KMART CORP.
A SEASONED
PERFORMER
The venerable retailer's bid to recoup its fortunes includes a system that overhauls the management of highly profitable seasonal merchandise
BY MEGAN SANTOSUS
For retailers, the effective management of seasonal merchandise is a delicate proposition. The selling window is of limited duration and the goal is not to get caught with too much-or too little-inventory at the wrong point in the seasonal cycle.
Take Christmas items. If there were no tinsel or wrapping paper or spare tree lights on the shelves the week before Christmas, customers would head for the exits. But if, on Dec. 26, the shelves were still well-stocked with these items, that too would be egregious.
And, because of the shorter selling season, the profit margins are kept higher on seasonal items than on regular stock; so, when it comes to maximizing profits, the balancing act between supply and demand is all the more crucial.
If at first blush all that tinsel doesn't seem like such a big deal, it can definitely add up. For ESPRIT Award honoree Kmart Corp., holiday merchandise totals some $2 billion-and Kmart's Seasonal Merchandise Management System (SMMS) currently handles only a fraction of the seasonal goods Kmart sells. (The inaugural project was limited to holiday items; it was recently extended to include back-to-school merchandise, and there are plans for further expansion.)
The universe of seasonal retail merchandise is potentially quite broad and might include such items as snow blowers, lawn mowers, bathing suits and bags of peat moss. Kmart, however, declines to reveal the total percentage of revenues for which its seasonal inventory accounts.
According to David M. Carlson, Kmart's senior vice president o ...