Wal-Mart, Kmart and Target — which account for 63 percent of all the mass retail volume generated in the U.S. — take three different approaches to casual sportswear. Wal-Mart focuses on the basics, while Target takes on the trends. Kmart is making a run for the fashion customer, and despite a recent setback, is aggressively going after branded merchandise. Here, a look at each.


NEW YORK — Wal-Mart, the world’s largest retailer, with 1993 sales of $67.3 billion, seems unstoppable in its growth, financially and territorially.

In casual sportswear, however, Wal-Mart is a sleeping giant. Unlike its rivals Kmart and Target, it has no interest in chasing fashion.

Wal-Mart’s strength is its hard goods and consumables. Because of the volume it commands, it can undercut just about any other retailer on prices of basic products. Its focus for future growth is in groceries, using a supercenter format.

At the Wal-Mart stores, soft goods made up 27 percent of overall sales, or roughly $12 billion last year. That’s a lot of T-shirts, jeans and basics, particularly at prices that are generally under $20.
In soft lines, the company has a low-buck, low-fashion approach.

While the apparel area is generally neat, display is nothing special. At a unit in Brick, N.J., for example, large turquoise banners with department names such as “Casualwear,” “Trends,” “Intimates” and “Plus Sizes” hung over the women’s apparel area. About a third of the sportswear at this unit was large sizes. Some of the usual mass market brands are in stock, including Sasson, Gitano, Jordache, Bonjour and Hanes Her Way.

Its casual offerings, including jeans, T-shirts, sweatshirts, knit and woven tops, swimsuits and jogging suits, far outweigh career or dressy-oriented separates, which consist of a few unlined blazers and skirts, and shells or button-down printed blouses in polyester and rayon blends.

Beyond the trademark greeter at the front door, sales associates in the departments are friendly — if not that easy to find. There were no sales associates offering help in the apparel department on a recent Sunday visit.

“Wal-Mart feels its apparel assortments are fine for its customers,” said retail consultant Kurt Barnard. “If it wanted to go after more apparel share, it would. But it has decided, for now, that it does not want to make a fashion statement. Instead, it has decided to focus on groceries.”

One of the proprietary apparel labels found at Wal-Mart is Bobbie Brooks, a name the firm bought and now distributes exclusively through its stores. Some of its other private brands include Huntington Ridge and Style My Way and Simply Basic.

For a year or so, the giant Bentonville, Ark., discounter has been forging into new regions — it’s already in the Northeast and Mexico, and in 1995 will open in Brazil and Argentina — gobbling up other chains — 122 Woolco stores in Canada, 103 of Kmart’s Pace warehouse clubs — and keeping its cost of operations among the lowest in the industry.

It is able to accomplish this by continually slashing unnecessary functions, and using state-of-the-art systems for operations, inventory control and information management. This is critical to keeping a lid on costs and making the organization more efficient.

In 1994, Wal-Mart is expected to add another $17 billion in sales, bringing it to $84 billion. The company is on a pace to break the $100 billion mark by the end of 1995. It is remarkable growth, considering that just 10 years ago, the firm rang up $4.6 billion in sales.

The company, which has its roots in a single Ben Franklin store opened in 1945 by Sam Walton, now operates more than 2,000 stores under the banners Wal-Mart, Wal-Mart Supercenters, Sam’s Club, Hypermarket USA and Bud’s Warehouse Outlets.

Sam’s Clubs is a warehouse operation that hit $14.7 billion last year. Wal-Mart Supercenters, which sell general merchandise and groceries and is slated for significant growth, had sales of $3 billion.


Its other businesses include the McLane food distribution company; Western Merchandisers, a wholesale distributor of music, videos and books, and Phillips Cos., a grocery chain in Arkansas. Through a joint venture with Cifra S.A., it operates 13 stores in Mexico.

The company also operates four Hypermarket USA units, which rang up about $600 million last year. The company has said it does not plan to enlarge its Hypermarket USA division.

“Wal-Mart is the most customer-driven retailer in America,” said Barnard. “It also has the legacy of Sam Walton, who never passed up the opportunity to update systems. The company has a clear sense of who its customers are and what they want.”

Wal-Mart’s core business is its discount stores. They tallied $45.5 billion in 1993.

Wal-Mart’s advertising, like its approach to most aspects of its business, is simple and gets the message that has made it a legend to the consumer. Its slogan — “Always the low price. Always.” — is repeated in its electronic and print ads, and is splattered on signs around the stores.

Finally, from the “Hindsight Is 20/20 Department,” when Wal-Mart went public in 1970, 100 shares cost $1,650. As of Jan. 31, 1994, that investment would have been worth $2,713,600.


NEW YORK — Beleaguered Kmart Corp., which posted sales of $34.1 billion last year, is struggling to turn around its lackluster performance, a task that is receiving mixed reviews.

“Of all the major discounters, Kmart has come the longest way. It has made a lot of strides,” said Bob Luehrs, president of Chic/HIS, which sells to the chain. “But it has been burdened by having too many stores, many of which are dowdy.”

“Granted, Kmart isn’t as nifty as Target, and not quite as efficient as Wal-Mart, but it is fairly easy to get around,” noted Janet Mangano, a retail analyst at Burnham Securities. “Kmart has been caught a little short in its assortment of merchandise. It didn’t have the right sizes or colors, but I believe if it goes forward with its plan to fix this and other problems, we’ll see a turnaround by fall.”

Casual sportswear, including basic tops and bottoms, is a big part of Kmart’s apparel business, with jeans a major focus. Aside from Chic, other jeans lines include Sasson, Wrangler and Bonjour.


Luehrs added the company has a deeper selection of jeans than Wal-Mart. Sources also say that the firm is going forward in developing its branded merchandise, which accounts for about 20 percent of apparel.

Kmart has had success with its Jaclyn Smith’s Sportswear collection, and this year launched an exclusive line of swimwear with fashion model Kathy Ireland. Kmart is merchandising these branded goods with snappy graphic displays.

But some industry observers express caution about the retailer, noting that it has failed on the fashion front.

“The problem is that Kmart fashion is an oxymoron,” noted retail consultant Kurt Barnard.
“When it comes to fashion, Kmart is not as strong as Target,” noted N. Richard Nelson, an analyst at Duff & Phelps. “Target has a much stronger, updated image.”

Industry observers also point out that Kmart’s advertising is too deceptive. “It’s way, way out of sync,” noted Luehrs. “It’s more like for a J.C. Penney’s. Maybe someday they’d like to be there, but they’re not there now.”

Last year, the company’s operating profits at its discount stores tumbled 32.4 percent. Profits in the first quarter, ending April 27, slumped 69 percent to $18 million, or 4 cents a share, from $58 million, or 12 cents. During that period, sales were up 6.2 percent, to $7.8 million from $7.4 million, reflecting strength in the specialty retail units. Total Kmart operating income dropped 26 percent, to $145 million from $196 million.

Against a sagging financial performance picture, Kmart’s chairman and chief executive officer Joseph Antonini has come under fire. At the firm’s recent annual meeting, a management-backed targeted stock plan to sell stakes in the specialty store divisions was defeated, and sources had read that as a vote against him. Alternate plans are under review.

Antonini, who has maintained he is staying put, is betting on a turnaround plan that will lead to improved financial results by the end of the year. The plan includes adding new systems that analyze sales at individual stores to help tailor inventories to meet local demands; daily deliveries to stores so that associates can concentrate on service, instead of stocking the shelves, and consolidation of headquarters to improve operations and cut costs.

The company is also counting on its $3.5 billion store modernization program, begun in 1990, which management hopes will bring higher store sales volumes. By the end of this year, 1,600 of the chain’s 2,400 discount store are expected to be modernized.


CHICAGO — “Target has the best presentation with the most timely merchandise of any mass merchant,” said Brian Epstein, vice president, women’s swimwear at Jantzen, which manufactures private-label swimwear for the chain.

“Target is the discount store of tomorrow. They are light years ahead of the others,” according to Bob Luehrs, president of Chic, which sells its own brand of casual apparel to the Minneapolis-based chain.

Vendors and analysts raved about Target’s presentation, assortments, advertising and service.


They said that what sets Target apart from other discounters is an upscale image and a focus on trend-oriented merchandise, comparable with specialty stores like The Gap and The Limited and moderate department stores rather than traditional discounters.

While the 567-store chain, owned by Dayton Hudson Corp., also offers competitively priced hard goods, industry observers cite soft goods — both home and apparel — as its biggest strength. Target’s 1993 revenues were $11.7 billion.

“[Target] coordinates trends across the store for a more upscale ambience,” said Sara Ann Browning, senior consultant with Management Horizons. “There’s a big focus on basics, but they are trendy basics.”

Target’s assortments are narrow and deep, said vendors. The chain has a trend merchandising department that is usually very accurate and commits unwaveringly to a trend. For example, Jantzen’s Epstein noted that Target was the first mass-market store to pick up on underwire bikinis as a hot swimwear look.

Presentation is clean, with wide aisles and clear signage making for easy shopping. Fixtures are generally limited to a single item or coordinated group.

“If you want a casual cotton pant, they’ll have one style and show you it in four or five colors…it’s much easier for the shopper to understand,” Luehrs said.

The focused message carries through to Target’s advertising, which observers said beats the competition not only in the way it shows the merchandise, but also in promoting the store’s image.


“[Target’s] Sunday circular is one of the first things most people look for on Sunday mornings,” Browning said.

Customer service is one of Target’s main attributes.

“They refer to their customers as guests and they treat them that way,” said Gary Ramey, vice president, Sara Lee Personal Products, which supplies Target with Hanes Her Way, L’eggs and Playtex products.

But Target’s emphasis on more fashionable merchandise means prices, although competitive, may not be rock bottom. “Pricing is strong, but it’s not everything,” Browning said. Nevertheless, the store maintains a keen price/value equation. “The more price-sensitive customer shops at Wal-Mart, the more fashion sensitive shops at Target,” said Rick Nelson, analyst with Duff & Phelps.

Target’s narrow focus means racks can sometimes appear a little thin and spaced out, and assortments sometimes lack newness, noted Bobby Reiss, president of No Excuses which makes private label apparel for Target.

According to Luehrs, “At times they may be a little too focused — other stores have more variety of apparel.”

Vendors also complain that the stores’ high proportion of private label apparel — which some sources estimated from 60 to 80 percent — makes Target a difficult account to crack for branded apparel. “There’s not a lot of room for outsiders,” said one sportswear vendor. The chain sometimes misses opportunities by not buying more brands, noted Ramey, citing women’s fleece activewear as an example.

Overall, however, most vendors praised Target for its willingness to build relationships, share information and its state-of-the art technology, which includes Electronic Data Interchange and Quick Response. “They have information right up to the day before as to what sold in style, sizes and color,” Luehrs said. “They are a wonderful partner. They understand what [the vendor] is up against,” Epstein said.


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