New Kmart still wears vestiges of the old - Editorial

Discount Store News, June 5, 1995 by Tony Lisanti

The contrast in style from the previous regime at Kmart was clearly evident at the discounter's first annual meeting since former chairman, president and ceo Joe Antonini was forced out two months ago.

As soon as acting chairman Don Perkins called the meeting to order in the ballroom of the Hyatt Regency in Dearborn, Mich., and not the auditorium at headquarters in Troy, it was obvious that a new era for this venerable chain had begun.

"Change is the most appropriate word to describe the actions of Kmart since our last annual meeting," said the soft-spoken Perkins.

"Kmart's board and management are very aware of shareholder unhappiness and with the company's performance in recent years--and both are acutely aware that Kmart must improve," he said. "That is why we can promise you that more change is on the way."

Perkins, who was somewhat out of place at the podium in a chairman's role in which he got more than he bargained for, effectively handled the business issues and fielded dozens of tough questions from frustrated shareholders, disgruntled employees and ex-Kmart staffers.

There was no doubt this annual meeting had a different tone, a different style, a different character.

But it had a similar outcome.

When the two-hour meeting ended, there was definitely a sense of relief and a somewhat greater sense of confidence in the new management team.

Yet there was also a continued sense of uncertainty about the future. The change that most people in the room anticipated hearing about was never announced.

In fact, it was still unclear exactly what the "next round of changes" that Perkins mentioned would be.

Unfortunately, although several accomplishments were touted and some progress is being made, the nation's second largest discounter is still wallowing in a three-pronged identity crisis that continues to affect its 290,000 employees, the 3.7 million customers who shop its stores daily and the hundreds of financial analysts who monitor the company regularly.

The culture must change dramatically.

* Employees must be better motivated and better trained to service the customer.

* The inconsistencies in merchandising, in-stocks, environment, and service must be eliminated.

* The Kmart image must be clearly communicated to consumers and focused, consistent and executed at store level.

* And the message of change must be also clearly communicated to Wall Street in order to strengthen its confidence in and support for the company.

The critical issue for Kmart to move ahead is the appointment of a new ceo, which Perkins admitted he had wanted done by the annual meeting.

When asked about what qualifications the search committee was looking for in a new executive, Perkins replied, "It would help if he can walk on water."

Some observers thought Kmart had such a person, but unfortunately he drowned.

There's no doubt that Kmart needs such a savior. Its future depends on it.