Retailer polishes image to compete with Wal-Mart


August 30, 1992|By Michael Dresser | Michael Dresser,Staff Writer

For Kmart Corp., the last decade has been a Blue Light blowout. Now it's fighting back.

One of the great retail success stories of the 1960s and 1970s, the Troy, Mich.-based discount store chain plodded through the 1980s as an upstart from Arkansas grabbed the attention of Kmart shoppers and the admiration of the business world.

Sam Walton's Wal-Mart Stores, which rang up a mere $2.4 billion in sales in the 1982 fiscal year, swept out of the South and breezed past Kmart in 1990, to seize the title of No. 1 U.S. retailer, with $43.9 billion in sales. Kmart, with $34.6 billion in annual sales, held onto the No. 2 position only because of the stumbling of once-dominant Sears.

But now, as its arch-rival, Wal-Mart, begins its push into the Baltimore area, Kmart is spending about $3 billion to give its aging discount stores a new look comparable to Wal-Mart's. It is backing that program with aggressive marketing to revamp its "polyester palace" image.

The renewal program is part of a 4-year-old effort by Kmart's chairman, Joseph E. Antonini, to revitalize the giant retailer, whose "blue light specials" and "attention, Kmart shoppers" announcements have provided fodder for a legion of stand-up comics.

In effect, the company is remaking itself, much as S. S. Kresge did in 1962, when it opened its first Kmart store in Garden City, Mich., and started a process that would lead to its rebirth as Kmart Corp.

Mr. Antonini's determination to transform the company is spelled out on the cover of its 1991 annual report.

"Kmart has changed," it proclaims in large letters. "We've changed the way we look, feel, think and act."

Analysts are skeptical about how much Mr. Antonini has been able to change the way Kmart feels, thinks and acts. But there is little doubt that his renewal program is radically transforming the way Kmart looks.

A walk through the Pasadena store, where the interior has been renovated, demonstrates that the new format is a dramatic departure from the cluttered, down-on-its-luck appearance of its older stores.

Aisles are wider, merchandise is better displayed and lighting is brighter. Bold red-and-white signs add color and make it easier to find your way around the stores. Added checkout lines make it easier to get on the road.

Brand names are prominently displayed throughout the store to pound home the message that buying at Kmart doesn't mean buying flimsy merchandise.

Gone is the old snack bar, replaced by a Little Caesars pizza franchise. At the front door is a "greeter" -- a classic Wal-Mart touch. Wheelchairs are available for customers who need them.

The nationwide program is well on its way in the Baltimore area, said A. N. Petraglia, Kmart's district manager for the east-central region. He oversees 14 stores covering a territory stretching from Annapolis to Frederick.

Already, Kmart's new look is in place at its stores in Fullerton, Crofton and on Wabash Avenue in Baltimore. At Pasadena, where the interior is finished, the facade will be upgraded this autumn. Work is in progress at Ellicott City and Sykesville.

Kmart is about halfway through its conversion program, which it launched in 1990. The undertaking, which the company expects to complete in 1995, will transform 2,400 stores and add an additional 100 to the chain, said Lisa Shields, a corporate spokeswoman. Smaller stores that cannot be expanded to fit the format will be closed and replaced.

For Kmart, the renovation program in Baltimore comes just in time. Wal-Mart opened its first area store in Glen Burnie this month, and it won't be long before the Bentonville, Ark.-based chain rings the city with stores in Westminster, Harford County and other suburban locations.

Let 'em come, said Mr. Petraglia, who works out of a small office in the rear of Kmart's Dobbin Center store in Columbia. "We are not intimidated by Wal-Mart at all."

According to Mr. Petraglia, Wal-Mart's reputation for providing good value is a matter more of perception than of reality. Kmart, he said, offers better merchandise.

"Our quality in fashions and clothing is really superior," he said. "We offer a broader assortment. We're more on-trend."

Mr. Petraglia acknowledges that Kmart fell behind the times during the last decade.

He acknowledged that checkout lines were too long, that displays were unattractive and that the chain's reputation suffered.

"The image problem that has plagued us is we were basically too cheap," he said.

In recent years, Mr. Petraglia said, Kmart has increased the percentage of name-brand merchandise it sells and cut back on private labels. Indeed, the stores are filled with such familiar brand-name items as Sharp stereos, Black & Decker power tools and Jordache clothing.

"The quality has always been there," he said. "Our new look shows it off a lot better."

Along with the store-renovation program have come an upgraded computer system and new distribution centers that will vastly improve Kmart's ability to control its inventory and prevent out-of-stock problems.

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