Harry Cunningham, 85, Kmart's founder, industry pioneer dies - K Mart Corp - Obituary

Discount Store News, Dec 7, 1992

NORTH PALM BEACH, Fla. -- Harry B. Cunningham, Kmart founder and widely regarded as the father of the discount store industry, died in his sleep here Nov. 11. He was 85.

In a statement about his death, Kmart chairman Joseph E. Antonini said, "Harry Cunningham's vision, creativity and leadership have reshaped the world of retailing. His contributions to Kmart Corporation will long be remembered by all who had the pleasure of working with him."

Although others had pioneered the discount store concept, Cunningham's major contribution to the industry was taking the idea and making it work. He applied the discipline, operating controls, executive talent and deep pockets that S.S. Kresge, the variety store predecessor that the Kmart Corp. developed, and used them to roll out the concept others had pioneered.

But where early chains foundered because they were operating by the seat of their pants, Kmart under Cunningham, who became Kresge president in 1959 and chairman in 1967, succeeded in developing a national discount store chain.

At the same time, Cunningham was taking risks, such as eliminating stock dividends in 1963 in order to devote more capital to expanding Kmart, and converting a successful variety store chain into a new retailing entity.

From 1957 to 1958, Cunningham, then-general vice president of Kresge, was charged with reviving the sagging fortunes of Kresge, founded in 1899, but part of the rapidly declining variety store industry.

During that year, he visited traditional retailers, as well as the upstart chains that were pioneering what then was a $1 billion industry.

"I became intrigued very early with the success of the discount pioneers," he said in an interview with DSN in 1975. "They were succeeding in attracting customers and doing volume, but they were also doing some things wrong."

In 1960, he commissioned other executives to study discounters to learn how they were outperforming variety chains. A report from one of those officials before a group of Kresge executives and merchandisers in March 1961, triggered this response from Cunningham: "Gentlemen, the discount store is as much a part of Krege's future as the variety store. And that's where we're going next."

The first Kmart, covering 60,000 sq. ft., opened a year later, March 1, 1962, in Garden City, Mich.

In 1963, Cunningham took the risky step of eliminating stock dividends in order to devote all possible resources to Kmart's expansion. He explained why to shareholders at that year's annual meeting: "Kmart looks so good for the long term that we want to pour in all the locations we can before other retailers see the opportunity."

By 1966, Kmart had opened 167 stores and became the nation's largest discounter, a position it held until Wal-Mart overtook it in 1990.

Others followed in his footsteps, including Sam Walton, founder of Wal-Mart, and John Geisse, who developed Target for the Dayton Co. Both Walton and Geisse also passed away earlier this year--just as each of the chains these industry pioneers founded celebrated their 30th anniversaries.

The operating order that Cunningham brought to the chaos of an infant industry also was applied by others to found successful regional chains, such as Venture, another Geisse creation, Caldor and ShopKo.

From the earliest days, Cunningham thought globally, founding Kmart in Canada in 1963 and joining forces in 1968 with Australia's largest retailer to start Kmart (Australian) Ltd.

Cunningham predicted, albeit prematurely, that Kmart would be operating in Europe by 1975. His prediction came true 17 years later with Kmart's acquisition of 13 department stores in Czechoslovakia.

From 1967 to 1970, Cunningham held two positions, president and chairman, when he resigned as president. He resigned as chairman in 1972, the year he retired to Florida, but retained a seat on the board and remained a member of the executive compensation, stock option and finance committees. He was named honorary chairman in 1973.

A native of Home Camp, Pa., Cunningham left Miami University, Oxford, Ohio, after his sophomore year to take a newspaper job in Harrisburg, Pa. He joined Kresge as a management trainee the following year and in 1940 started his climb to the top when he became a store manager.

Surviving are his widow, the former Margaret Diefendort, three daughters; Jane Herrington, Sally Downey and Ann Glime; a brother, Norman, three sisters; Virginia Cunningham, Mabel Graham, and Nellie Kauffman, and grandchildren.

The family held private funeral services.