What's happened to Kmart?
...mation to sell the appropriated goods. It is essential for you to build up a good supply chain in order to stay competitive. In contrast to Wal-Mart, the business strategy of Kmart was promotion-driven, which means that their prices changed very often. The promotion was presented in local newspapers and known by the name “blue-light”, what intensify the marketing costs. In 1999, Kmart built up a web site with the same name (bluelight.com) that never really becomes profitable. Today, the web site is Kmart.com. Kmart didn't use information system (IS) until 1987. They tried to make up the leeway and install an IS, but as M. Carlson (alumnus CEO of Kmart) mentioned, Kmart didn't use IS effectively. They collect only the data and didn't analyse them. The management also didn't accept IS, the business process reengineering which should follow the development and application of a new IS never happened. The organisation didn't change, so that the benefits of IS could not be developed. Later on, as Conaway became the new CEO in May 2000, Kmart turn to a new partner, i2 Technologies of Dallas, to update its IS. But this time, they didn't choose the right digital firm, because i2 developed supply chain management (SCM) software especially for manufacturers, not for a retailer. So i2 has to innovate in many aspects there software and once it was installed, it didn't work. Different reasons were mentioned, e.g. to huge quantity of data have to be treated. To face the problem, they'd to buy more hardware which increases the costs. Putting all the costs concerning the IS together they paid round about … for a system that didn't work. Also when they asked PkMS to install a new SCM-software, the management did not longer believe in this solution. Conaway didn’t engage the necessary processes in the organisation to benefit from the IS. To resume, IS never support the business strategy Kmart uses. This is surely one of the reasons for the bankruptcy of Kmart. As a result of the dysfunction of the i2 System, Kmart still didn't solve their SCM problem. Another problem was the image they gained in front of the consumers. They were seen as a frumpy retailer and too expensive compared to Wal-Mart. Only a big advertising campaign could rescale their image, but Kmart didn't have the money for such an operation. A wrong step to try to save money was the reducing of their products in the shelves. The customers didn’t accept this and buy their products in other retail stores. Wal-Mart also use IS since they’ve entered the market like the barcode or a software guided SCM. This was not the case for Kmart. A disadvantage of this was sometimes empty shelves, because they didn’t know how much they’d sailed. ...