Book Review and Learnings: K-mart’s Ten Deadly Sins

When one looks at the title of the book, perhaps the first thought that would come to his mind would be “another tirade a failed organisation”. However, on going through the book, the reader gets to know a number of intricate details that led to the collapse of K-mart. At the same time, the reader also gets to know what decisions should have been taken by K-mart which would have helped it to survive and grow.

Author Marcia Layton Turner reveals 10 management mistakes which made K-mart fall from grace and transformed it from a profitable retail titan to a bankrupt behemoth. The book is based on secondary sources of date like interviews of retail gurus, financial analysts, former employees, professors, etc. Also, a number of newspaper articles, books etc have been a source of information to the author. The author successfully makes the readers understand the thought process of K-mart and also enlightens them with the behind the scene happenings.

The book is very informative about retailing concepts, facts and anecdotes about this industry. At several places, comparisons have been drawn between K-mart and Wal-mart and this gives the reader an insight about the good practices in brand management, supply chain, information technology, etc which were followed by Wal-mart and contributed heavily to its success.

In the end, the author also lists out ten steps that the K-mart should take post its emergence from bankruptcy that would help it to grow and sustain in the future. It should be noted that a majority of the points mentioned here, would be applicable to most of the companies in any industry. Thus, this is a highly recommended book for anyone who not only wishes to know what went wrong at K-mart but also for those who wish to develop a better understanding of the retail sector.

In the next few paragraphs, I would try to summarize my learnings after reading K-mart’s Ten Deadly Sins.

Brand Management should be one of the key focus areas of an organisation. K-mart’s focus has been growth through expansion, and in the meantime an important aspect of brand management was ignored. K-mart stores were messy, products were often out of stock, checkout lines were very long and no customer care. In the mad rush for expansion and experimentation, K-mart forgot to reinvent its brand and there was no strategy, and lack of proper communication and tag-line along with a high degree of poor positioning that allowed the brand to deteriorate a lot.

In order to sustain and grow, an organisation needs to know its customers well. There has to be a substantial amount of investment in customer research to identify the customers and to understand their requirements. At the same time, improving the relationship with existing customers can itself provide a stimulus to the customer to frequent the store more often. Ensuring that new products are aligned to the tastes and preferences of the customers and that there is sufficient inventory of the products in demand are the stepping stones of forging long term relationship with customers. Also, there should be an increased focus on micro-segmenting and classifying the customers to ensure that their needs are met.

Acknowledging competition is another area where organisations need to focus on. In the case of K-mart, it ignored its biggest competitor Wal-mart and in the process did not align its activities to combat the steps taken by Wal-mart. It is essential for any organisation to formulate and change its strategies keeping in mind the competition. Today, several organisations adopt the steps taken by the competitors if necessary, and this was one key area where K-mart lacked. It could have easily adopted some of the best practices of Wal-mart.

The location and appearance of the store is of utmost importance, especially for retailers. The store should be located in a place such that maximum number of customers can have an easy access to it. In the case of K-mart, the focus was more on urban locations where customers were scattered. Apart from this, other aspects of real estate like future price expectations, etc too need to be kept in mind. In the real estate, it is also quite possible to have a “second-mover advantage”. The appearance and arrangement with the store is again of great importance to the retailers. Store design and layout should be modified from time to time to align with change in strategies and offers, etc. Customers should be attracted to the store and the layout should focus on bettering their shopping experience. It is essential for the organisation to ensure accountability at the store level so that the policies are implemented properly.

Technology is one aspect which organisations cannot afford to ignore. It is essential that investment is done in technology to understand the customer, to manage inventory, to increase collaboration between stores and to effectively meet competition. The issue is that a mere investment in technology would not help. There has to be a commitment from the top management too. In the case of K-mart, it did make some instrumental changes on the technology side and won awards too, however this happened haphazardly. While implementing technological changes, it should be kept in mind that the devices and the technology should be customer friendly and fiascos like P&G’s continuous replenishment and kiosks in case of K-mart should be awarded. Also, in the case of K-mart, focus on technology was required even more because its competitor Wal-mart was investing heavily in aspects like RFID, etc, and benefitting a lot.

For an organisation to succeed, it is essential that it has a focus on the supply chain aspect as well. Focusing on supply chain has several benefits like minimizing inventory, ensuring timely delivery, etc. Organisations need to keep the suppliers and other players in the supply chain in the loop while formulating strategies. Retails primarily need to choose between two options: either a responsive supply chain or an efficient supply chain that minimizes variations. It is also not uncommon for some organisations to invest heavily in supply chain and come up with own fleet of trucks, etc, like Wal-mart. An efficient supply chain ensures that the right product is available at the right time at minimum cost.

Organisations should also ensure that they do not lose their focus and fail to create effective strategies to meet competition and challenges. In the case of K-mart, the focus kept shifting from one factor to another, with the case of private labels being a classic example. Similarly, the strategy need to be modified keeping in mind the market conditions, customer preferences and competition. It is essential that the management involves the other stakeholders in formulation of strategy and implementation.

Last, but not the least, is it important that organisations learn from their mistakes. In case of K-mart, the same mistakes were repeated continuously. The management did not take technology seriously and the strategies were not changed in the light of changing market conditions. Also, issues like real estate, appearance, branding, etc were not addressed even with the change in management.

To summarise, after reading the book, one gets to know not only the causes behind the downfall of K-mart, but also gets to know the things organisations must do in order to sustain and grow. 

(With Himanshu Gupta, PGDM IMT Ghaziabad 2012-14)

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