At one point in time, Kmart was bigger than Walmart. Yes, that's right! For a long time, it knew exactly what middle-class consumers wanted and needed. So, why is it almost out of business today?
Similar to Sears, K-mart took its size and prominence for granted. They assumed that K-mart had solved the riddle of the middle-class culture when in reality, their tastes and expectations evolved. Kmart was not a perpetually innovative company. In fact, most of us over 30 can remember when Walmart was a crappy little store. Walmart recognized that merely selling cheap crap wasn't enough, and has continually improved its stores. It now is able to sell a handful of quality brands at average prices. Walmart recognized that middle-class consumers are aspirational and don't want to settle for only cheap goods, whereas K-mart is stuck in the past.
K-mart placed large bets on the future of “big box” stores. Both its own stores and other retailers that K-mart acquired in the early 90s. Unfortunately, this was also the time where the internet began welcoming e-commerce customers and sales. Sites like Amazon and eBay were in their infancy, but they were an early harbinger of what was to come.
K-Mart merged with Sears a few years later. This move was like two rocks holding each other tight in the hope they don't sink. Both companies wracked up large debts in the early 21st century. Which made it impossible for both companies to compete on price and bring their stores up to modern prices.
Arguably the biggest contributor to the downfall of K-Mart was, Walmart. Walmart is a despicable competitor that has always had a heartless eye on closing down its competition. Even Amazon tried to expand its scope by poaching Walmart marketing talent and trying to learn how Walmart uses logistics to its advantage. If K-mart is going to compete with Walmart, they will need an A+ management team, a ton of money to burn, and they'll need to get aggressive online. Lets hope K-Mart is up for the fight...
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