Kmart
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Kmart
Type	Subsidiary of Sears Holdings Corporation
Founded	1899 as the S. S. Kresge Company (Detroit, Michigan), 1962 as Kmart
Headquarters	Hoffman Estates, Illinois, USA
Industry	Retail
Products	Clothing, footwear, bedding, furniture, jewelry, beauty products, electronics, and housewares.

Kmart (sometimes spelled as "K-Mart") is a chain of department stores in the United States, Puerto Rico, the U.S. Virgin Islands, and Guam. The chain merged with Sears in 2005, creating the Sears Holdings Corporation. Kmart also exists in Australia and New Zealand (see Kmart Australia), although it now has no relation to the American stores except in name after US equity in the Australian business was purchased in the late 1970s. It is the third largest discount store chain in the world, behind Wal-Mart and Target.

Kmart's world headquarters was located in Troy, Michigan in a sprawling complex which, since Kmart's relocation to Illinois, has been slated for demolition ^[1].

Kmart became known for its "Blue Light Specials." They occurred at surprise moments when a store worker would light up a mobile police light and offer a discount in a specific department of the store. The phrase "attention Kmart shoppers" also entered into the American pop psyche, as seen in the movie Rain Man.

History

Sebastian S. Kresge, who had previously founded the S. S. Kresge dime store chain, opened the first Kmart store on March 1, 1962 in Garden City, Michigan^[2] and named Kmart after himself; this store is still in operation to this day. A total of eighteen Kmart stores opened that year. Kmart Foods, a now defunct chain of Kmart supermarkets, opened in that same decade.

During the 1970s, Kmart put a number of competing retailers out of business. In 1977, S. S. Kresge Corporation changed its name to Kmart Corporation. In 1987, the Kmart Corporation sold its remaining Kresge and Jupiter stores in the United States to McCrory Stores, although Canadian Kresge stores continued to operate until 1994.

Changes for Kmart

Logo 1962-1990. It is still used at some Kmart locations. An updated version of the logo is still used in Kmart Australia with the word "mart" done in italics. This logo was also used in Australia which was used from 1980 to 1991 and then it was no longer used and became old.

During the 1980s, the company's fortunes began to change; many of Kmart's stores were considered to be outdated and in decaying condition. In the late 1980s and into the 1990s, the corporate office shifted much of its focus from the Kmart stores to other companies it had acquired or created, such as The Sports Authority, Builders Square, and Waldenbooks.

In 1990, in an effort to change their image, Kmart introduced a new logo (dropping the old-style italic "K" with a turquoise "mart," created 1962), and renovated many stores. (This logo forms part of the "Big Kmart" logo pictured below.) However, most stores were not re-modeled until the mid-1990s, and some have not been completely renovated to this day. This logo was replaced in 2004 with the current logo. In the early 1990s, Kmart also tried to reinvent itself by using the short-lived Today's Kmart name.

The company also began to offer exclusive merchandise by Martha Stewart, Kathy Ireland, and Jaclyn Smith. Other recognizable brands included Sesame Street and Disney. Rosie O'Donnell and Penny Marshall were among the company's most recognized spokespersons.

Super Kmart and Big Kmart

Kmart opened its first 147,000-square-foot (13,700 m²) Super Kmart^[3] in 1991 in Medina, Ohio. The second Super Kmart opened in Montrose, Ohio, but is now closed. Kmart also opened the first Big Kmart in Chicago, Illinois, on April 23, 1997. Some Kmart stores were converted to the Super Kmart concept, but most were converted to the Big Kmart concept, possibly because it was less reminiscent of Wal-Mart's Supercenter concept.

Big Kmart logo. Notice the red "K" with a script "mart" that was used from 1990-2004; the previous logo was still used in some places.

Blue Light Special and 1994 Closures

Kmart logo used from 1990-2004

The original Blue Light Special disappeared in 1991^[4], due to changing consumer habits and misuse by individual stores (according to the company's official explanation). The company brought back the Blue Light Special in the early 2000s, but within a few weeks the program was scrapped.

In 1994, Kmart closed 110 stores. Unlike its competitors Wal-Mart and Target, it had failed to invest in computer technology to manage its supply chain. Furthermore, Kmart maintained a high dividend, which reduced the amount of money available for improving its stores. Many business analysts also faulted the corporation for failing to create a coherent brand image.

Bankruptcy

Kmart's lime green prototype logo. This logo was only used at five prototype Kmart locations. Notice how an arrow or chevron is formed within the logo. The name of the city or town is located at the front entrance of the stores underneath or beside this logo.

On January 22, 2002, Kmart filed for Chapter 11 bankruptcy protection under the leadership of its then chairman Chuck Conaway and president Mark Schwartz. Conaway, who had had success building up the CVS Corporation, had accepted an offer to take the helm at Kmart along with a loan of some $5 million. In a scandal similar to that involving Enron, Conaway and Schwartz were accused of misleading shareholders and other company officials about the company's financial crisis while making millions and allegedly spending the company's money on airplanes, houses, boats, and other luxuries. At a conference for Kmart employees January 22, Conaway accepted "full blame" for the financial disaster. As Kmart emerged from bankruptcy, Conaway was forced to step down and was asked to pay back all the loans he had taken.

While the company was in bankruptcy, Edward Lampert bought K-mart bonds for his hedge fund, ESL Investments. On May 6, 2003, Kmart officially emerged from bankruptcy protection as the Kmart Holdings Corporation and on June 10, 2003, it began trading on the NASDAQ as "KMRT." Lampert took control of the company and began to run it for profit instead of sales.

After dismissing Conaway and Schwartz, Kmart closed more than 300 stores in the United States and laid off around 34,000 workers as part of restructuring the company. Kmart introduced five prototype stores with a new logo, layout, and lime green and gray color scheme, one in White Lake Township, Michigan, a quasi-rural community near Detroit, Michigan, and four in central Illinois (Peoria, Pekin, Morton, and Washington). The new layout was touted as having wider aisles and improved selection and lighting, and the city or town's name was featured under the new Kmart logo at the front entrance. However, Kmart could not afford a full-scale rollout. The lime green prototype was abandoned for the new Kmart "orange" concept that rolled out at nine test stores throughout the United States.

Merger with Sears, Roebuck and Company

Main article: Sears Holdings Corporation

On November 17, 2004, Kmart announced its intention to purchase Sears, Roebuck and Company. As a part of the merger, the Kmart Holdings Corporation would change its name to Sears Holdings Corporation. The new corporation announced that it would continue to operate stores under both the Sears and Kmart brands.

Store concepts

Current

The exterior of a typical Big Kmart discount store in Ontario, Oregon. The red "K" with script "mart" pictured here was Kmart's logo from 1990 to 2004.

• Kmart is a chain of discount department stores that are usually free-standing or located in strip malls. They carry electronics, music, movies, bedding, hardware, sporting goods, clothing, toys, jewelry, office supplies, health and beauty products, home decor, and a limited selection of food items. Many stores also have a garden center, a pharmacy, and usually have a K-Cafe or Little Caesars Pizza Station. Kmart stores range from 80,000 to 110,000 square feet (7,400 to 10,200 m²). Many of these stores were converted into Super Kmart, and most of them were converted into Big Kmart. An urban multilevel variant of a Kmart store is located in Middle Village, Queens, New York.
• Big Kmart is a chain of discount department stores that carry everything a regular Kmart carries, but with an emphasis on home decor, children's clothing, and more food items. Big Kmart stores range from 84,000 to 120,000 square feet (7,800 to 11,100 m²). Big Kmart stores also feature a garden center, a pharmacy, and usually have a K-Cafe or Little Caesars Pizza Station. Since the merger with Sears, many stores have been converted back to regular Kmarts.
• Super Kmart is a chain of hypermarkets that carry everything a regular Kmart carries, but has a full grocery section with meat and poultry, baked goods, delicatessen, frozen foods, dairy products, garden produce and fresh seafood. Super Kmart stores range from 140,000 to 190,000 square feet (13,000 to 17,700 m²). These stores are also known as Super Kmart Center. Super Kmart stores also feature a garden center, a video rental store, a branch of a local bank, a pharmacy, and usually a K-Cafe or Little Caesars Pizza Station. Several also include Kmart Express gas stations. Fewer than 60 Super Kmarts are still open, most having been closed during the two rounds of closures in 2002 and 2003. ^[5] Some of the surviving Super Kmarts were those in regions without a strong Wal-Mart presence, including Ohio and Michigan. A typical Super Kmart sells around 30 million dollars of merchandise during one fiscal year.

Former

The exterior of a typical Super Kmart hypermarket in Corsicana, Texas. While the concept was introduced in 1991, it was very similar to Kmart Foods.

• Kmart Food Stores were a grocery store chain founded in 1962. Most Kmart Food locations were together with Kmart stores. The chain was discontinued in the 1970s, but re-introduced in 1991 with Kmart's launch of their Super Kmart concept.
• Builders Square was a big box home improvement chain of stores. In 1997, it was sold to Hechinger, who closed all the Builders Square stores in 1999.
• Borders Books is a chain of book stores acquired by Kmart in 1992. In 1994, Borders merged with the Kmart chain Waldenbooks to form Borders-Walden Group, which was sold off in 1995.
• OfficeMax is a chain selling office supplies and office furniture which was acquired in 1991, and sold off in 1995.
• Office Square was a chain selling office supplies and office furniture which was a spin-off of Builders Square. In 1991, OfficeMax was acquired by Kmart and Office Square was merged into OfficeMax stores.
• Waldenbooks is a chain of mall book stores which was acquired in 1984. In 1994, Kmart chain Borders merged with Waldenbooks to form Borders-Walden Group, which was sold off in 1995.
• PACE Membership Warehouse was Kmart's wholesale club brand, until the chain was purchased by Wal-Mart. In 1993, Wal-Mart converted most of the stores into their Sam's Club brand, and sold others to chains such as Bradlees.
• PayLess Drugs was a chain of drug stores acquired by Kmart until it was sold to TCH Corporation in 1994. The resulting entity, Thrifty PayLess was acquired by Rite Aid in 1996, which converted all of the PayLess and Thrifty stores into Rite Aid stores in 1999. The PayLess division also owned Bi-Mart.
• The Sports Authority is a chain of sporting goods stores which was acquired in 1990 and sold off in 1995.
• American Fare was a chain of hypermarkets that first opened in January 1989. American Fare was a joint venture between Kmart (which owned 51 percent), and Birmingham, Alabama-based Bruno's Supermarkets. The first store, near Atlanta, Georgia, was 244,000 square feet (larger than most Wal-Mart Supercenters by more than 55,000 square ft). American Fare’s 244,000 square feet (22,700 m²) of retail space included 74,550 square feet (6,926 m²) of groceries, 104,000 square feet (9,700 m²) of general merchandise, and 35,000 square feet (3,300 m²) of clothing (including apparel, footwear, and accessories). A “mall-like” area in the front of the store housed a music and video store, a food court, bank, hair salon, pharmacy and a card store. Charlotte, North Carolina was home to the second American Fare, which opened in late 1989 with only 160,000 square feet (15,000 m²) of retail space. A third and final store opened in Jackson, Mississippi. In June 1992, Bruno's Supermarkets announced that its partnership with the Kmart Corporation was being terminated, and that Kmart would absorb ownership of the three stores. However, the stores were closed in the mid-1990s. The American Fare brand is currently used on some of Kmart's store brand consumable products.
• Kmart Chef restaurants were a small chain of free-standing fast-food restaurants owned by Kmart, started in 1967 with their first location on the parking lot of the Kmart in Pontiac, Michigan. These restaurants were paired up with many Kmart locations. The restaurants were somewhat of a hybrid of the cafeteria-style restaurant and the style later made famous by McDonald's. The "limited, high-turnover menu" (as Kmart founder S.S. Kresge put it) consisted of 18¢ hamburgers, cheeseburgers, French fries, fish sandwiches, hot dogs, apple turnovers, carbonated soft drinks, fruit drinks, coffee, and milk. Their specialty hamburger was called the "Big K Burger." The Kmart Chef chain folded in 1974 after peaking at eleven locations.^[6]

Environmental Record

On May 9, 2007, Kmart was penalized $102,422 for violations of federal hazardous waste, clean water, emergency planning and preparation regulations at 17 distribution centers.^[7] Kmart corrected the violations by preparing and implementing spill prevention control and countermeasure plans, applying for appropriate storm water permits, complying with hazardous waste generator requirements, and submitting reports to state and local emergency planning and response organizations informing them of the presence of hazardous substances.^[8] The Environmental Protection Agency also accused Kmart of not maintaining adequate information and failing to act in accordance with hazardous waste storage and disposal requirements.^[9] For instance, the EPA reported having discovered improperly labeled oil storage drums at a location in Falls, Pennsylvania.^[10]

Out of concern for the environment, Kmart promoted battery recycling.^[11] Kmart even proposed spending about $80 million on full-page newspaper advertisements offering to recycle junk batteries for $2 each .^[12]

Mascot and Spokesperson

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In May 2007, Sears Holdings Corporation and Kmart named a new mascot and spokesperson for Kmart called Mr. Bluelight. Named after Kmart's well-known "Blue Light Specials," Mr. Bluelight is a talking cartoonish blue light bulb who gives customers ideas to help them make the most of their Kmart experience. Mr. Bluelight has appeared in several television commercials. Specials associated with Mr. Bluelight inside Kmart stores are advertised as "Blue Light Finds" (marked-down merchandise) and "Best of Blue" (higher-end products, often brand-name).

Canada, Europe and Australia stores

Kmart Australia logo. This logo is used at several current locations in Australia.

Kmart was also once a major presence in Canada. However, as a result of Kmart's ongoing financial difficulties, the Canadian division comprising 112 stores was sold to competitor Zellers of the Hudson's Bay Company in 1998, after which the stores were either closed or converted to the Zellers brand.

Like Target stores, Kmart-branded stores in Australia belonged to Coles Myer before being acquired by Wesfarmers in 2007, which also holds the rights to the Kmart brand in New Zealand.

In 1992, Kmart purchased several communist-era department stores in Eastern Europe, including 13 in the former Czechoslovakia that were bought from the former Czechoslovak government. One of those stores was the old Maj department store on Národní Třída in Prague. Many of these outlets were quite profitable, with the Bratislava location setting a single store sales record for the company. But Kmart's larger troubles in the United States caught up with its European operations later in the decade. In March 1996, The Kmart Corporation announced that it had agreed to sell the six Kmart stores in the Czech Republic and the seven in Slovakia to Tesco P.L.C. of Britain for about $117.5 million, to focus on its core operations in North America.

BlueLight Internet Service

In 1999 Kmart began offering a dial-up internet service called Bluelight which was eventually spun off as an independent company. Bluelight was initially free and supported by banner ads. BlueLight dropped the free service in February 2001 and was reacquired by Kmart in July 2001. In 2002 United Online, which owns the NetZero and Juno bought the Bluelight service after Kmart filed for bankruptcy. In 2006, Bluelight dropped the banners. The service now cost $8.95 a month and has around 165,000 subscribers.

List of CEOs

• Aylwin Lewis, President of Sears Holdings Corporation
• Bernard Fauber
• Charles Conaway
• Floyd Hall
• Harry Cunningham
• James Adamson
• Joseph Antonini
• Julian Day
• S. S. Kresge, Founder

See also

• Kmart Australia, operated by Wesfarmers
• Sears Holdings Corporation

References

External links

• Kmart Official Website (Corporate)
• Kmart Official Website (Online Store)
• FBI investigates Kmart (BBC)
• Tampabay.com Column on Kmart's demise