Worlds apart: K-Mart & Wal-Mart

Way back in 1962 two gentlemen by the names of Sebastian S. Kresge and Sam Walton began creating what would eventually become recognized as separate, but parallel empires in the retail industry. Kresge named his new company after himself by calling it K-Mart, and Walton did the same by calling his Wal-Mart. After that, the similarities pretty much end.
 
Initially, both K-Mart and Wal-Mart prospered, and before long the two companies were expanding into new markets and opening stores all across the country. When the computer revolution hit, Walton quickly recognized the competitive advantages that an automated inventory and ordering system would offer. He invested hundreds of millions of dollars in the development and refinement of just such a system for Wal-Mart’s large and growing network of retail stores and distribution centers, a brilliant move that will be studied in business schools for generations to come.
 
K-Mart on the other hand continued to rely on the old way of doing business: replenish sold merchandise via manual orders from a huge variety of independent vendors. Now recognized as one of the most devastating strategical errors in the history of business, K-Mart’s failure to utilize modern technologies in order to compete with Wal-Mart has led to the virtual demise of the company.
 
For years now, when Wal-Mart opened a new store in a market, the existing K-Mart store there has often ended up closing (along with a number of other smaller businesses). Under Sam Walton, the Wal-Mart Corporation refined the art and science of lowering prices while retaining profits to the point where no other retailer can possibly compete head-on with them, including K-Mart.
 
Target has done pretty well by projecting a more up-scale image to its potential customers than Wal-Mart, but by and large the products are the same, only packaged differently and sold at slightly higher prices. In market after market, Wal-Mart’s sales figures trounce all of their nearest competitors, including Target’s.
 
K-Mart has attempted to battle its way out of Chapter 11 bankruptcy by closing hundreds of stores and merging with Sears, but one only needs to compare the number of cars in a typical K-Mart parking lot with those at a near-by Wal-Mart at any given time to see what an uphill battle they are facing. For better or for worse, Wal-Mart has defined itself as the most successful retail business in history, and if current trends are any indication that won’t be changing any time soon.
 
On the other hand, K-Mart’s future is far from secure. Only time will tell if they will be able to climb out of the deep hole they dug for themselves while Sam Walton was climbing up the grandiose mountain that is today’s Wal-Mart Corporation.