The penalty that businesses pay when they ignore the power and value of strategic branding is usually fatal, especially when facing experienced competitors. Attention Kmart Shoppers! The bankrupt discounter is ending its 40-year presence in Houston, closing all 17 area stores and removing hundreds of jobs as the nationwide chain sheds low-performing stores. The giant retailer, formerly one of the better known in the United states, announced this past week it would shutter another 326 stores and lay off 37,000 workers nationwide. It is a classic example of a company failing to comprehend the critical necessity for competitive positioning in a highly competitive economic environment.
Kmart had the pole position. Kmart originally resonated using the marketplace. It had been unique in the own new retail category. Which was a positive first step in a two-step process for positioning a brand. Nevertheless they ignored the crucial step: They did not identify themselves in the marketplace with the category they created. How if they did that? Again, two steps: Craft an extensive and focused communications strategy built across the category concept, then manage it diligently year-in and year-out.
Oh, yeah: Don’t forget to raise the bar to potential competitors by requiring that they spend millions on advertising just to get in this game. Promote the category instead of contend with your competition. Unsophisticated management becomes distracted when they see their 100% market share decline to 90%, then 80%, etc., as competitors emerge, but competitors are important to get sales growth in a new category. 50% of a million dollar category is preferable to 100% of the $500,000 category.
The Blue Light Special Questions for today: Just how can a company selling goods cheaper than their competition go bankrupt for insufficient sales? Don’t buyers ferret out lower prices and keep an organization alive? Not if their brand sinks.
Category competition increased. It’s instructive to compare and contrast Kmart with Target and Walmart. Kmart’s ultimate failure in the industry was virtually guaranteed by letting Target and Walmart to identify themselves successfully with Kmart’s low-cost concept of retailing. Perhaps Kmart expected their lower prices to get enough. How wrong they were.
Retail sales success is a result of three intertwined factors: Product. Price. Location. Prices must interest buyers. Products must be desirable. And store locations should be convenient. Kmart succeeded oftentimes on the 3 fronts.
The Houston Chronicle (January 15, 2003) reported how Kmart customer Bob Franchville bought a bath set through the Westheimer Kmart store for $9.95. “I was in your own home Depot earlier, and it also cost $60 there,” he stated. Kmart’s price was a small fraction of a competitor’s and the store’s location is prime. But Home Depot was getting 6-times the price for the same product.
Affordable prices, not enough. The answer is that both Target and Walmart have built more powerful brands than Kmart. Neither have lower prices than Kmart. But, despite the best prices, https://www.storeholidayhours.org/kmart-holiday-hours-open-closed-today is not really the most preferred retailer among shoppers. Think about it. Most companies believe they are able to obtain a competitive advantage by offering goods on the cheap and Kmart represents kjgvei startling, real-life case background of how wrong that strategy could be.
At this particular eleventh hour, the Kmart management’s prayer is always to improve cash flow, not by increasing sales but by reduction of costs. If this type of were a game of chess, Kmart is hearing the phrase “Checkmate!” looking at the competitors. Each time a company competes without having a preferred brand, the only move left is always to reduce costs, close stores and abandon customers and markets. Where does which lead? The incredibly tragic ripple effect extends, unfortunately, to some legion of suppliers, manufacturers and related industries. And how is it possible to disregard the devastation this caused with thousands upon thousands of shareholders and employees who had vested their trust in Kmart’s leadership?
The course is now forever changed. Even if Kmart emerges from bankruptcy, Target and Walmart will still be there, stronger than in the past. Their positions as category leaders are firmly established in the minds from the purchasing public. If Kmart’s answer to tomorrow’s concern is to seal more stores and surrender both customers and competitive turf, it won’t be a long time before Kmart’s Blue Light is turned off. Forever. Kmart abdicated the throne they built. Competitors could not have overcome Kmart’s leadership position if Kmart had not given it away.