In 1959, Harry Cunningham became president of the Kresge organization. Under Cunnigham's leadership, Garden City, MI, became home of the first Kmart discount department store in 1962. Seventeen additional stores opened in 1962, which led to corporate sales of more than $483 million in that year. By 1977, nearly 95 percent of S.S. Kresge Company sales were generated by Kmart stores. To reflect this development, the company then changed its name to Kmart Corporation. Ten years later, Kmart sold the

I feel that the biggest potential threat out of the five forces would have to be the rivalry among the established firms. You already see this happening between Wal-Mart, Kmart and Target. Constantly putting items on sale to bring in the flow of customers. Fighting for location space to set up a new store.

Kmart should focus on the growth of their business and not focus too much on their competitors. Keeping their prices at a competitive level should do enough to keep profits up. When a company loses focus on their strategies because they are watching the competition too closely, this will lead to the competition to obtain their customers.

Kmart, although they are generally considered a single business, is starting to focus on strategic alliances with suppliers, other retail chains, etc. Eleven of the worlds leading retailers, including Kmart, have formed a collaborative partnership to establish the Worldwide Retail Exchange. This new web-based business-to-business exchange is designed to facilitate and simplify trading between retailers and over 100,000 suppliers, partners and distributors. Some of the participants include CVS, Kmart, Safeway, Inc and Target. This is a great alliance for all of these companies since it will provide the means for auctioning products and services between retailers and suppliers.

Potential competitors are not many when it comes to the retail discount industry. The barriers to enter this market are very high. You have giants guarding the arena very harshly. These giants include Wal-Mart, Kmart, Target and Warehouse clubs like Cosco and BJ's. These market shareholders make up approximately 47% of the total discount retail industry. My only guess of a potential competitor would be supermarket giants like Walbaums, King Kullen and Shop Rite. They already have the food industry down to a science, which Wal-Mart, Kmart and the others have started to have in their stores. They have the experience with large stores. Another potential competitor might be the high end department stores. These include Bloomingdales, Lord & Taylor, Macys, etc. Who is to say that they are not eyeing the discount department store industry? They have the brand name label name connections. They have the experience with clothing, electronics, fragrances, etc.

In 1998, Kmart had total annual sales of $33,687 Million while in 1999 it had annual sales of $35,925 Million. In 1998 Kmart had annual Net Income of $519 Million while in 1999 it had an annual Net Income of only $403 Million. The reason for this was that in the second quarter, they had discontinued operations in a few locations and had reported a loss of about $238 Million.

I strongly believe that Kmart has two weaknesses in their value chain stage. One is the production of the products by the manufacturers that they buy from. As mentioned

I would recommend that if an investor owns shares in Kmart stock, I would recommend that they sell their shares. I feel that Kmart is a big and powerful company, however, I do not think that Kmart has much growth opportunity with Wal-Mart and the other competitors in the industry around. On the other hand, since Bluelight.com is doing satisfactory for itself, I say that Kmart expand on that area and form a separate entity. If that happens, I say buy that stock.

merchandise retailer. They are pretty close in what the

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