NEW YORK — Kmart Corp. is counting on the revival of the Blue Light Special, relaunched this past Sunday with a $25 million ad blitz, to help boost sales and profits — and to help the discount retailer reconnect with its consumers.
"This is no silver bullet," said Chuck Conaway, chairman and chief executive officer. "But this will help differentiate us, and drive traffic. . . . We had alienated our customers."
The nation's third-largest retailer had used the flashing blue light, created in 1965 and abandoned in 1991, to direct customers to unadvertised sales items. In the late 1980s, it lost its luster as it became another way of getting rid of unwanted merchandise and damaged goods.
With its revival, Kmart is abandoning the mobile cart with the flashing blue light stick, and has instead installed Blue Light Zones in the middle of the stores. The company's strategy is to advertise the same product across all 2,100 stores — and on its e-commerce site, Bluelight.com — every hour on the hour for 25 minutes. On Sunday, for example, Kmart spotlighted 2-liter bottles of Pepsi at 39 cents, reduced from 99 cents.
Conaway, in an interview with The Associated Press, said he believes the revived Blue Light Special will increase the average number of trips per year its customers make to the stores, currently averaging about nine. Customers at such competitors as Wal-Mart Stores Inc. and Target Corp. make about 11 visits per year.
"The enthusiasm so far has been great," added Conaway. "In one store, all the sales associates dyed their hair blue."
But Kmart, which showcased special guests Kathy Ireland and Jaclyn Smith on Monday, whose brands are sold at Kmart, will need a lot more than just marketing hype and blue-haired salespeople to reinvigorate the retailer's bottom line.
The retailer, based in Troy, Mich., reported a 40 percent drop in profits for its fiscal fourth quarter, ended Jan. 31, earning $249 million, or 48 cents per share. For the year, it lost $244 million, or 48 cents a share, on revenue of $37.03 billion.
With competition heating up among such red-hot competitors as Target and Wal-Mart, Conaway needs to give customers a clear reason for shopping at Kmart.
"Wal-Mart has done phenomenally well as a low-cost provider. Target is known for cheap chic," he said. "Our sweet spot is to be the authority with mothers."