Friday, September 26, 2014

1388 Cadillac and Kmart

Here’s what happened to Kmart, which had been chugging along nicely since before the turn of the 20th century until the game shifted from the sales floor to the boardroom.

In the late 1980s it was still ahead of Wal-mart… and was the country’s second largest retailer, behind Sears.

Enter Joseph Antonelli, a long time Kmart executive, elevated to CEO. Among his bright ideas were things like getting big name endorsers… Martha Stewart for one. Jaclyn Smith for another.

Those lines flopped.  So did much else Joe did.  But the biggest flop of all was dividing the company into four different entities.

Instead of selling clothing, pots, pans and such, he sold stock.

Kmart never recovered and today is a shadow of its former shadow.

You’ve heard this from Wessays™ before.  Now, you’re going to hear it again.  When all the action is in the boardroom, the team on the field can’t win.

Fast forward to 2014.  General Motors has announced it is turning Cadillac into a separate company and moving its headquarters to New York City.

Not to GM’s imposing Fifth Avenue skyscraper, but to a relatively small office in SoHo.

Why?  Well, because Cadillac is the Kmart of luxury cars.  And some of the North American headquarters of some of the competing luxury brands are in Manhattan.

Caddy even has its own version of Joe Antonelli.  His name is Johan de Nysschen who once ran Audi/North America and more recently the beleaguered Infiniti division of Nissan.

Perfect. Infiniti is a mess.  And when was the last time you saw one on the road?  They sold about 9,000 cars in the US last month, down almost 23% from August, 2013.

At the same time, Lexus sold almost 30-thousand cars and Cadillac about half that.

The most optimistic prediction:  nothing will change.  A probable prediction: moving the front office off the auto industry’s beaten path while leaving engineering, design and production right where it is -- Detroit -- can’t possibly do the brand any good.

Cadillac still does a pretty good business in markets most of us don’t think about much.  Ambulances.  Funeral cars.

Actually, they and their outside contractors make the coolest ambulances and funeral cars on the planet.  But the call for that stuff is limited and mostly people only ride in each once, if that.

Other than those customers and a bunch of traditionalist grandparents, they don’t sell a whole lot of tin.

A typical reaction to seeing one of their stock models: “Wow, that’s a beauty.”  But more often than not, the thought is followed by “I’d buy one of those if they weren’t so bad underneath the skin.”

People who buy luxury cars are easily divisible into categories: show offs, arthritics and that part of the population with money to burn.

Cadillac needs to pay attention to all three categories.


--Attorney General Holder is quitting but he’ll wait until the Senate confirms the president’s nominee.  Figure Holder will be around until after the 2016 presidential election. The Senate wouldn’t approve John Jay, if Obama wanted him.

I’m Wes Richards. My opinions are my own but you’re welcome to them. ®
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© WJR 2014

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