business news in context, analysis with attitude

Edward Lampert, the multimillionaire hedge fund manager who will become Kmart Corp.'s largest shareholder when it emerges from bankruptcy, told the Detroit Free Press that he wants the retailer to keep a sharp focus on its once and future customers.

Lampert said he invested in Kmart because “it's a nationally known company, with a very significant history of success before the last decade or so.” He said that Kmart was once a big success, “and it can easily become one again.”

Still, he said that a price war strategy “is not a sustainable business proposition,” he said.

“You need to provide (customers) with goods and services that give them value," Lampert told the paper. “It's one thing to have customers who shop at Kmart once or twice a year. It's another thing to get them to shop once or twice a week."
KC's View:
He’s right. It is another thing. It’s called a miracle.

Okay, that was a little snotty.

Actually, we think it is a positive sign that a hedge fund manager is talking about customer service as opposed to financial efficiencies, especially since our main criticism of the new board is that it is heavy on money guys and light on marketing and merchandising experience.

We still wonder when the last time was that Lampert actually went into a Kmart -- or any comparable retailer -- to do some shopping. (We’re not talking official store tours.) He lives in Greenwich, CT…so does he ever cross the border into Port Chester to visit the enormous two-story Costco to pick up inexpensive cases of soft drinks? Or go into the Whole Foods, or the A&P? Or does he drive up the road to Stamford to pick up food at the Super Stop & Shop? Has he ever been to Stew Leonard’s? Did we wander into the local Caldor’s before it went out of business?

Or does he send his wife, his maid, or his housekeeper? (Not that we’re equating these three titles.)

By the way, we’d ask these same kinds of questions of every other person on Kmart’s board, including CEO Julian Day.

(We’d like to put these same kinds of questions to every board member of every major supermarket chain in the country. It’d be an interesting exercise.)

The biggest problem with this industry may be that it is run by middle-aged white guys who don’t actually do the shopping. The question is whether Kmart in particular, and the industry in general, can be made or kept relevant by people who only see the process from one side.