an open letter to Julian Day, Kmart CEO
Julian Day
Chief Executive Officer
Kmart Corporation
3199 West Big Beaver Road
Troy, MI 48084
January 6, 2003
Julian:
Congratulations on breaking out of bankruptcy and for recording a profit with your 3rd Quarter financial numbers and with your November/December Holiday sales. While your comparable store sales have fallen significantly, you have improved your gross margins and stemmed your losses.
But survival is not enough.
You must differentiate or die.
Focus entails sacrifice.
Wal-Mart stands for “low prices, everyday” and Target stands for “cheap chic” through their "expect more, pay less" positioning. But what does Kmart stands for?
I applaud you for choosing to strategically position Kmart to appeal to an urban, multicultural mix of Hispanic, African-American, and Asian shoppers. However, by attempting to appeal to a very broad, eclectic, and diverse customer base, you are violating the old marketing adage of “If you try to appeal to everyone, you ultimately appeal to no one.”
In the advertising campaign that you ran last fall, you featured Kmart’s exclusive brands (Martha Stewart, Joe Boxer, and Thalia Sodi) intermixed with urban imagery all underscored by a hip rhythm and blues interpretation of the popular tune “Right Here. Right Now.” Target also actively promotes their exclusive line of offerings from Michael Graves to Issac Mizrahi to Todd Oldham and to Mossimo. While Wal-Mart has a limited selection of exclusive brands that have resonance, their private label line dominates nearly every category it competes in. Are Kmart’s exclusive brands of Martha Stewart, Joe Boxer, and Thalia Sodi compelling enough to promote as Kmart’s point of difference?
I’ll cut to the chase here and offer you advice on how you can strategically focus Kmart to accomplish more than just survival and to differentiate the Kmart brand so that it will not die.
MAKE KMART THE BRAND OF CHOICE FOR HISPANIC CONSUMERS.
The Hispanic consumer has long been underserved. At about 40 million strong and nearly $600 billion in buying power, Hispanics represent the largest and fastest-growing minority group in the United States. Incredulously, there is no major retailer that solely focuses on serving the needs of the Hispanic consumer. Instead of trying to appeal three distinct and viable customer bases (Hispanics, African-Americans, and Asians), focus supremely on the Hispanic audience.
CREATE UNIQUE, MEANINGFUL, AND MEMORABLE ADVERTISING.
Your fall advertising campaign creative (especially the television spots) felt overly contrived because you showcased ultra-happy, super pretty, and ethnically diverse people shopping at Kmart. (No one is that happy shopping, even at Tiffany’s, Anthropologie, or Build-a-Bear Workshop.) Take out the Kmart logo and you could slide in all sorts of retail brands (from Kohl’s to Marshall’s) that would fit the Kmart “Right Here. Right Now.” positioning.
It's in the K? What was up with all those people flashing the “peace sign” or “victory sign” in those television spots? Wait... that peace sign is actually sign language for the letter “K”. (Your marketing department and advertising agency over-thought this one.)
A BILLION DOLLAR IDEA... FOR FREE
Own the letter “K”, it’s about the only thing you can own when competing with low-price owning Wal-Mart and cheap-chic owning Target. But own the letter “K” in a meaningful way that will resonate with Hispanic consumers. Phonetically and linguistically, “K” translates beautifully into Spanish - “QUE”.
Resonating with the Hispanic audience truly is in the “K”.
K Bueno roughly translated means, “That’s Good.”
K Bonita roughly translated means, “That’s Pretty.”
K Pasa roughly translated means, “What’s Happening?”
Julian, funnel all available resources to maximizing this simple creative concept. All Kmart advertising (print, television and radio) should supremely focus on communicating the "K". It’s easily understood (unlike the sign language "K" concept). It’s meaningful (especially to the Hispanic audience). And it’s rich with applications that Kmart can tap into for years to come.
In the end, it’s your call Julian. K Sera Sera.
John Moore
Brand Autopsy
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