Gil MacQuarrieLupita Martinez

Mike NouauxCorey Savio

Presenting …

Target vs. Kmart

About the two companies

• George Dayton• Goodfellow Dry Goods • Founded in 1962• #4 in the industry • 1802 stores • 38 distribution centers

• Sebastian S. Kresge• Five and ten cent stores • Founded in 1962 • #7 in the industry• 941 stores • 28 distribution centers

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Kmart’s Beginnings

• 1962 - First Kmart discount store, 17 additional, $483 million in sales

• 1976 – opening record 271 stores and becoming first retailer to launch 17 million of square feet of sales space = 1647 stores

• 1981 - total of 2055 stores and leader in the retail industry

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Kmart’s Supply Chain Issues

• Focused efforts on ↑ sales via acquisitions and signature collections

• Investments in technology way after competitors

• No trust in its own inventory systems • Deliveries every 3-4 days while competitors

making daily deliveries • 28 distribution centers

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Target’s Mission: Expect More. Pay Less.

• Constantly innovating• Development of smaller urban store formats• Multitude of digital services (Instacart, SFS, STS,

CurbSide)

• Remodeling/ Remerchandising to drive higher margin goods

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Top Target Supply Chain Issues

• “Incredibly Complex Supply Chain”• Servicing two separate supply chains:

– Online and in-store customers require different approaches

• Out of Stock problems – Too wide an assortment of sizes and formats– E-commerce and physical stores compete for

inventory when customers pick up in-store

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Kmart’s Solutions: Too Little, Too Late

• Implemented Omni-channel fulfillment strategy • Aim to create next-day delivery model by

leveraging existing assets, inventory & DCs.• Decreasing inventory by $1.7 billion • Transformation

model around integrated customer-centric retail model

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Top Target Supply Chain Solutions

• $2-$2.5B to upgrade supply chain technology infrastructure• Simplify Supply Chain by cutting number, sizes & brands stocked• Localize assortment in stores and open up more smaller-format

stores in urban markets• Improved inventory management:

– RFID tags – Optimizing case pack sizes

• Improve sales online and on mobile:– Mobile (apps and m-commerce) allows customers to search for items before they

get to store and once they are in store

• Strengthening Omni-Channel Operations:– Flexible fulfillment– Ordering online and picking up in stores and a new ship-from-store capability

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Conclusion

• Supply chain improvements– Reducing physical inventories– Optimizing their distribution

channels• Technology Innovation

– Mobile & online fulfillment– RFID inventory accuracy– Reducing inventory out-of-

stocks

• Not alignment between business model & supply chain strategies

• No leadership • Technology investments • Lack of integrating

systems

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Thank you Questions?

Gil MacQuarrieLupita Martinez

Mike NouauxCorey Savio

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