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A blue-light special: Kmart dresses up for its renewed battle against Wal-Mart.

It's a new day at Kmart Corp.

But analysts doubt recent changes will be enough to help the Troy, Mich.-based chain catch Arkansas-based Wal-Mart Stores Inc. in the race to be the nation's leading retailer.

Arkansas is one of the battlefields.

The state has more than just Kmarts and Wal-Marts. It is one of a limited number of areas that also have Target Stores, a division of Dayton Hudson Corp. and another Wal-Mart rival in the battle for discount shopping dollars.

In 1990, Wal-Mart was in 35-40 percent of Kmart's markets.

By 1995, the two retailers will have 75 percent of their markets in common.

Can a new look and an updated logo make the difference for Kmart, which appeared to be dying a slow death?

Recently, the chain has taken brave -- and expensive -- steps to reverse its fortunes. Its $2.5-billion modernization plan reaches into 1995.

Of course, Arkansas may not be the best place to take a shopper's pulse. It is, after all, Sam Walton's back yard.

Still, a recent stroll down the aisles of two stores showed one was hot and the other was, well, not.

Watering Concrete

Pulling into the parking lot of the new Kmart in North Little Rock's McCain Plaza, a visitor immediately notices an automatic sprinkler system watering the concrete of an empty outdoor garden section.


There are no plants there.

At a Wal-Mart in west Little Rock, a teen-age boy stands with a green garden hose showering fall-colored mums and bright pansies. It's not fancy, but it's effective.

The new North Little Rock Kmart is a prototype of what the company wants across the country.

The store is slick.

There's a deli that would blend in with any mall's food court.

Merchandising systems are modern and bold.

It's quite a contrast to the vacated Kmarts on Cantrell Road in Little Rock and Broadway Avenue in North Little Rock. Those stores were hopelessly outdated and dingy.

The new store is brightly lit. Most aisles are wide and uncluttered. They also are uncrowded. At least on this visit.

At Wal-Mart, shopping cart traffic jams are common in the aisles on any visit. It takes a ship's captain to maneuver around the displays of vacuum cleaners and other accessories stuck in the middle of the main aisles.

Even shoppers who complain about the crowds find themselves back in the stores before long. The crowds themselves seem to be evidence that this is the place with the best selection and prices.

You must go back.

Could all these people be wrong?

Shoppers' enthusiasm is contagious.

Wal-Mart shoppers have grown accustomed to the friendly greeters, usually senior citizens.

Kmart obviously thinks it's a good idea.

You could swear it's your great-aunt in a red-and-gray outfit that matches the new North Little Rock store's decor. She's the hostess up front.

In a conscious competitive effort, Kmart also has streamlined its 110,000 product offerings by 30 percent and dropped the retail price on more than 8,000 popular items.

Kmart also has added more trend lines such as Fisher-Price and Reebok.

It is concentrating on 12 departments management believes are core. Those include home fashion, toys and pharmacy.

One department in which Wal-Mart obviously is better focused than Kmart is what some analysts call the rod-and-gun club -- outdoor sporting goods.

"Ducks live in mortal fear of Wal-Mart shoppers," quips a national business reporter.

You can bet that plays well in Arkansas.

Quick-Change Artist

Joseph E. Antonini, Kmart's chairman, claims his stores' new look and focus have resulted in 5 to 15 percent revenue increases where implemented.

On a recent visit, however, a visitor stood eight deep in line to purchase one item, $1.11 cough drops. And the line grew longer before a second register was opened.

Cut to Wal-Mart.

A dozen registers are singing.

You can bet that Wal-Mart is not ignoring the competition. In the west Little Rock store, there are occasional signs above items showing the price advantage compared with Kmart's prices.

One Kmart shopper says she knows she can save money at Wal-Mart, but it's too far to drive. A research consultant recently echoed that opinion.

"Kmart is an extremely conveniently located store, and the '90s are going to be convenience oriented," Carol Farmer told Fortune.

It's true that in most places Kmart came first. It thus has better real estate. But as cities continue to spread out, the advantage lessens.

One advantage Kmart maintains is its famous blue-light specials. People still get a kick out of those.

Both chains now boast state-of-the-art computer and satellite data systems. Wal-Mart's system center looks like a shuttle launch headquarters.

Kmart finally realized inventory control, credit monitoring and other computer-aided functions made business sense. It paid $1 billion for a similar system last year.

As for advertising, Wal-Mart stresses its attention to the environment and the fact it buys American. Both are popular campaigns.

Kmart is using its chairman in "we're just happy to be here" ads.

Reportedly, Antonini was asked to do the ads because market research showed women liked him.

A Decade Of Change

The year 1962 gave birth to both Kmart and Wal-Mart.

For two decades, the companies were mentioned in that order.

In 1981, Forbes ran a story headlined "If You Could Love Only One", referring to Kmart stock.

At the time, it was the most profitable national retailer.

Things have changed drastically during the past decade.

It was as early as 1983 that analysts began asking, "Can Kmart come back?"

Since then, it has been a mad chase with both chains in pursuit of aging Sears Roebuck & Co., and Kmart in pursuit of its glory days.

"Sears was the Wal-Mart of its day," says a Little Rock broker. "It was every bit as innovative. When Wal-Mart began, there were five autonomous Sears divisions, and they were the five largest retail chains in America."

Sears is now an uncertain No. 2 on the list of the nation's largest retailers.

If Kmart's improvements pay off and Sears continues to founder, Sears could fall to No. 3.

A Little Rock broker says telling people in Arkansas to sell Wal-Mart stock is like telling them their children are ugly.

Such fierce loyalty probably will cause Arkansas shoppers to continue favoring Wal-Mart.

As for the rest of the country, everyday low prices and a utilitarian flair -- only at Wal-Mart is that not a contradiction in terms -- should also keep Wal-Mart shoppers coming back.
COPYRIGHT 1991 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Ford, Kelly
Publication:Arkansas Business
Article Type:Company Profile
Date:Oct 21, 1991
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