Visit the Kmart store in Warren, Mich., and you might notice there’s a store-within-the-store where everything costs $1.
What you won’t be able to see is that everything in the $1 area is supplied by Kmart’s female and minority suppliers.
The shop is part of a five-store pilot program, highlighting vendors who come through Kmart’s Minority Business Enterprise program.
While Kmart’s discount store division is struggling, its minority supplier program is a leader in the retail industry. Competitors such as Sears Roebuck and Wal-Mart have asked Kmart for assistance in setting up or revamping their programs.
Last year, John Rutherford, Kmart’s point man for the program, traveled to South Africa as part of a 10-day mission to help white-owned businesses develop programs to locate and support black and mixed-race suppliers. Some South African retailers are to pay a return visit to Kmart this spring.
“We asked: ‘Why us?”’ Rutherford said. “It’s because we have one of the leading programs. Other companies come to us for help.”
Kmart’s formal minority supplier program dates to 1974.
In 1993, Kmart bought $778 million worth of goods at wholesale from minority- and woman-owned suppliers, worth more than $1 billion at retail. Kmart’s total sales at its discount stores were $28 billion.
By comparison, Sears bought $166 million worth of goods at wholesale in 1993 through its 27-year-old minority- and woman-owned sourcing program, compared with total store sales of $23 billion. Wal-Mart Stores is just starting to set up a minority supplier program.
Carol Martin, who was named director of the Sears program nine months ago, said when she got on the job she made a point of calling Rutherford to exchange ideas. “Kmart does have a very fine program,” she said.
Rutherford said when Wal-Mart decided to begin such a program, the staff charged with the task came to Kmart for advice, and he readily shared. “The mission here is one of community development, not market competition,” Rutherford said.
Kmart’s program aims to identify and assist minority- and female-owned firms to become Kmart suppliers. Rutherford and Richard Cozart travel around the country to find businesses at trade fairs and other events, and encourage them to make presentations to Kmart’s buyers. Rutherford and Cozart do not buy products themselves, nor does Kmart directly supply financing.
Cozart said minority suppliers often want to supply products to be marketed to minority customers, but he tries to talk them out of it. “We try to focus them on the mainstream. The mass market is where the money is.”
One exception is Ron Thomas, a former manufacturers’ representative from Southfield whose Thomco Inc. is about to launch a line of black hair care products at Kmart stores. Thomas sold Clairol and Johnson & Johnson brands to Kmart before deciding to launch his own line. The Golden Imani product line, with distinctive white and gold packaging, debuted in Kmart stores in February.
The large Kmart order will help Thomas sell his products to other stores as well, Rutherford said. “Now when he walks into Target or WalMart to sell them, he’ll have more credibility.”
Other vendors in the Kmart program include:
Basket Case Gift Services of Detroit, producing gift baskets.
Blankenship Distributors of Kansas City, Mo., supplying gum, rock candy, jaw breakers and other confectionery products.
Ace Industries of Grand Rapids, Mich., supplying plastic utility buckets, wastebaskets, dust pans and laundry baskets.