Kmart's ongoing travails provide a textbook example of how a
retailer can lose focus and allow competitors to craft images that
resonate with the public while it flounders in search of message points
and a marketing PR strategy.
Now in chapter 11 bankruptcy proceedings, Kmart's survival will depend
on whether its senior executives can create new PR messages that will
ring true enough in the marketplace to bring back disenfranchised
customers while keeping employees positive about the company.
"Clearly the important thing is having a clear position, but also the
right position," says Kevin Keller, a marketing professor at Dartmouth's
Tuck School of Business Administration.They can't play the Wal-Mart
game, and they can't play the Target game. Kmart clearly must sharpen
its focus, or it is not inconceivable that it could go away."
Few dispute that Kmart was an early innovator in US discount
While competitors were still locked in cities, Kmart saw the future in
the suburbs. Abandoning its five-and-dime-store roots, it opened big box
stores in major metropolitan areas, often being the only retailing
alternative in the fast-growing smaller burgs that ringed American
A competitive market
Thirty years ago, Kmart stood for convenience and price. But as any
runner knows, leading early in a race doesn't guarantee a win,
especially in a marathon like the retailing business.
Competitors like Wal-Mart and Target slowly advanced out of their
regional bases - Wal-Mart the South, Target the upper Midwest - to
challenge Kmart on the national discount scene.
Wal-Mart began its push by focusing on employee and customer
communications (PRWeek, December 10, 2001). "They didn't do it with
press releases, but they certainly pushed their culture at the store
level," says Frederick Marx, a partner at Marx Layne & Company, a
$5 million Detroit area PR shop. "They developed a sense of
ownership by their employees."
Even today, Wal-Mart management holds twice-daily broadcasts to all
stores, and does a monthly internet employee newsletter, sharing
financial information about the company with its workers.
Wal-Mart gave customers the message that they could find items in stock
and at low prices, messages on which well-managed stores delivered.
While Wal-Mart lowered costs and invested heavily in systems that
streamlined its supply-chain management, it didn't discuss such
retailing minutiae with consumers. All it told them about was low prices
in its stores.
"In PR, you must demonstrate your message, and your stores have to carry
through on that corporate message. Wal-Mart demonstrated their message
at the store," says Eric Yaverbaum, founder of New York-based Jericho
Communications. "When you're Wal-Mart, you're price."
Wal-Mart also capitalized on the image of founder Sam Walton as a
hard-working, American success story, adds Marx. Wal-Mart became a
projection of Walton's image, much like Wendy's became identified with
founder Dave Thomas.
Minneapolis-based Target started its retailing life as the offshoot of
department store company Dayton-Hudson. Early on it had a sense of style
that once had been the PR approach favored by department stores.
"They have that sense of personality," says Marx, a retail PR veteran,
who once worked for Hudson's, one of the two department store chains
that merged into Dayton-Hudson. "They've done a phenomenal job of
branding. Everything speaks very clearly to who they are."
Target became the place to shop for people who remembered the panache
that the department stores once had, but who also wanted better value
for their money and hipper styles and fashions than many department
stores seemed to be offering at the time.
"Target reached Generation X. It just became trendy," says Adrienne
Arieff, an account director with Magnet Communications, San Francisco,
who handled US PR for Burberry's earlier in her career.
Target also did well in integrating its marketing. "Their PR message is
mirroring their advertising, and all of it is staying on the edge," says
Yaverbaum. "Target wants to be edgy and high-energy."
Target's messaging changed people's attitudes about discount
Yuppies who once felt they were too successful to need discount shopping
went to Target because it was cool. "People are not only not embarrassed
to shop at Target, they're proud to shop at Target," claims
As they grew, Target and Wal-Mart also both emphasized community
Their very size made them vulnerable to accusations that their arrival
would hurt local retailers, so community relations had to become an
essential part of their PR plan, Yaverbaum explains, knowing from his
work with IKEA the types of community issues a big retailer can
An uphill battle
Kmart garnered widespread press coverage last year when it staged the
return of its Blue Light specials amid much fanfare, but the message
being put out was that Kmart would try to compete on price with
Wal-Mart. "The moment Kmart thought they could be the price leader or
the price dominator, that was an uphill climb against Wal-Mart," says
In the past, Kmart PR focused on events rather than long-term
And its marketing mix relied heavily on weekly ad circulars, which also
seemed to be an attempt to compete on price alone.
"I don't think they've figured out how to market yet," says
"They talk much more about tactics than overall strategy."
Kmart last year brought in Lori MacTavish, a Daimler-Chrysler veteran,
to head its PR efforts. But senior executives seem reluctant to adapt
the more proactive PR doctrine MacTavish has tried to push. Kmart's
headquarters in suburban Detroit is called Fort Kresge by locals (Kresge
was the company's name when its five-and-tens dotted Main Street USA) as
much for its architecture as for the insular corporate culture inside
Reporters who cover Kmart say there seems to be a disconnect between PR
people wanting to make senior executives accessible and those executives
shying away from interviews (PRWeek, June 11, 2001).
Fortune, for example, in early January before the bankruptcy
announcement, was rebuffed after requesting that a reporter be allowed
to spend time with CEO Charles Conaway.
Conaway so far has come across as more of a Mr. Inside than a CEO who
enjoys the media spotlight; so observers don't expect him to personally
lead Kmart's new image push with ads, a la Lee Iacocca.
One place for Kmart to start building a workable image is to listen to
customer complaints about messy stores and out-of-stock merchandise,
A humble, honest approach that admits past problems and commits to
better service could connect with customers, he explains.
Arieff suggests using testimonials from customers as a way to
communicate what Kmart has to offer. "There's nothing more powerful,"
While it's trying to reach consumers, Kmart also needs to aim messages
at employees who now are demoralized at the prospects of massive store
closings and layoffs. Says one PR person familiar with the situation:
"Store managers and others feel very disenfranchised. There's nothing
wrong with being real with them."
At the present time, Kmart management seems preoccupied with clearing
the financial debris that comes with bankruptcy. But if they don't start
thinking about PR and an image that will bring business back to whatever
Kmart stores remain open, they could simply be writing another chapter
in the ongoing decline of a once mighty retailer.