Two Crazy Department-Store Innovations That Just Might Work
Like an oasis in a desert of retail sameness, innovation has come to a few big department-store chains. Kmart is opening a laundromat in a corner of one Iowa store, while Walmart (WMT) and Target (TGT) are opening health clinics. These add-ons may or may not work, but it's exciting to see managers dare to be different.
Kmart's Kwash (that's said "K-wash") concept debuts in Iowa City this weekend. The laundromat features great big machines, free Wi-Fi, and a Kmart checkout register. For its part, Walmart and Target are opening walk-in health clinics -- along with pharmacies including CVS (CVS) and Walgreen (WAG) -- aimed at capturing the influx of newly insured Americans as healthcare reform rolls out. Walmart already has more than 70 clinics around the country, and Target recently said it will open five clinics in the Chicago area in September. More Target clinics are open in Maryland and Minnesota stores.
Of the two initiatives, the one with the most obvious potential is the laundromats. This seems like a match made in demographic heaven.
Who shops at Kmart? People who don't have a lot of money. Bet many of them live in apartments and don't own a washer/dryer. Iowa City has a big college-kid population too, more prime laundromat customers.
So you can throw in a few loads, get your shopping done, and then come back, pop your clothes in the dryer and get your Kmart goods scanned and pay up while you're waiting for the clothes to dry. What other discount department-store chain can offer that kind of multitasking? Seems like a slam-dunk. Laundromats are also a great add-on business because they require so little staffing -- just one attendant.
The health-clinic initiatives are more of a question mark. The idea of getting a flu shot inside a retail store with dirty, scuffed floors... it's unclear if shoppers will go for that. Staffing is far more complicated here and requires hiring nurses and other medically trained staff -- not an area where either Target or Walmart has expertise. On the other hand, if you needed a prescription, you'd be just steps away from the pharmacy.
There are about 1,200 retail health-clinics nationally, but the clinics have yet to prove they can be profitable, and some have closed. It's possible the flood of newly covered customers might make the model work, but it's currently a question mark.
There's also a basic trust issue here. Sure, you'll buy a 30-pack of soda at Walmart or Target -- but will shoppers trust them to diagnose their flu? Also, do we want sniffling sick people wandering the aisles after their visit coughing on the oranges? At first glance, this is an awkward pairing.
But I can remember when no retail consultant thought consumers would be willing to buy food in smelly gas stations, and we've all seen how that ended up.
Photo courtesy of Kmart