Manhattan plays big role in renaissance of Kmart

From the Manhattan-centered view of the universe, Kmart has long been one of the big symbols of the world Out There, a caricature of strip mall culture at its height, or depth, twinkling mysteriously somewhere in the provinces under the downscale glare of a blue-light special.

Kmart, in turn, ignored Manhattan completely.

Manhattan was antithesis, everything that Kmart was not, lacking everything that had made the Kmart formula work so well everywhere else: no large tracts of land for one-level shopping, no parking lots and, worst of all, crushingly high real estate and energy costs that would squeeze the company's already narrow profit margins into a thin shriek. Then in the early 1990s, Kmart's formula stopped working. The company's aging suburban stores, facing take-no-prisoners competitors like Wal-Mart, stumbled. The stock price swooned and Wall Street watched for signs of death or rebirth. Now, Manhattan, seemingly the least likely of places, has become a critical element in the company's plans for a rebirth. In a major push beginning this week, Kmart is opening two huge new stores. The one on 34th Street adjoining Penn Station opened Wednesday, while the store on Broadway between Eight and Ninth Streets near Union Square in the East Village will open next month. The company, swallowing the high operating costs, is going for volume. Each store will be expected to contribute more than $50 million in sales. A kind of cultural exchange has begun as well. "People don't realize how normal New Yorkers are," said Miles Johns, who was appointed as general manager of the 34th Street store two months ago. "They're just like everybody else." The new stores, each with more than 140,000 square feet, are not flagships in the usual sense -- Kmart has larger stores elsewhere in its 2,144-store chain -- nor are they even the first in New York City. Kmart opened stores in Queens and the Bronx in the early `90s, not to mention in the `60s on Staten Island. But they will be landmarks nonetheless, both for the evolution of New York retailing and for the turnaround efforts of the country's second-largest retailer as it tries to find a voice in a foreign environment. The new stores will have functions and goals, company officials say, that would be unachievable anywhere else. They are intended as visible displays of corporate vigor to the often skeptical financial community of Wall Street analysts, many of whom live and work in Manhattan. They will be conduits to a new market that most Kmarts have never touched: the foreign tourists swarming through Manhattan. Johns, the manager at 34th Street, said his head is dancing with the idea of announcements for the spur-of-the-moment sales known as blue light specials in various foreign languages. They will be corporate laboratories. The lower Broadway store, near Astor Place, especially, will be a testing ground for new ideas in selling fashion and clothing to the young avant garde of Manhattan. The store will have a bulk-goods format, seeking to become a kind of no-frills urban outfitter. What works in Manhattan will be spun to other stores. For a city that pioneered many of the elements of big-business retailing in the 19th century, there is a paradox in all this, a company intimately associated with the growth of suburban life embracing the premier urban core of America, not as an exception to the rule, but as a way to learn new rules. Part of the value of Manhattan to Kmart is the very distinctiveness of it, something the company hopes to absorb and take back to the suburbs for its makeover. The company's chairman, chief executive officer and president, Floyd Hall, said he thought the stores would also have the advantage of surprise. Most Manhattan residents, he said, regardless of what they might think about Kmart or think they know about Kmart, have never been in one. Whether Kmart can surmount its financial troubles, convince the doubters on Wall Street, and learn how to be hip from the denizens of the East Village, all at once, is only half the story. Manhattan's never-ending evolution is the other. The lower Broadway building, in a long-ago New York, was home to Wanamaker's department store. The name, once an icon of New York retailing, now all but forgotten, still emblazons the glass-front entryway to the store from the Astor Place subway stop. The doors, along with the subway entrance to the building, were sealed in the 1950s, and are being restored.

Copyright 1996
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