Kmart has a long history; recently it is trying to emerge from bankruptcy reorganization. Kmart is slowly losing its customers to Wal-Mart.
Before being bankrupted Kmart was the second best retailer after Wal-Mart. Both companies used different strategies to outsmart each other. They tried different strategies to woo the customers. After coming out from bankruptcy Kmart found that it has lost most of the customers to Wal-Mart and other retailers like Target. Its total net profit also declined considerably. Target took this opportunity to its full advantage and started aggressive campaigning. Though the think tank of Target knew that most of Kmart's customers would go to Wal-Mart rather than coming to Target's stores, they started slashing the prices of the products and announced heavy discounts on them. They used innovative ideas to woo the customers.
To maintain its top position Wal-Mart used to slash the rates so that when customers come to purchase the items would buy other products also. These items were termed as loss leaders. Most of the middle class families are Wal-Mart's customers. Target aimed at upper middle class. Because of this stiff competition between Wal-Mart, Kmart, Target, Costco, etc., customer has wide range of choices to choose. Customer can buy products at discount rates.