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The Kmart Challenge: Reinventing Apparel To Lure New Customers

Kmart Corp. has organized a New York design group to revamp apparel and home products and reverse dismal sales as it struggles to survive.

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Schultz, who was executive vice president of product development and design at Gap for 14 years, said that when she joined Kmart last September, “I noticed a lot of obvious things that could be done — like how to merchandise the lines. There was a ton of stuff, with no vision and no point of view.”

Sloppy merchandising made things worse. “Not everything was ugly. It just took a really savvy shopper to find the great stuff,” Schultz said.

“I wanted this challenge. I felt I knew what to do. I’m not afraid to bring great design to the people. I am very practical. I feel like I understand what the customer wants. I’m not afraid to put something better in the store, like a great leather skirt. Kmart had some of that before, but we’re putting more emphasis there. It felt very clear to me what we would do to change Kmart into a better retailer.”

The focus is on revamping Kmart’s most important proprietary apparel lines for fall, including Route 66, Attention, Thalia, Basic Additions and Jaclyn Smith. Goodman and Schultz said the proprietary brands are what give Kmart a reason for being and a mark of distinction among apparel discounters.

Most important, they’re taking a vertical approach to product development that’s new for Kmart, though similar to the way Gap, Limited Brands and other specialty chains have been operating for years. That involves sourcing and designing in-house, bypassing the domestic market for both design and production. Merchants function more like general managers, rather than selecting goods as they did in the past, to exert tighter control over the designs, pricing and quality controls. Apparel gets manufactured abroad, as it’s a cheaper and more profitable way to bring goods to the stores, according to the Kmart officials.

“By going direct, we can give more value to the customer,” Goodman said. “We’ve got the process in place, established the rules and true directions, and we have kept to our strategy. Everything is done with profits in mind. We don’t want to sell ‘stuff’ anymore.”

Kmart has made other major changes in its apparel program, among them:
  • Accelerating the flow of goods onto its selling floors, but keeping the presentation more streamlined. New merchandise has begun flowing in every six weeks, instead of every five months as in the past. Gap also operates on a six-week flow, Goodman said.
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