Antonini's vision fell victim to poor execution; total revamp underway - former Kmart chairman Joseph Antonini - includes related article on Kmart executives

Discount Store News, Feb 6, 1995 by Laura Liebeck

TROY, MICH. -- Joe Antonini has learned the hard way that when it comes to grandiose plans on remaking a retail empire, the devil is in the details.

Replaced as chairman of Kmart last month by highly regarded board member Donald Perkins, the retired chairman of Jewel Companies grocery store chain, Antonini now faces an uncertain future at the nation's No. 2 retailer.

His abrupt removal as chairman serves as a primer for chief executives everywhere who fail to deliver after greatly hyped plans to do otherwise. Instead of taking Kmart to the promised land of competitive retail dominance, Antonini oversaw two years of declining profits, a stumbling store renewal program and a disappointing run with specialty store formats that took the company's focus away from its core discount store business.

Antonini's demotion and Perkins' ascension to chairman are largely viewed as the first act from a now more visible, vocal and demanding board.

"Antonini has run out of time with people listening to his ideas, right or wrong," said Neil Stern, partner at Chicago-based McMillan & Doolittle, retail strategists. "Even if he has all of the right ideas, he's probably not the most effective guy to communicate them."

Stern likened Antonini's situation to that of a sports team that needs a new coach with fresh ideas to shake things up. "He was doing the right things, just too late."

Now the spotlight turns to the new management team of Perkins, executive vp Marvin Rich and executive vp and Super Kmart Centers president Ron Floto. The praise from industry analysts for this group of executives has, so far, been largely effusive.

At a conference call with Wall Street analysts after the shakeup in Troy, one analyst called Perkins "absolutely a top guy" and Rich "terrific."

Kmart watchers of all types feel that these three new executives have the tools to turn Kmart around.

"Perkins showed a fundamental knowledge of their [Kmart's] strengths and their weaknesses" during the conference call, said this analyst, who like most others interviewed for this article declined to be identified.

The analyst noted that the new team of executives running Kmart are serious about turning the chain around and are "looking at every nook and cranny" and at every number to find ways to improve the operation.

Most industry watchers applauded the two newly named task forces assembled to evaluate merchandising, operations and personnel. They cited the $800 million in cost-cutting measures, the store closings and the streamlining of headquarters staff as positive steps. Yet, most feel even more cuts are needed.

Industry experts say Kmart must reduce its expenses at headquarters and in the field and create a new identity for itself with consumers. Then it must consistently execute that identity. TV spots should not be a hodgepodge of messages that alternatively stress low price, fashion and selection. One message should be pounded again and again. The naming of a new advertising agency (now being reviewed) will be charged with that responsibility.

More under-performing stores are likely to close and executives let go, replaced by outsiders from both within and outside of the discount store field.

In addition, Kmart must complete a careful evaluation of the Super Kmart Center business, where store growth is being slowed this year for such a purpose. It must create a dedicated team to the program. If Super K is to realize its full potential, it can no longer be run from within the Kmart discount store operation. It needs an identity and culture of its own.

One Kmart competitor noticed that in the early days of Super K the stores had an impressive entrepreneurial spirit that appears to have been suppressed as the division grew by more than 300% in store count. The retailer said Super K was a better competitor in its early days with that employee fire.

The focus of a turnaround at Kmart begins with the naming of a new chief executive or chief operating officer, which is the priority of Perkins and the now higher profile board of directors.

Sources believe that headhunters will now be able to find a No. 2 associate since that exec will not report to Antonini but join Kmart under the highly regarded Perkins.

Among the names mentioned include Mike Bozic, president and ceo of Hills; Wal-Mart Stores president Bill Fields; former Wal-Mart president Jack Shewmaker; Ken Macke, retired chairman of Dayton-Hudson (parent of Target Stores); Bob Ulrich, chairman of Dayton-Hudson; and supermarket exec Steve Burd of Safeway, among many others.

"He [Perkins] absolutely needs a top guy," said another retail analyst who follows Kmart.

Perkins, who is a non-executive chairman, will not maintain an office at Kmart headquarters but will work from his home, something some observers worry about. Perkins is leading the way on a broad strategic review of Kmart encompassing recruiting and the grocery business, new merchandising techniques, customer service and inventory control.

"I'm concerned that he's only involved one-third of the time," the first analyst said. "Perkins understands that retailing is about customer franchise."