Shop Talk

Retailers, consumers and prices

Kmart embraces the ghost of Christmas past

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Written by Tom Hals

kmartAs its rivals plan aggressive discounts on flat-panel TVs and round the clock hours to lure in recession-weary shoppers, Kmart is sticking with what worked, even if it is what worked 40 years ago.
 
Chief Marketing Officer Mark Snyder, who joined the company last year just before the holiday season, said the chain had no major new initiatives this year but plans to “build on the successes” of 2008. 
 
In other words, a fresh spin on layaway plans and Blue Light Specials, and of course the deep discount days that are a retailing standard this time of year.
 
One new offering includes a Christmas club, a staple of 1950s household budgeting that only deepens the impression that Kmart is rushing into its past to find the future.
 
The goal is to help households crushed by mounting debt to “leverage their cash,” or in other words, pay when credit is no longer available, he told us.
 
The chain may be onto something.  Kmart’s same-store sales for the quarter ended Oct. 31 rose 0.5 percent, only the second quarterly increase it has posted since 2001.
 
A recent visit to a Pennsylvania Kmart did not turn up any blaring lights or calls of “attention Kmart shoppers.”  It did show that some elements of Kmart’s past are more easily forgotten.
 
Asked by this reporter, the outgoing and helpful staff tried to locate Martha Stewart-branded housewares, possibly the last as their long-standing partnership ends this year. 
 
Another member of staff joined the hunt until a manager reminded everyone that Martha Stewart’s final inventory was sold out the week before, not with blue lights but helped by clearance prices. Like those found at Wal-Mart.

(Reuters photo)

Health reform won’t lead to many retail layoffs, survey says

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president-obama-and-doctorsSeventy-one percent of chief financial officers at major U.S. retailers do not think they will cut jobs as a reaction to healthcare reform, according to a new survey from BDO Seidman LLP.
 
But that still may not be all good news for employees at those chains.  Eighty percent of those executives who don’t plan to eliminate positions do plan to charge employees more if healthcare costs rise, the accounting and consulting firm found.
 
The remaining 20 percent said they do not expect their employees to face higher healthcare costs.

Meanwhile, Republican Senator Olympia Snowe backed President Obama’s plan for healthcare reform on Tuesday.
 
“Managing healthcare costs is a significant challenge for any business and the retail industry, which is the second largest employer in the U.S., bears a large brunt of the burden,” said Catherine Fox-Simpson, a partner in BDO’s Retail and Consumer Products Practice. 
 
“At the end of the day retailers need employees to run operations and healthcare will be considered just another cost of doing business,” she added. 
 
BDO also said that shoppers shouldn’t expect many more layaway options.  Layaway programs at Kmart and Sears, which allow shoppers to pay in installments, have been met with applause from many consumers.  Still, 86 percent of retailers said they do not plan to offer layaway programs for the 2009 holiday season.
 
The survey also found that only half of the retailers who responded said that they sell green products.  Of those, 63 are seeing an uptick in demand for such goods.  Perhaps Wal-Mart’s sustainability efforts are driving some of that change.

Layaway goes virtual at Kmart

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kmartLast holiday season, Kmart touted its layaway program as a way to help cash-strapped shoppers afford their holiday purchases (and ultimately help boost its own sales).

This year, with consumers still reluctant to spend and estimates emerging that overall holiday sales may not rise from last year’s depressed levels, Kmart is extending the program and will launch online layaway on Oct. 9.

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