US discount retailer Kmart must carve out its own niche if it is to do well, according to company chairman Edward Lampert.

Lampert warned the company would fail if it tried to become a “second- or third-rate version” of rival Wal-Mart, reported the Associated Press.

“If that’s who our competition is going to be, and we’re going to be a second- or third-rate version, I don’t think we’re going to win,” Lampert was quoted by AP as saying.  

Instead, the company should focus on providing customers with specific reasons for shopping at Kmart, such as exclusive clothing ranges, Lampert said, adding that Kmart was broadening its demographic to target families, not just “a mother who runs the household”.

“We’re taking baby steps to find a message that we think will resonate with our present customers, as well as those who may have shopped at Kmart in the past,” Lampert said.

The chairman was speaking at the company’s first shareholder meeting since emerging from bankruptcy a year ago.