Kmart maps out aggressive store expansion plan

Discount Store News, Oct 5, 1992

TROY, Mich. - Kmart's fall store opening schedule is possibly its most ambitious n years, highlighted by the debut but of its second Super Kmart Center in Montrose, Ohio, and its newest store prototype in Auburn Hills, Mich., dubbed Oak Park III.

This fall, Kmart has scheduled 73 store openings. The largest concentration of stores is slated for November when 42 stores open. November is traditionally Kmart's largest store opening month. The openings are usually scheduled to take advantage of the uptick in fourth quarter sales.

Fall 1992 is also notable for a few other reasons: Kmart officially enters the Hawaiian retail scene with a store slated for later this month. The long awaited Kmart in Fresh Meadows, N.Y., a two-level unit, acquired from Bloomingdales, will open on Oct. 29.

In total, Kmart's fall opening plans include the following.

* Nine stores that opened in September: Baytown, Texas (Houston); Plano, Texas; Clarksville, Tenn.; Brewton, Ala.; Ionia, Mich.; Riverton, Wyo.; Lincoln, R.I.; Pineville, N. C.; and Gibsonia, Pa.

* 14 on the slate for October (including the Super Kmart Center in Montrose, Pa., and the Hawaiian unit) plus a site in Houston; Bloomingdale, Ill., Plainview, Texas; Chicago; Columbia, Tenn.; Boise, Idaho; Waite Park, Minn.; Fresh Meadows, N.Y.; Bear, Del.; Trussville and Homewood, Ala. (both Birmingham suburbs); and Lumberton, N.C.

* 49 in November, including Auburn Hills Nov. 19 as well as a store in Houston which will be part of a power center; Englewood, Calif., (Los Angeles market); and Tweksbury and South Attlelboro, Mass., (new markets). For the month, the chain's major store openings include eight in California, four in both Florida and Kentucky, three each in Michigan and Texas, and two in Massachusetts. In December, Kmart will open another store in Puerto Rico, its 15th in the commonwealth.

Kmart also is adding to its roster of power centers, retail centers that feature at least three Kmart retail formats. By the end of this year, Kmart win have 15 power centers, 12 of which were added in 1992. Twelve more are scheduled for 1993, said Charles Miller, director of real estate, specialty retail group.

Also on the rise are the number of Kmart combination centers, sites with at least two of Kmart's subsidiaries. The discounter will have 45 combination centers by the end of 1992, 19 of which opened this year. For 1993, Kmart is working on 17 projects, said Miller, noting that the final number of completed projects for the year is likely to rise. In addition, seven combination centers are already planned for 1994.

Kmart conceived of the power center format a few years ago as a way of presenting a variety of its retail formats in one place. The discount giant is committed to advancing the power center concept, where possible, because of the competitive advantages, said Miller.

"We're pushing it where it makes sense. There are advantages to our tenants. Kmart can gain a competitive advantage by being able to bring sister and brother companies together and make deals happen," he said.

So far, the best example of Kmart's power center concept is in place in Sayville, N.Y., the site of the discounter's Oak Park II prototype, unveiled last summer. That center now houses Kmart plus OfficeMax, The Sports Authority, Basset Books, and Builders Square, all Kmart subsidiaries.

For Kmart, the Sayville center has developed momentum for the power center program, said Miller: There is synergy among the Kmart tenants.

The most ambitious of the power center sites is underway in Utica, Mich., where Kmart plans to open six subsidiaries: a Pace, a Sports Authority, a Kmart, a Builders Square, an OfficeMax, and possibly a Basset. Pace will open this year; the rest next spring, he said.

So far, no power centers are planned using all of Kmart's subsidiaries. However, PayLess Drugs, which is primarily a Northwestern drug chain, will probably be included in some power centers in its market areas.

Assembling the tenants for the power centers is "a balancing act," Miller said. "We want to be careful that we allow each company to make its own business decision in order to preserve the accountability we expect from each."