Wal-Mart versus Kmart: Diverging Paths

The battle between giant discounters Kmart and Wal-Mart began the year they
both were founded, 1962. In the ensuing thirty years until his death, Sam Walton built
Wal-Mart into the nations largest retail chain by breaking many of the rules of
retailing. He popularized discount pricing, avoiding the periodic sales on which other
retailers relied and used instead low prices always on many brand-name goods. He
also built stores concentrating on small Southern and Midwestern towns that other
retailers avoided.
Additionally he was successful with his cheerleading management style,
determined cost-cutting, and devotion to hands-on management involving frequent
visits to Wal-Mart stores. Wal-Mart also set industry standards in technology usage,
with its sophisticated, companywide point-of-sale and satellite-communications
systems, and in service, symbolized by the greeters stationed at the front doors of its
stores.
A significant milestone in the battle between Kmart and Wal-Mart was 1987,
the year Joseph Antonini took the reins of Kmart. He inherited some stores that were
as much as seventeen years old, with water-warped floors, broken light fixtures,
shelves placed too close together and cheap displays of merchandise. His predecessors
had neglected to invest in the technology that was helping Wal-Mart track and
replenish its merchandise inventory swiftly.
But at this point in time Kmart was still way ahead. It had nearly twice as
many discount stores, 2,223 compared with Wal-Marts 1,198. It also had sales of
$25.63 billion compared with $15.96 billion for Wal-Mart. Thanks to heavy
advertising and its major urban presence, it also had greater visibility. Wal-Mart sat in
open fields outside small towns and picked off the customers of aging mom-and-pop
stores.
As Wal-Mart multiplied across the landscape, an invasion of urban America
and a confrontation with Kmart was inevitable. Antonini prepared for this battle by
focusing on his strength: marketing and merchandising. He invested heavily in
national television campaigns, and glamorous representatives such as Jaclyn Smith, a
former Charlies Angels television star who had her own line of clothes for Kmart.
Instead of marketing, Walton focused on operations. He invested heavily in a
companywide computer system that linked cash registers to company headquarters,
enabling quick restocking of goods as they were sold. He also invested heavily in
trucks and distribution centers, around which he located his stores. This enhanced
control, and sharply reduced costs.
Joseph Antonini and Sam Walton also took different paths to achieving
growth. Antonini tried to foster growth by purchasing other types of retailers: the
Sports Authority sporting-goods chain, Office-Max office supply stores, Borders
bookstores and Pace membership warehouse clubs. Walton took the exact opposite
approach, betting everything on discount retailing. He then moved to discount
groceries, with the massive Hypermart, which was more than 230,000 square feet in
size. The Hypermart discount groceries didnt work, largely because they were so big
that customers couldnt find what they wanted. Undaunted, he launched a revised
concept: the Supercenter, a combination of discount and grocery store that was
smallar than the Hypermart.
 By the end of 1990, three years after Antonini took charge of Kmart, Wal-Mart
overtook it, with sales of $32.6 billion, compared with Kmarts $29.7 billion. This
was accomplished with fewer stores, 1,721 to Kmarts 2,300.
Kmarts response to losing its supremacy was to launch a $3.5 billion, five-
year plan to renovate, enlarge or replace its oldest and shabbiest stores. But, it still
could not overcome Wal-Marts very sophisticated distribution, inventory and
scanning systems which meant that customers almost never encountered depleted
shelves or price-checks at the cash register. Wal-Marts vigorous cost control also
allowed it to expand aggressively to bigger cities. Meanwhile, Kmarts combination
discount and specialty-retailing empire began to unravel at the end of 1993. The
problem was that the Kmart discount stores were quickly losing market share to Wal-
Mart, while Kmarts specialty stores-those offering books, office supplies or sporting
goods-were declining in profitability. At the end of 1994, at the insistence of
shareholders and against Antoninis wishes, Kmart announced a plan to sell majority
stakes in three of its specialty retail chains.
Meanwhile, Wal-Mart couldnt open its new Supercenters fast enough. This
prompted Kmart to start a similar chain. But the cost of opening super Kmarts only
detracted from the continuing, and generally disappointing effort to renovate general
merchandise Kmarts. Kmart also adopted a strategy of closing its unprofitable stores,
and closed about 300 discount stores from 1993 to1995. By March 1995 Antonini was
forced to resign and eventually was replaced by Floyd Hall. At the end of 1995,
Kmarts $33 billion in revenues were only about one third of Wal-Marts.
At this juncture Kmart is in serious trouble, although it is predicted to have
annual earnings of 40 cents a share in 1996, compared with a net loss of $1,25 a share
in 1995. Recent benchmarking of the two discount retailers revealed the following
with respect to key success factors.

Key Success Factor Kmart Wal-Mart

Location 25% of customers find
their Kmart inconvenient
Market share (1995 23%
estimate)
Sales/sq.feet (1995) $195
Core customer Over 55; $20K + income,
no kids at home
49 % of Wal-Mart
customers drive past their
Kmart to go to Wal-Mart
42 %
$333
Under 44; $40K + income,
kids at home

Questions:
1. What are the major reasons that Wal-Mart has been more successful than Kmart?
2. From a service operations perspective what has Wal-Mart done to enhance its
competitive position?
3. What does the future hold for Wal-Mart? What does the future hold for Kmart?
 Kmart karsnda Wal-Mart: Ayrlan Yollar
Dev perakendeciler olan Wal-Mart ile Kmart arasndaki sava her ikisinin de
kurulduu yl olan 1962de balamtr. lmne kadarki izleyen 30 yl iinde Sam
Walton perakendeciliin birok kuraln ineyerek Wal-Mart lkenin en byk
perakende zinciri haline getirmitir. Dier perakendecilerin uygulad periyodik
indirimlerden kanarak ve birok marka rnde her zaman dk fiyat
uygulamasn benimseyerek indirimli fiyat uygulamasn semitir. Ayrca, dier
perakendecilerin katklar kk Gney ve Ortabat ehirlerinde younlaan
maazalar amtr.
Buna ek olarak, neeli, gleryzl ynetim tarzyla, kararl bir ekilde
maliyetleri azaltmaya almasyla, Wal-Mart maazalarna sk ziyaretler yaparak eli-
zerinde bir ynetim tarzn benimsemesiyle baarl bir tarz yakalamtr. Wal-Mart
ayrca, irket apnda kurduu sofistike sat noktas ve uydu-iletiim sistemleriyle
teknoloji kullanmnda ve maazalarn dnda mterileri karlayan terifatlaryla
sembolize edilen hizmet anlaynda endstri standartlar oluturmutur.
Kmart ile Wal-Mart arasndaki savan nemli bir yapta Joseph Antonininin
Kmartn dizginlerini ele ald 1987 yldr. Antonini bazlar onyedi yanda olan
maazalar devralmtr. Bu maazalar byk lde sudan kabarm zeminleriyle,
krk lambalaryla, birbirine ok yakn yerletirilmi raflaryla ve mallarn
sergilenmesi iin kullanlan ucuz tehir yerleriyle olduka kt bir grntdeydiler.
Kendisinden nceki yneticiler, Wal-Martn stoklarn hzl bir ekilde izlemesini ve
yenilemesini salamakta olan teknoloji yatrmn ihmal etmilerdi.
Ancak, bu zaman diliminde Kmart hala nde bulunmaktayd. Maazalarnn
says neredeyse Wal-Martnkilerin iki katyd. (Wal-Martn 1,198 maazasna
karlk Kmartn 2,223 maazas bulunmaktayd). Wal-Martn 15.96 milyar $lk
satlar karsnda Kmartn satlar 25.63 milyar $ idi. Youn reklam kampanyalar
ve ehirlerdeki maazalar sayesinde tannrl da daha fazlayd. Wal-Mart kk
ehirlerin dnda ak alanlarda kurulmutu ve eski geleneksel maazalarn
mterilerini ekmekteydi.
Wal-Mart maazalar oaldka ve Amerikadaki ehirlere doru geniledike
Kmart ile kar karya gelinmesi kanlmaz bir sonutu. Antonini bu savaa gl
ynlerine odaklanarak (pazarlama ve ticaret) hazrlanmtr. Ulusal televizyon
kampanyalarna arlk vermi ve Charlienin Melekleri dizisiyle tannm bir
televizyon star olan ve Kmart maazalar iin bir giyim hattna sahip Jacklyn Smith
gibi byl isimleri kullanmaktan kanmamtr. Walton ise pazarlama yerine
ilemler alanna odakland. Sat noktasndaki kasalar iletmenin merkezine
balayarak, mallarn satldka hzl bir ekilde yerine konmasn salayan irket
apnda bilgisayar sistemine byk yatrm yapt. Ayrca, kamyonlara ve maazalarn
evresine kurduu datm merkezlerine yatrm gerekletirdi. Bu durum denetimi
artrd ve maliyetleri nemli lde azaltt.
Joseph Antonini ve Sam Walton byme ynnde de farkl yollar izlediler.
Antonini Sports Authority spor malzemeleri zinciri, Office-Max ofis malzemeleri
maazas, Borders kitabevleri gibi baka perakende zincirlerini satn alarak bymeye
alt. Walton bunun tam tersi bir yaklam izledi ve her eyini indirimli
perakendecilie yatrd. Daha sonra indirimli bakkaliye rnleri sat iine girdi;
bykl 230,000 feet kare olan hipermarketlere yneldi. Hipermarketler byk
olduklarndan mterilerin aradklarn bulamamalar gibi bir sorunla karlald ve
bu nedenle bunlar i yapmad. Daha sonra revise edilmi bir konsepti korkusuzca
uygulamaya koydu. Bu konsept, hipermarketten daha kk bir indirimli
bakkaliyernleri maazas olarak tanmlanan Spermerkezdi.
1990larn sonlarnda, Antonini Kmartn bana getikten yl sonra, Mal-
Mart, Kmartn 29.7 milyar dolarlk satlarna karlk 32,6 milyar dolarlk
satlaryla Kmart yakalad, hatta geti. Bu sonu Kmartn 2,300 maazasna
karlk daha az sayda, sadece 1,721 maazayla gerekletirilmitir.
Kmartn stnln kaybetme karsndaki tepkisi, en eski ve ykk dkk
durumda olan maazalarn elden geirmek, yenilemek, bytmek veya bunlarn
yerini deitirmek zere 3.5 milyar dolarlk bir bte ayrmak eklindeydi. Ancak
yine de, Kmartta, Wal-Mart mterilerinin hemen hemen hibir zaman boalm
raflarla veya kasalarda fiyat kontrol ilemleriyle karlamamasn salayacak
sofistike datm, stok ve tarayc sistemlerinin nne geecek bir sonu
yaratlamamtr. Wal-Martn gl maliyet denetimi, onun byk ehirlere
genilemesine de olanak salamtr. Bu arada, Kmartn imparatorluu 1993 ylnn
sonunda zlmeye balamtr. Sorun Kmart iskonto maazalarnn hzl bir ekilde
Wal-Mart karsnda pazar kaybetmesiydi. Bu arada Kmartn kitap, ofis malzemeleri
veya spor malzemeleri satan maazalarnn karlar da d gstermekteydi. 1994n
sonunda, pay sahiplerinin sraryla, ancak Antonininin kar kmasna ramen,
Kmart bu zel perakende zincirlerindeki hisselerinin nemli bir ksmn satma plann
duyurmutur.
Bu arada Wal-Mart Spermerkezleri yeterince hzl bir ekilde aamamt. Bu
Kmart benzer bir zincire balama konusunda tevik etmitir. Ancak sper Kmartlar
amann maliyeti genel Kmartlar yenileme ynndeki, srekli ancak genellikle hayal
krkl yaratan abann kesintiye uramasna neden olmutur. Kmart ayrca, kar
etmeyen maazalar kapatma stratejisini benimsemi ve 1993 ylndan 1995 ylna
kadar yaklak 300 indirim maazasn kapatmtr. 1995 Mart aynda Antonini
istifaya zorlanm ve yerine Floyd Hall gelmitir. 1995in sonunda, Kmartn 33
milyar $lk gelirleri Wal-Martnkinin sadece yaklak te biri kadard.
Hernekadar 1995deki hissebana 1,25 $lk zararla kyaslandnda 1996
ylnda hisse bana yllk 40 sentlik bir getiri salayaca ngrlmse de, bu kritik
dnemde Kmart ciddi bir glk iindeydi. ki perakendecinin yakn zamanda
kyaslanmas sonucunda kritik baar faktrleri cinsinden aadaki bilgiler elde
edilmitir:

Kritik Baar Faktr Kmart Wal-Mart

Kurulu yeri Mterilerin yzde 25i Wal-Mart mterilerinin
Kmart maazasnn yerinin yzde 49u Wal-Marta
elverili olmadn ulamak iin Kmartn
dnmektedir nnden gemektedir
Pazar pay (1995 tahmini) Yzde 23 Yzde 42
Feet kare bana satlar 195 $ 333 $
(1995)
Temel mteri grubunun 55 ya st $20K ve st 44 ya alt, 40K ve st
zellikleri gelir grubu, evde ocuklar gelir grubu, evde ocuklar
 olmayan olan
Sorular:
1. Wal-Martn Kmarttan daha baarl olmasnn en nemli nedenleri
nelerdir?
2. Hizmet ilemleri perspektifinden, Wal-Mart rekabetci konumunu
gelitirmek iin ne yapmtr?
3. Wal-Mart iin nasl bir gelecek szkonusudur? Kmart iin nasl bir gelecek
szkonusudur?