened in Detroit in 1962. Low- and middle-income American consumers loved the convenience of shopping in one store for a variety of merchandise at reasonable prices, and Kmart eventually opened over 2,000 stores across the United States. By the late 1970s, Kmart was one of the largest retailers in the country, second only to Sears. The corporation sold most of its old Kresge stores in the 1980s and began to diversify, purchasing specialty companies like Borders-Walden Bookstores, Builders Square, Payless Drugstores, and Office Max. Also, Kmart ventured into larger warehouse clubs, launching its chain of Pace membership warehouses.

In 2002 Kmart files for reorganization under Chapter 11 of the U.S. Bankruptcy Code, announced closing of almost 300 stores, and Charles Conaway is replaced by James Adamson as a chairman and CEO.

Today the Company operates in the general merchandise retailing industry through 2,105 Kmart stores, with locations in all 50 United States, Puerto Rico, the United States Virgin Islands and Guam (Yahoo Finance). Kmart's general merchandise retail stores are present in 321 of the 331 Metropolitan Areas in the United States. The Company's stores are usually single floor, freestanding units, in sizes from 40,000 to 190,000 square feet. Kmart is the