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© St. Petersburg Times, published January 23, 2002
We'll be reading and watching the analyses of Kmart's demise for weeks to come.
Want to know the real reason Kmart tanked into bankruptcy Tuesday?
Blame Raymond Babbitt.
He's the autistic savant character, played by Dustin Hoffman in 1988's hit movie Rain Man, who made famous a two-word phrase.
Hoffman won an Academy Award for best actor for his performance as Babbitt.
And Kmart? The discount giant was tagged with a nasty slogan that entered popular U.S. culture and 14 years later dogged the retailer all the way into Chapter 11.
One-liners like that don't stick around unless they convey at least an element of truth.
After starting in the very same year (1962) as Wal-Mart, Kmart expanded rapidly and hit $1-billion in sales in 1966. That's a full 13 years before Wal-Mart reached that milestone.
By the mid-1980s Kmart was in search of an identity. By the 1990s, Kmart was too busy eating the dust of Wal-Mart's aggressive price cuts to find any path. Most recently, Kmart's been sideswiped by the sharper inventory skills and snippet-of-affluence marketing message of Target.
Now Kmart's No. 1 -- on the list of U.S. retail bankruptcies, that is.
The list is full of grand national and regional retailing names such as Federated (parent company of Burdines), Montgomery Ward and Allied Stores (parent of Maas Bros.)
Some of these retailers entered Chapter 11 long enough to reorganize and shed some debt, exit bankruptcy and return to the nation's malls with renewed life.
Others, such as Montgomery Ward, entered bankruptcy and never returned.
Kmart's future -- rehab or morgue -- is not yet clear. The discounter's many managers tried all sorts of revival strategies, including the resurrection of the Blue Light Special. None worked.
After 40 years in business, why is Kmart seeking bankruptcy protection now? Is it a coincidence that the nation's largest retail bankruptcy occurs just one month after the the collapse of Enron Corp., the nation's biggest bankruptcy of all time?
Kmart's bankruptcy, with $17-billion in assets, puts the retailer at No. 3 on the nation's largest bankruptcies of the past year, behind Enron ($63-billion) and Pacific Gas & Electric ($21.5-billion).
Such are the mega-casualties of the first recession in a decade.
Enron's destruction was greatly aided by self-dealing by company executives and an outside accounting firm whose motto seemed to be "See no evil."
Kmart's worst sin appears to be that it lacked focus and follow-through. While discount competitors rigorously matched customer shopping trends with their own inventories, Kmart careened between too little and too much.
At one point in 2000, for example, Kmart was forced to park 14,962 trailers stuffed with unsold merchandise behind its stores.
Maybe all those trailers were sending a message that Kmart managers missed.
Maybe there are too many retailers chasing too few U.S. consumers.
When Wal-Mart and Target pushed into New England, regional discounters Ames Department Stores and Bradlees were overwhelmed. Bradlees went out of business. After declaring bankruptcy in 1990, Ames re-emerged only to head back into bankruptcy last summer.
Even Sears, for all its attempts at a rebound, is just treading water.
In retail terms, how bad is it? Wal-Mart turns over each store's inventory about eight times a year. Target does about seven turns. Kmart lags badly, with just 3.6.
In hindsight, I did a fair bit of Christmas shopping last month at Kmart (though I'm not sure why). The store had a dowdy look. The merchandise looked haphazardly arranged. Shoppers had wallowed through the aisles and scattered inventory. Specific items I wanted were nowhere to be found.
To add further insult, when I pulled into a local Kmart one December afternoon, I noticed two young boys facing a tree in the middle of the parking lot. I thought they were looking at something, but then was surprised to realize they were both relieving themselves.
In plain view. With not a worry in the world. At Kmart. What would Martha Stewart say?
In movies or in its own parking lot, Kmart just can't seem to get a break.
Overcoming such lingering images may be Kmart's toughest hurdle.
- Robert Trigaux can be reached at email@example.com or (727) 893-8405.