Kmart

On January 22, 2002, Kmart filed for Chapter 11 bankruptcy protection. It was the largest retailer ever to do so and shocked many people. Kmart had made retail history when its founder, the Kresge “five and dime store” chain, invented the concept of the discount store. The first Kmart was established in Detroit in 1962, the same year Wal-Mart opened its first store in Rogers, Arkansas. By the end of 1963 Kmart had 63 stores converted from Kresge’s.

In the following years, however, Wal-Mart expanded quickly by following a strategy of everyday low prices. Wal Mart used information technology (IT) to track sales in all its stores and to replenish its fastest selling products. Wal-Mart demonstrated its willingness to spend needed funds on IT by installing registers with bar-code scanners in each store during the late 1970s and early 1980s, which fed the sales data into the back-end store computers. The result was Wal-Mart sales data were always current and store managers knew what was selling well and what was not. In time many orders were routed straight from theWal-Mart store to the appropriate supplier, and the delivery went from that supplier directly to the store. Wal Mart recently developed an extranet to work closely with key suppliers on problems such as how to increase sales on specific products. Many analysts believe Wal-Mart has the most sophisticated supply chain systems in the industry.

By 1983, with its cutting edge information systems, Wal- Mart was already spending only two cents per dollar getting goods to its stores while Kmart was spending five cents. From that differential alone, Wal-Mart could sell the same product at a price 3 percent lower than Kmart, an important saving to many shoppers. In 1990 Wal-Mart passed Kmart as the largest discount chain with annual sales of $32.6 billion for Kmart’s $32.3 billion. Wal-Mart was well on its way to becoming the world’s largest retailer. In December 2001, Target, Kmart’s other major competitor, passed