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In the 1970’s Kmart was highly successful and dominate in the retail industry. However, by 2002 they had filed for chapter 11 bankruptcy. In the 70’s and 80’s Kmart was a household name and today it is difficult for most people to even remember where a local Kmart store might be located. Consultants, analysts, and academics have varying views as to what caused the financial breakdown. Some claim supply-chain issues and others blame economic conditions, however, the predominate theme in their opinions appears to be poor strategy. The degree to which poor strategic decisions contributed to Kmart’s failure is debatable.
So how did Kmart manage to lose the majority of its market share to Wal-Mart, Target, and others in the last 20 years and how did strategy or a lack there of lead to this? Simply put, the company never had a marketing strategy. Historically, Kmart depended on Wal-Mart’s focus of expanding into rural markets and Target's focus on regional markets to maintain its market share. Kmart stores have always been mainly concentrated in urban areas. Other than just being in the market, Kmart did little to protect its geographic advantages. Service was another area in desperate need of improvement for Kmart. Though they continued to open new stores and bought several specialty chains, including sporting goods, office supplies, and books stores, conditions at existing locations declined. Newspaper articles around this time period pointed out constant complaints from customers regarding, service, unbalanced store inventories, sloppy merchandising, and uncaring employees. Kmart customers expected a higher level of service because companies like Wal-Mart and Target had "raised the bar" on service. Customers might have avoided bargain opportunities if they were constantly disappointed with the level of service. Kmart may have let its weaknesses in customer service undermine its competitive advantage in promotional selling. So, when Wal-Mart and Target...