That may have been part of KMart's problem. However, it's not the whole story.
In a nutshell:
Old, outdated stores, poorer locations
Spending 12 to 15% of revenues on sale flyers (Walmart spends around 2%), leaving almost nothing for other advertising, PR or promotions
Supplying stores with advertised items (very costly)
Not finding their identity or niche in the new competitive marketplace (Walmart is for the everyday value shopper with falling prices; Target is considered more upscale but still with good prices)
Going almost cold turkey on their flyers in mid-2001, which killed the bulk of their sales, as they were driven by the flyer madness.
They stumbled in the early 80's due to poor management. Walmart and Target won, they lost.
By the way, KMart died in Canada in the mid 90's for most of the same reasons. Seems like KMart USA management were too dumb and didn't see the writing on the wall, or simply, it was too late.