Target vs. Kmart—a store-level view - Opinions from the Field - Brief Article

DSN Retailing Today, May 6, 2002 by Rick Wingate

It should come as little surprise that Target is in the process of surpassing Kmart as the nation's No. 2 discount retailer. Where Target is a forward-thinking and carefully planned company, Kmart is fighting for its life and is in the midst of a massive cultural change.

Kmart's woes are not just recent developments, either. It's been struggling for many years to effectively implement sound growth strategies, whereas Target has kept things slow (especially when compared to Wal-Mart), but steady (which is the way Wall Street likes it).

The reason I know this about Target and Kmart is because I've worked at the store level for both companies. I've been in the trenches, so to speak. I've seen firsthand how these companies operate. And I can say, with a certain degree of confidence, that their business practices are nothing short of a study in contrasts.

While at Target, where I worked as the equivalent of a store manager for most of the '90s, I saw a model of retailing efficiency. Among my observations were the following:

* New programs at Target are carefully planned and tested.

* Caution is the operating principle for all moves.

* Underperforming elements of the business, whether stores or strategies, are eradicated.

* Leadership is valued for its consistency and tenure.

* Idea-sharing is encouraged on all levels. Target truly believes in generating ideas from the ground up.

* Speed in replenishment, service and execution is ingrained in the company mindset.

At Kmart, where I worked as a store manager under the Conaway reign, I had many fond memories. The top leadership was always impressive and I was surrounded by a sense of pride and tradition. But operations left much to be desired. Among my observations were the following:

* Kmart's leaders were, and are, well-respected.

* The company has many long-term, experienced and dedicated employees. It's not uncommon, in fact, to find 75-plus years of experience in a given store within the management staff alone.

* Turnover, however, is a huge issue, especially in the midlevel to vp ranks. In my area alone, 11 district managers were changed in four months. One district even saw four different district managers in four months.

* Training programs suffer because of the rapid turnover.

* Contrary to popular belief, the transition to Fleming food distribution was extremely rocky, even if the decision to use Fleming over Supervalu was a huge coup.

* Technology is archaic (even e-mail and video conferencing were new to Kmart less than two years ago).

Given these stark differences, it's easy to see how Target moved into the position of the nation's second-largest discount retailer. Furthermore, it's not hard to imagine how it will maintain its edge and leverage its advantages. Its technology is arguably the most advanced in the industry; it employs prior planning in everything it does; and it thrives on a grounds-up philosophy for the generation of new ideas.

If Kmart, for its part, is to stand a fighting chance at a comeback, it's got its work cut out for it. Over the next 12 months, as the executive leadership team works feverishly to bring it out of bankruptcy, Kmart has three "must-win" tasks of its own:

* It must allow store managers to run their buildings, make mistakes and grow from them. Because the culture is being changed so fast, it must work to preserve its longtime, tenured managers.

* Planning and execution must be done prior to the roll out of a given strategy, not after the fact. This was the case with Bluelight Always items, which should have been pool-stocked, instead of being out for six weeks after the prices were lowered.

* Management must encourage ideas from the ground up, not from headquarters down. Even as recent as six months ago, Kmart was pushing a culture whereby the home office knows best.

When it comes to the co-existence of Target and Kmart, perhaps the question we should all be asking at this stage is not, "Who will be No. 2?", but rather, "Is there enough room in today's market for both?" Clearly, Target has found its niche. So now it's a question of how long Kmart can last without a viable niche of its own.

The author, who currently is a store manager at a leading apparel retailer in the Northeast, previously worked as a store manager for Kmart in 2001, and spent the better part of the '90s as a region operations specialist at Target.