Kmart, every mention
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tap a year for its mentions
every year anyone David Rosenthal 52Ben Gilbert 11
Verbatim, from the transcripts: the passages where Kmart comes up
Costco (Audio) · Acquired
- ▶ 20:57 David Rosenthal Why do you think Kmart was called Kmart?
- ▶ 21:10 David Rosenthal They were expanding across the country, and he was like, oh great, we're gonna draft off the Fedmart brand, and it was the same thing with Kmart.
- ▶ 21:26 David Rosenthal Discounters are Walmart's, Kmart's, Targets.
- ▶ 24:00 David Rosenthal First, he invents the discounter, which then Sam Walton, Kresge with Kmart, Dayton with Target, copy, and becomes the dominant retail form of America.
- ▶ 34:26 David Rosenthal As these other companies are scaling, and I think particularly Kmart, they don't really have
- ▶ 34:41 David Rosenthal Kmart, if you remember back to our Walmart episode, came out of the Kresge department store chain, which was huge.
- ▶ 34:52 David Rosenthal You know, Sam had to fight bitterly, last mile by last mile, building out his distribution network to beat Kmart.
- ▶ 43:11 David Rosenthal They're gonna get steamrolled by Walmart and Kmart and Target and everybody else.
- ▶ 49:14 David Rosenthal So at the time, Walmarts and Kmarts had on the order of about 50,000 SKUs and even FedMart had
- ▶ 1:07:50 David Rosenthal Walmart and Kmart and Target start, 1982 when all this is happening.
- ▶ 1:13:28 David Rosenthal Capital in order to be able to grow stores and compete with Walmart and Kmart.
Benchmark Part I · Acquired
- ▶ 1:03:30 David Rosenthal So, of course, as we've talked about, it was Louis Borders, the founder of Borders Books, which had then gotten absorbed by Kmart and then spun out, and he had left as part of all that, and he felt like Borders didn't realize his vision.
- ▶ 1:03:46 David Rosenthal He knew about Kmart, Walmart.
Amazon.com · Acquired
- ▶ 41:32 David Rosenthal So, you know, the discounters, Walmart, Kmart, you know, Sears, all that physical stuff, you're just gonna cut them all out
- ▶ 1:28:45 David Rosenthal And we're going to talk about eBay in a minute here, but it's just like the Walmart story and fighting against Kmart and other people like Amazon now
- ▶ 1:29:09 David Rosenthal Not Walmart, not Kmart, not Barnes and Noble.
- ▶ 1:52:09 David Rosenthal Kmart had acquired them, and yep, the founders had moved on.
- ▶ 1:53:19 David Rosenthal Do you know, just like we talked about last episode about the whole crazy, you know, Borders, Kmart, Webvan, Kiva came out of Webvan, which of course Amazon acquired and is.
- ▶ 2:00:14 David Rosenthal And that was very different than the Kmart coming out of Kresge distribution that they were piggybacking off of.
Walmart · Acquired
- ▶ 17:34 David Rosenthal I think Kmart or whatever competition we were facing just became Jeff city high school.
- ▶ 26:59 David Rosenthal He says he thinks it's the big reason why corporate raiders or larger companies like Kmart never came and acquired them because the stock was never splintered.
- ▶ 38:51 David Rosenthal I was going to bring this up later, but I think he says in the book that he believes he has spent more time in Kmart's than any non like individual store employee of Kmart.
- ▶ 39:03 David Rosenthal Including Kmart senior management.
- ▶ 39:06 Ben Gilbert And also, we keep referencing Kmart.
- ▶ 39:08 Ben Gilbert When I was growing up, I was like, Walmart, Kmart.
- ▶ 39:10 Ben Gilbert I think Kmart's kind of like Walmart, about the same scale, same size, kind of a little lower end.
- ▶ 39:16 Ben Gilbert Like, that was my perception as a kid of Kmart.
- ▶ 39:18 Ben Gilbert I didn't realize that Kmart for a very long time was much, much larger than Walmart.
- ▶ 39:24 Ben Gilbert They were kind of Walmart's big brother incumbent.
- ▶ 39:31 Ben Gilbert Year this was, but I remember some quote from Walton where he's talking about when we reached five percent the scale of Kmart and it's like, whoa, that, that really puts it into perspective how big a lead they had.
- ▶ 58:13 David Rosenthal And if you think about it, right, like put yourself in the shoes of customers back then, and Sam talks about this a lot in the book, you know, for so long, and we'll get into the competition with Kmart, everybody thought Walmart, Sam, all…
- ▶ 1:27:41 unnamed speaker Certainly Kmart wasn't doing that.
- ▶ 1:28:33 David Rosenthal We keep talking about Kmart.
- ▶ 1:29:09 David Rosenthal Variety store chain based in Detroit, they start their own new discounting concept, Kmart.
- ▶ 1:29:18 Ben Gilbert But it's worth knowing all three of these are existing variety store chains that we're used to making 33% on every single item they sold in their store, and if you look at four horses, this Woolco, Target, Kmart, which would come out of SS…
- ▶ 1:29:58 David Rosenthal I think especially like Kmart, they were the gorilla
- ▶ 1:30:02 David Rosenthal And I think the parent companies, especially Kresge, were willing to take losses and have lower margins in Kmart.
- ▶ 1:30:34 David Rosenthal So within five years, you know, by like 1967 ish Kmart has 250 stores all across the country doing eight hundred million dollars in sales.
- ▶ 1:30:44 David Rosenthal And the new Walmart concept, Walmart revenue was still only around ten million dollars at that point in time, so they are like a gnat five years later, and Kmart is like darling of Wall Street.
- ▶ 1:31:06 David Rosenthal Yeah, and they're like in Arkansas and Missouri and like a regional area, Kmart's now everywhere, like they could just
- ▶ 1:36:34 Ben Gilbert But if it truly is core, which this did become core to beating Kmart and all the others and having much better economics of them at scale, then yeah, you have to do in-house.
- ▶ 1:48:41 David Rosenthal You know, think of Kmart is like great.
- ▶ 1:49:53 David Rosenthal So this is how as Walmart starts to expand out from the South and from the Midwest across the country, and Kmart is just going off city by city, extending their supply lines.
- ▶ 1:50:05 David Rosenthal Walmart's got this behemoth of a distribution network that is way more efficient, and so when they go head-to-head in a geography, Walmart can price lower, still be making a profit, and Kmart just bleeds cash in those stores.
- ▶ 1:52:02 David Rosenthal And again, all through the seventies, all through the eighties, Kmart was the gorilla.
- ▶ 1:52:06 David Rosenthal And then by the early nineties Kmart, which had been so dominant, they start really feeling the squeeze from Walmart.
- ▶ 1:52:54 David Rosenthal In the mid to late eighties, Kmart is at the height of its power, the height of its pride, right before, you know, Walmart is finally gonna tip them over.
- ▶ 1:53:11 David Rosenthal So Kmart between the mid eighties and the early nineties acquired sports authority, office max builder square Walden books and borders.
- ▶ 1:53:51 David Rosenthal It was because Kmart bought his company.
- ▶ 1:53:57 David Rosenthal And so by the time, like, kind of early mid-nineties, when the writing's on the wall, Kmart starts selling off all of these acquisitions that they had made to just try and raise cash.
- ▶ 1:54:10 David Rosenthal And then in 2004, Kmart and Sears merge.
- ▶ 1:54:16 Ben Gilbert Wait, Kmart and Sears merged?
- ▶ 1:54:34 David Rosenthal There's no way that Kmart or God forbid Sears at that point could compete against Walmart.
- ▶ 2:00:57 David Rosenthal I think the war was already won with Kmart, but this was really the death knell with super centers because Kmart tried their own hypermarket concept called super Kmarts.
- ▶ 2:01:10 David Rosenthal And this is where the Walmart distribution strategy just completely trounced to Kmart.
- ▶ 2:01:18 David Rosenthal It trounced Kmart in hard goods, but now you're talking about groceries.
- ▶ 2:01:37 David Rosenthal It's totally game over for Kmart, and frankly, it's kind of crazy that a lot of the other traditional grocery chains
- ▶ 2:14:09 David Rosenthal Who could have predicted that these little small town guys from Arkansas would beat Kmart?
- ▶ 2:45:03 David Rosenthal In fact, it was completely non-obvious in that Kmart just borrowed Kresge's distribution network, and everybody thought that that was the way to go.
- ▶ 2:45:19 Ben Gilbert Yeah, that helped them get a massive lead, and there'd be some very, very credible argument that I totally would have bought, which is, if you think you can get two decades of lead with this strategy, there probably will be something that…
- ▶ 2:45:41 David Rosenthal I want to believe who was the CEO of Kresge when they launched Kmart.
- ▶ 2:45:51 David Rosenthal And that Sam believes had Cunningham still been running Kmart as Kmart started to decline, the company would have made different choices.
- ▶ 2:46:02 David Rosenthal They had a whole bunch of CEO turnover and all sorts of controversial stuff.
- ▶ 2:56:32 David Rosenthal And that was not really Sam that led that and was also a big part of driving the nail in the coffin of Kmart and is now 55% of the business.