(Oct. 15) TROY, Mich. — Amid recent reports of slower sales for all retail chains, Troy-based Kmart Corp. says that — for the moment, anyway — it is not planning to expand its full-line grocery format beyond its existing 117 supercenters, according to news reports.

Kmart, which is has said that it expects to emerge from Chapter 11 bankruptcy by summer, is expected to reveal a business plan later this year that is not likely to include additional supercenters, chairman James Adamson was quoted as saying. Kmart closed 283 stores earlier this year and will consider closing more of its 1,831 remaining outlets after Christmas.

The chain reported in late September that it had lost $1.83 billion in the six-month period that ended July 31.

Telephone calls to Kmart officers for comment were not returned.

U.S. grocery store sales are $682.3 billion, according to U.S. Department of Commerce figures and industry estimates.

Economic reports issued in early October indicated that sales in U.S. chain stores fell 0.8% in the week that ended Sept. 28, after a 1.7% drop in the preceding week.


Food sales at Super Kmart — the chain’s supercenters — account for about about 35% of the format’s sales. Super Kmart sales represent about 15% of Kmart’s sales, which were $15.2 billion, down 12.1% from the same period a year ago.

But grandiose expansion plans, at this point, don’t make much sense, however successful the chain’s supercenter format may be, said produce marketing consultant Ed Odron of Produce Marketing Services, Stockton, Calif.

“The only thing I can think of is the fact that they have so many things going on right now, with bankruptcy issues and trying to get sales up,” he said. “At this point, they’re just trying to get their current operation profitable. You get too many things going at one time, and there are too many diversions.”

By contrast, Wal-Mart Stores Inc., the world’s largest retailer, has announced plans for the biggest store expansion plan in its history, including as many as 210 new supercenters.

Odron said, however, Kmart can’t be compared to Wal-Mart.

“They need to get their current operations up and running properly, and once they get their act together, they can move forward on some other projects,” Odron said. “You get too fragmented, and senior management has a little problem focusing on what needs to be done. Wal-Mart, on the other hand, seems to have their act together, and they’re ready to move forward on other issues.”

All of which, he added, is no knock on Kmart.


“You have two different scenarios,” Odron said. “Wal-Mart is trying new things, and the Kmart situation is focused on trying to get profitable in their current operations. Their focus needs to be doing something right with their current operations. And I agree with what they’re both doing. But they need two different approaches.”

Wal-Mart, already the largest grocery operation in the U.S., recorded 2001 grocery sales of $83.7 billion, while the nation’s largest pure grocery chain operator, Cincinnati-based Kroger Co., had sales of $50.1 billion and Albertsons Inc., Boise, Idaho, posted $37.9 billion, according to the trade group Grocery Manufacturers of America.

Sales at Minneapolis-based Super Target represent about 7% of Target Corp.’s sales, which were $39 billion in 2001. Target is the No. 3-ranked discount retailer in the U.S., but No. 36 in terms of food sales. Super Target estimates its grocery sales for fiscal 2002 to be $2.7 billion.

But, Odron said, Target’s position in the market is secure.

“The one company that seems kind of quiet, with a pretty nice operation is Target,” Odron said. “They’re kind of along the same lines as Wal-Mart and Kmart. But in consumer’s eyes, the Target operation seems to be a little more, let’s say, upscale.”

In any event, Odron added, retailers with an eye on increasing sales — and expanding supercenter formats — should consider produce as a key to growth.

“I see the perishable departments as a real draw,” he said. “I think the perishable department can really make the difference on the draw for the entire supermarket. There is some real potential there.”