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DETROIT -- At a time when consumers are increasingly choosing one-stop-shopping, Kmart Corp. is putting its supercenter expansion plans on hold.
Spokesman Jack Ferry says the Troy, Mich.-based discounter will build no new supercenters -- combination grocery and general merchandise stores -- while in bankruptcy proceedings. "It's really due to being able to conserve cash during bankruptcy," Ferry says.
A year ago, Chuck Conaway, Kmart's chief executive officer at the time, said Kmart had between 1,000 and 1,300 stores that could be expanded into supercenters. The company did not announce a target for 2002. Nationwide, Kmart now has 117 supercenters and 1,715 discount stores with a smaller assortment of groceries, mostly non-perishables.
Although supercenters are a profitable formula, Ulysses Yannas - an analyst with Buckman, Buckman & Reid, a registered broker/dealer in New York - said there are several reasons Kmart should get out of the supercenter business.
"Kmart has too few supercenters, and they are spread too far apart, to support an efficient distribution system," he said. "It has had problems with its food supplier, the Fleming Cos., it can't beat Wal-Mart prices, and it will find it rough to compete with national grocery chains on service and selection."