On November 17, Kmart agreed to acquire Sears, Roebuck in a deal worth $11 billion. While some analysts cheered the potential efficiencies, the merger of two struggling, behind-the-curve retailers leaves us scratching our heads. Post-bankruptcy, Kmart is profitable and flush with cash, but it still lacks any clear differentiation strategy, and same-store sales are slipping by 13%, among the worst in the trade. Forget Sears, which brings its own baggage; here's what the big red K really needs.
Neil Stern, retail analyst, McMillan Doolittle
"Play to your strengths. A greater percentage of inner-city and urban real estate gives them a greater percentage of the ethnic consumer. Do a better job of tailoring to a customer base that's not being catered to by your two big competitors."
Bill Chidley, chief creative officer, Design Forum
"The radical approach would be an altruistic retail concept. If we shop at Wal-Mart to be good fiscal managers and at Target to be hip, maybe we could shop at Kmart to give something back. Kmart becomes K for care, K for community. I'll put up with tiles that don't match, and I won't care if I pay 25 cents more for Tide if I know 20 cents is going to the high school."
Howard Davidowitz, chairman, Davidowitz & Associates, retail-consulting and investment-banking firm
"Go downscale. I would use their ratty stores to their advantage. If you look in the United States, which companies are doing well? Extreme value is doing very well. Ninety-nine-cent stores are doing great. . . . Cheap consumables. Cheaper basic clothing. Cheap health and beauty aids. Cheap, cheap, cheap, cheap!"
Neil Koomen, 48, Raleigh, North Carolina. Frequent contributor to Google Group misc.consumers.frugal-living
"They need to start by bulldozing some stores, building new stores, stocking them with desirable merchandise, and adding a lot more clerks. At a minimum, revolutionary change is needed."
A version of this article appeared in the January 2005 issue of Fast Company magazine.