Founded by “five-and-dime” low price retail genius, Sebastian S. Kresge, the first discount store with the name Kmart was opened in a suburb of Detroit in 1962. With the logo “No frills! Just discounts,” the tone was set. Kresge targeted the discount-hunting shopper and set out to be the consolidator and leader of the fragmented discounter market.
With a laser-like focus on low cost and an aggressive opening schedule of very large stores, nothing seemed to stop Kmart. By 1966, it was the leader of the discount store segment; by 1970, it surpassed Woolworth, its long-time rival in low price variety stores; by 1980, it reached 80% of the US population with stores in nearly all of the largest metropolitan areas. The “Blue Light Special” promotion tactic became a hallmark. Shoppers would be looking in the large stores for employees who would switch on a blue rotating light that was mounted on a pole on a stockroom cart to know where merchandise was on sale. This was hard-core discounting.
To further fuel its sales growth, Kmart decided to reach for higher margins by selling more upscale items with national brands; Martha Stewart lent its name and designs to Kmart; snacks moved to the back while jewelry was moved in; Kmart started advertising in Vogue, and even one of Charlie’s Angels pitched in; stores were refurbished. Advertising costs went up. At the same time, it opened smaller and hyper stores, bought and sold a drugstore chain, launched and closed a chain of designer cloths outlet stores, acquired a building products chain, a bookstore chain, etc.