GREY WINS $200 MILLION KMART ADVERTISING ACCOUNT

Struggling Retailer Hopes to Reposition Brand

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SAN FRANCISCO (AdAge.com) -- Struggling retailer Kmart yesterday awarded Grey Worldwide its anticipated $200 million to $250 million advertising account, in time for the agency to reposition the brand
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before the important holiday selling season.

Kmart selected Grey Global after hearing final presentations Friday. Interpublic Group of Cos.' ad agency Campbell-Ewald, Warren, Mich., and Initiative Media.

Financial rift with TBWA
The review began following a legal battle between Kmart and its former agency, Omnicom Group's TBWA/Chiat/Day, New York, which created Kmart's back-to-school ad campaign while demanding $5.4 million in unpaid media fees. The two parted in July following an out-of-court settlement.

Creative will be handled by the New York office of Grey Worldwide, while media planning and buying duties fall to MediaCom, replacing TBWA/Chiat/Day sibling OMD. Other Grey Global units working on the account will include Grey Alliance and G2 Worldwide, which handle corporate identity and entertainment marketing, respectively.

Meridian will continue to handle the retailer's circulars, Kmart spokeswoman Abigail Jacobs said. Omnicom sibling Arnell is expected to continue producing advertising for Kmart's Martha Stewart line, a spokeswoman for Ms. Stewart said.

Three other shops participated in the review: independent Doner, Southfield, Mich.; Havas' Euro RSCG MVBMS Partners, New York; and WPP Group's J. Walter Thompson, New York.

The 'new America'
In a news release, Julian C. Day, president-CEO of Kmart, said the company is trying to find "creative ways to communicate the unique strengths of Kmart to the 'new America' consumer." Chief Marketing Officer Karen Austin indicated Grey will work to reposition the Kmart brand.

While working with TBWA/Chiat/Day, the retailer developed high-profile advertising campaigns, such as the dance-filled ads featuring the "Joe Boxer guy," to back the private-label apparel line.

Ms. Jacobs declined to expand on how Grey would reposition the Kmart brand, or to comment on advertising budgets.

Wal-Mart and Target
Numerous retail experts note that advertising is not the key problem facing Kmart as it emerges from Chapter 11 bankruptcy reorganization, but rather continued price competition from behemoth Wal-Mart and purveyor of cheap chic Target.

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