AD AGE POWER 50;RETAIL;AMPLE DOLLAR SUPPORT HAS FIVE RETAILING POWERHOUSES HEADING IN DIFFERENT DIRECTIONS

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The struggle to develop distinct brand identities for their stores is what propels five retail marketers into the Power 50. What will set them apart is how wisely they spend the dollars designated to do the job.

Wal-Mart's Paul Higham, Toys `R' Us' Ernie Speranza, Sears' , Kmart's Kenneth Watson and Home Depot's Dick Hammill are running fast in a race to create diverse images among consumers.

Mr. Higham, 49, has helped engineer Wal-Mart Stores' massive growth, pushing the discounter past both Sears and Kmart to become the nation's No. 1 retailer. That success has been driven by the perception that Wal-Mart always has the lowest prices around-a positioning created by VP-Marketing Mr. Higham and hammered home with $129 million in measured-media ad spending last year.

This belief that Wal-Mart is synonymous with rock-bottom prices (complete with prices visibly "falling" in some of its ads) has given the chain an identity apart from the rest.

Along with the advertising, of course, Wal-Mart's strong market position and state-of-the-art distribution technology allows the $82.4 billion retailer to set the standard for retailing in the '90s. That puts even more power squarely in the hands of Mr. Higham.

With Wal-Mart's growth rate tracking at 18% a year, analysts expect that by the year 2000 it could become the world's largest company.

A low-price strategy championed by Home Depot's Senior VP-Marketing & Advertising Dick Hammill has helped it rise quickly to the top of the competitive home-improvement category.

When he started with the "category killer" in 1988, Home Depot had 75 stores. As of 1994, it had grown to 340 stores with plans to open 91 new outlets this year, from markets as disparate as Buffalo and Boise.

"We're just now emerging as a national player," says Mr. Hammill, who's moving more of the retailer's $66 million advertising budget to network TV to reflect its expanded geography.

In advertising, Mr. Hammill relies on a two-pronged strategy: featuring low prices and the depth of service rendered by Home Depot's salespeople.

"We spend a lot of money cultivating the customer," Mr. Hammill says.

With the chain poised to go national, the 51-year-old executive chose a sponsorship of the 1996 Summer Olympics to heighten awareness of Home Depot on a larger scale.

Mr. Hammill says the sponsorship will also be used to boost employee spirit; the summer games will be held in Atlanta, Home Depot's home city.

Getting to the top of the retail heap is one thing, but staying there is another.

That's the dilemmna faced by Mr. Speranza, Toys `R' Us' senior VP-marketing.

While the country's largest toy retailer had a lock on the market until recently as a make-or-break outlet for toy products, competition from discounters such as Wal-Mart and Target Stores, and specialty chains that deal in children's computer software products, has hurt them of late. Today, only 25% of toy industry sales go through Toys `R' Us.

Industry watchers say Toys `R' Us' challenge is to restate a clear marketing strategy.

The company is making strides. Mr. Speranza is leveraging Toys `R' Us' marketing budget-he has ended the company's relationship with J. Walter Thompson USA on its $30 million ad account-with initiatives such as increasing circulation of its coupon books and stepping up in-store marketing spending by 30% to push a low-price image.

To attack specialty stores like Tandy Corp.'s Incredible Universe, the retailer is establishing several in-store departments that sell educational software and learning aids.

Similarly, Kmart has undertaken a major turnaround marketing effort. Mr. Watson, exec VP-marketing and product development, is charged with leaving an imprint on the troubled discounter with the help of a hefty $175 million advertising budget, a new management team and a new ad agency.

Mr. Watson, 52, seems up to the challenge. Only two months after taking on the job in October 1994, he put the retailer's ad account up for review, replacing longtime incumbent Ross Roy Communications with Campbell Mithun Esty. The first creative from the agency is now underway, begun just in time for the important back-to-school selling season.

"Kmart wants to be in control vs. having to react to what our competition is doing," says Mr. Watson.

Perhaps the biggest image overhaul in the group was faced by Mr. Costello, who appears to have successfully turned around Sears, Roebuck & Co.'s Sears Merchandise Group, armed with a formidable marketing budget aimed at the task of proving to consumers there is a "Softer side of Sears."

Mr. Costello, 48, senior exec VP and general manager-marketing, believes strongly that brand image is important to retailers, and that the advertising accomplishing that should be accompanied by heavy promotional support.

"It's critical to have the right balance between creating a distinctive image for your store and brand while providing a stream of relevant promotional opportunities," he says.

Most recently, Sears announced a $3 million deal to sponsor a national tour of singer Gloria Estefan and a promotional deal with Ringling Bros. and Barnum & Bailey Circus, offering free circus tickets to Sears customers and featuring in-store appearances by "Greatest Show on Earth" performers.

Advertising, even with a $491 million allocation, isn't everything, Mr. Costello says.

"While we are making a significant investment in brand campaigns as well as targeted and event marketing," Sears also has "a commitment to a strong promotional plan," he notes.

The five power players in retailing seemed to all be in the same camp.

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John Costello

Sears, Roebuck & Co.

Ad budget: $491 million

Agency roster: Ogilvy & Mather, Young & Rubicam

Career: Mr. Costello started his marketing career at Procter & Gamble Co., as assistant brand manager on Secret deodorant. From there, he joined Pepsi-Cola Co. in 1984 as senior VP-marketing and sales before moving to exec VP at Wells, Rich, Greene in 1986. Two years later, he was named president-CEO of Nielsen Marketing Research. He moved to Sears in 1993 as senior exec VP and general manager-marketing for Sears Merchandise Group, his current post.

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Ernie Speranza

Toys `R' Us

Ad budget: $53 million

Agency roster: No agency of record but works with J. Walter Thompson USA, Wells Rich Greene BBDP and others on a project basis.

Career: Early in Mr. Speranza's career, he worked in the shoe business as director of advertising for both Kinney Shoes and Foot Locker. Before joining Toys `R' Us in 1983 as VP-advertising, he was VP-advertising & marketing for County Seat.

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Paul Higham

Wal-Mart Stores

Ad budget: $129 million

Agency roster: GSD&M, Bernstein-Rein Advertising.

Career: Before joining Wal-Mart in 1989, Mr. Higham served as VP-advertising for Dayton Hudson Corp.'s Target Stores. Since joining Wal-Mart, Mr. Higham has seen the chain become the largest retailer in the nation, with sales of $82.4 billion.

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Kenneth Watson

Kmart Corp.

Ad budget: $175 million

Agency: Campbell Mithun Esty

Career: Mr. Watson brings to down-to-earth Kmart a wealth of experience at upscale marketers. He joined Kmart in October 1994 after a short stint as president-CEO of Little Switzerland, a Caribbean luxury retailer. Prior to that, he headed Louis Vuitton Inc. in New York; Gump's in San Francisco; Cartier and International Gold Corp., also in New York. His first marketing job was senior product manager for Skippy peanut butter at CPC International, in 1969; he also put in time in the mid-'70s as a VP at Pepsi-Cola Co.

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Dick Hammill

Home Depot

Ad budget: $66 million

Agency: Richards Group

Career: Began his retailing career at Wickes Lumber, where he served as senior director of marketing from 1975-'84. He took up the same post at sister company Wickes Furniture before leaving in 1985 to join Circuit City in a senior marketing position. He joined what is now the nation's largest home-improvement chain in 1988. His first job was in advertising: As an intern at Campbell-Ewald.

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