K Mart Management example essay topic

K Mart is the outgrowth of S.S. Kresge, founded in 1899. S.S. Kresge was a variety store that featured low-priced merchandise for cash in low-budget, relatively small buildings with sparse furnishings. The adoption of this concept was pioneered by F.W. Woolworth Company in 1879. Due to the early success of the variety store concept, S.S. Kresge saw rapid and profitable development in its early years. In 1917, the firm was incorporated. It had 150 stores and next to Woolworths, was the largest variety chain in the world. Over the next 40 years, the firm experimented with mail-order catalogs, full-line department stores, self-service, a variety of price lines, and the opening of stores in planned shopping centers.

By 1957, management had become aware that there were many different merchandisers that were grabbing the market share of categories of products previously dominated by variety stores. This was mainly due to the expansion of supermarkets and drugstores. In 1957, in an effort to regain its competitiveness, S.S. Kresge placed Harry B. Cunningham in the position of General Vice-President. Mr. Cunningham was given the assignment of studying existing retailing business and recommending marketing changes. After two years of study, Cunningham recommended that S.S. Kresge go beyond being a variety store and enter the discount store market.

The board of directors accepted Cunninghams recommendations. When President Frank Williams retired, Cunningham became the new President and was directed to implement his recommendations. The first K mart opened in 1962 in Garden City, Michigan. In adopting Cunninghams strategies, management decided to rely on the strengths and abilities of its own people to make decisions rather than employing outside experts for advice. The main different in the K mart strategy would be the offering of a much wider merchandise mix. Originally, K mart was only able to merchandise about 50% of their merchandise mix, and they contracted for operation of the remaining departments.

In the following years, K mart took over most of those departments originally contracted to licensees. Eventually, K mart operated all but the shoe departments. By 1980 K marts competition was offering something new and different in terms of depth of assortment, competitive price image, and format. K mart management recognized the threat of these viable businesses that were keeping the firm from improving and maintaining market share in specific merchandise categories. After careful analysis, several new marketing strategies emerged. They included accelerating store expansion and refurbishment; capitalization on dominant lifestyle departments; centralizing merchandising; investing more capital in retail automation; undertaking an aggressive and focused advertising program; and fostering continued growth through new specialty retail formats.