Chain reaction

Carole Sloan, founding editor-in-chief -- Home Textiles Today, 1/28/2002 12:00:00 AM

Well, it finally happened.

The self-fulfilling prophecy that was generated by Wall Street and market gossip has produced the country's largest retailing bankruptcy.

Yes, Kmart was still doing a lot of stuff that bogged down its future. But in the last year or so, it managed to play some measure of catch-up with the marketplace. Perhaps not enough to avoid what many believed would be the inevitable — Chapter 11. But perhaps not as soon as this.

Yes, there are the stories of how key and secondary vendors travelled to Big Beaver Road in Troy to meet with the honchos who were to explain the company's situation — but never showed up for the meetings that were instead chaired by people in uncomfortable situations.

Yes, there are the comments that the merchandising/marketing team did not develop to the level of Wal-Mart and Target. And even Penney is given higher kudos for transforming a destroyer into an aircraft carrier more quickly.

The now oft-told scenarios of the vultures circling the carcass will be part of retailing's history of the ages. And as the pickup on the rumor accelerated, the possibility of Kmart's surviving without filing for bankruptcy protection lessened by the minute, not the day.

As the prefiling dance began, there were those vendors — and not just home textiles players — that would have some protection because of their critical impact on the company's survival. But there is a host of smaller vendors that could not say they wouldn't ship.

It's what will be happening to this sector of the supplier base across the product lines that is most troubling. Some of these companies were already among the "walking dead" but the boom 1990s kept them alive. Others were in the front lines of providing moderate-income Americans with fashion/quality/value product. Too many of these will be gone.

Then we have the Federated/Fingerhut scenario — a retailing chapter that many in the business let slip under the radar screen.

Fingerhut was acquired by Federated for its prowess in direct marketing, especially to lower-income consumers, as well as its backroom infrastructure and burgeoning e-commerce development.

In less than three years, the venture has been abandoned.