Keep an Eye on Your Business Competition
In the 1960s, a little discount store called Kmart opened its doors. One store turned into many. The Kmart Corporation soon dominated the discount market to the point where few once believed that any competitor could shake its grip on the business competition.
Kmart led the pack by being the first to introduce modern conveniences such as air conditioning, self-service displays and shopping baskets. The “blue light special” became an American icon. Kmart put a number of competitors out of business so why should they be worried that competitors would take any market share or even catching up.
When Did Kmart Start to Fall Behind
Without the required focus and efforts to maintain its core brand, Kmart’s fortune and superstar status also shifted. Kmart maintained a high dividend so there was little money available to improve its stores. While the competitors remodeled their stores, Kmart stores became outdated and withered. As Target and Walmart invested heavily in computer technology, Kmart relied on its antiquated systems.
Business Competition Stepped Up
While its competitors adapted to changing consumer needs and market demands, Kmart experimented with different logos and names. When Kmart finally began a long overdue overhaul of its stores in the 1990’s, Walmart already overtook it in sales and market share.
Eventually, Kmart filed for Chapter 11 bankruptcy protection. Hundreds of Kmart stores were sold or closed and tens of thousands of employees were laid-off. During that time, Walmart opened new locations in record pace. Kmart was consistently one step behind its customer needs and two steps behind its competitors.
Where Did Kmart Go Wrong
Some business architects and strategists feel that the corporation failed to create a coherent brand image. Others felt that there was too much diversification and not enough focus on the brand that once brought in the majority revenue. Almost all agreed that they also did not properly manage the changes needed to accommodate the market and respond to their competition.
Can Kmart Come Back?
Some feel that Kmart has an opportunity to come out of bankruptcy stronger than ever but only if they successfully re-design and re-architect their business. Many business architects have their own opinions on how that can be accomplished but only time will tell which methods work (or did not work) for Kmart.