Kmart opens 15 supercenters; Smaller formats pose management challenge - Brief Article

DSN Retailing Today, Nov 19, 2001 by Mike Duff

MIDDLETOWN, N.Y. - While Kmart's new generation of in-the-box supercenters will drive sales volume through the addition of grocery and perishables operations, a quick walk-through suggests running the new format will be a challenge in store management.

Kmart reduces just about everything on the sales floor to incorporate food. And while the food presentation itself is attractive, it is somewhat scaled back in comparison with Kmart's full-scale supercenter model. One newly opened in-the-box supercenter-so called because it fits into a discount store facility- in Middletown, N.Y., devotes about 24 feet to the service deli case. The nearest full-size supercenter, in Kingston, N.Y., gives the deli case about 36 feet.

Steve Pagnani, a Kmart spokesman, said departments are scaled back throughout the store, some more and some less, depending upon their historic performance at the location. He readily conceded that the smaller stores presented management challenges.

Not only are departments smaller, but so are aisles and, critically, the checkout stands. The checkout at the Middletown store was greatly reduced from what might be expected even at a discount store; self-checkouts were included to help speed customers through bagging and payment. But then the checkouts lead to a wall fronted by a narrow aisle and a single exitway to the right. Without good management, this is likely to become a mess on weekend evenings.

Pagnani said Kmart has taken such problems into consideration in its training program for managers who are slated to operate new smaller supercenters. The majority of managers at Kmart's in-the-box supercenters will be those who ran the stores before conversions or managers from full-sized supercenters, who will take on the challenge of the smaller stores with their incentive packages tweaked appropriately.

Discount store managers will get specific consumables help as they take on supercenter operations. "The stores have food managers," said Pagnani. "They are usually in supercenters. Discount store managers have experience in food already, though, from handling Pantry operations."

Eric Beder, a Ladenberg Thalmann analyst, said the new smaller supercenters, with their additions of full grocery and perishables operations, represent "cheap growth" at a time when Kmart isn't in a position to roll out a lot of stores. Still, he acknowledged that managing it wouldn't be easy. "The devil is in the details of making it work," he said.