Essay Example on Kmart's Problem and Possible Solution

Kmart was one of the leading discount retailers in the United States of America a decade ago (Turner, 2003). The 2000 fiscal year saw Kmart rake in thirty-seven billion US Dollars in total sales. However, the company registered only 12.1 billion US Dollars in sales in the year 2014 (Hoovers, 2016). The decrease in sales is approximately sixty-seven percent in just over a decade (Egan, 2015). The decline has not gone unnoticed by the American citizens. Americans have noticed and observed the decline in their respective towns. There were two thousand, one hundred and sixty-five Kmart stores in America in the year 2000. Currently, the company only operates nine hundred and seventy-nine stores (Hoovers, 2016). Declining sales continue to be a major challenge to Kmart, and the management needs to focus on creating a unique brand that attracts customers so as to change the current situation.

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Kmart was in bankruptcy in the year 2003 hence attracting the attention of Eddie Lampert, an investor, who bought the company and merged it with Sears. The merger formed Sears Holdings Company. However, things turned against him. The company continued to record declining sales volume despite the merger with Sears. Some business analysts argue that Eddie had little knowledge of management and operation of retail brands, but that is not the primary reason for the decline. Failure to create a unique brand is the primary challenge facing Kmart and continues to cause the drop in the sales volume.

The real problem facing Kmart and Smears as retail partners does not revolve around their real estate value but revolves around the brand. The two partners have equity according to the old brand models that measure value and equity. The above old thinking that confuses brand meaning with corporate identity is the obstacle to successful operations of Kmart.

Kmart and Smears do not suffer from lack of physical location or awareness. They suffer from lack of mind location. The management does not recognize that deficit. Kmart is location driven whereas Smears appears as a mall of brands in the minds of consumers (Garbato, 2015). The industry at large and the retailers fail to address the subject. The debate focuses on the physical location of the stores and the plans of the new management team, but there is nothing mentioned about the real problem. The brand is the problem facing Kmart. Both Kmart and Smears brands do not exist in the minds of consumers.

By evaluating their current space in the retail market, it is clear that it is shared among other discount retailers like Macys, Target, and Wal-Mart. Therefore, it means that retailers observe Kmarts brand meaning and market space as a symbol of who they are as retailers but not who consumers believe they are as customers. The brand face is what matters. Customers upon using a particular service or product, they can get a reflection of the company. Failure of Kmart to create a new and robust brand will only result to decline further in their sales volume.

Conclusion

It is time Kmarts management realized that their existing brand does not work. It only worked many years ago when the market was still not crowded. A brand is specifically about the customer hence belongs to the client. Kmarts new management need to focus their attention on creating a new brand that is inexistent among consumers so as to start recording an increase in their sales. Otherwise, the current declining sales volume will continue.

References

Egan, M. (2015). Kmart's sales have fallen off a gigantic cliff. New York: CNN Money.

Garbato, D. (2015). Sears and Kmart Brand Merger. New York: Stealing share.

Hoovers. (2016). company search. Retrieved april 11th, 2016, from hoovers: www.hoovers.com

Turner, M. L. (2003). Kmart's Ten Deadly Sins: How Incompetence Tainted an American Icon. New Jersey: John Wiley &Sons Inc.