The retailer last week chose TBWA/Chiat/Day, New York, considered a creative powerhouse, to handle its $100 million account and shake up its ad approach. An executive familiar with the situation said troubled Kmart has been "impressed with what Target has done" with the quirky direction taken in advertising from Peterson Milla Hooks, Minneapolis. Those ads play off Target's bull's-eye logo and highlight offbeat combinations of Target's products, such as Tums antacid and a young woman with an exposed tummy showing off the store's clothing.
Previously, Kmart's advertising centered on celebrities, featuring first director Penny Marshall and actress Rosie O'Donnell, and later mother/daughter country singers the Judds. Other ads used Martha Stewart backing her line of bath, kitchen and garden products. Company execs did not return calls at press time about their future ad plans.
The decision to move to TBWA/Chiat/Day was one of the first major moves the company has taken under new Kmart CEO Chuck Conaway, previously president-chief operating officer of CVS Corp., who is now searching for the company's first chief marketing officer. The earlier agency was Campbell Mithun, Minneapolis, which will handle Kmart's holiday advertising. TBWA/Chiat/Day's work is expected to debut in spring 2001.
Kmart's direct aim at its rival comes as no surprise. Target, with its positioning as a discounter specializing in cheap chic, has remained a strong retail performer. Kmart, meanwhile, is stumbling, with its stock price hovering at around $5, down from its 52-week high of $12.25.
Kurt Barnard, president of Barnard's Retail Trend Report, said Kmart now is "trying to get as close to the customer as they can with messages to appeal to their target customer -- a younger customer who has a family with children, as well as ethnic customers." He called the decision to hire TBWA/Chiat/Day, inventor of the Energizer Bunny, the Pets.com sock puppet and the Absolut vodka campaigns, "a good decision."
Previous CEO Floyd Hall prevented the retailer from falling into bankruptcy with the Big K store concept anchored by the Martha Stewart brand. However, to improve its cash position, Mr. Hall cut $800 million in operational costs. "It helped them become profitable, but they fell behind in terms of the competition," Mr. Barnard said.
An executive familiar with the review said TBWA/Chiat/Day was chosen because it had "a compelling retail idea," which was not disclosed.
BACK TO THE LIGHT?
Kmart's future focus is being kept close to the vest, but Mr. Conaway told Wall Street investors last month he is considering bringing back Kmart's "blue light" image. The blue light, along with its "Attention Kmart shoppers" call over loudspeakers, was invented by a store manager trying to push excess inventory. The symbol has been updated, and is being used by Kmart's e-commerce and free Internet service, BlueLight.com.
Contenders in the Kmart review included Campbell Mithun, Minneapolis; FCB Worldwide, Chicago; Grey Worldwide; Lowe, Lintas & Partners Worldwide and J. Walter Thompson USA, New York; and Temerlin McClain, Dallas. At first, Kmart said a seventh agency in the pitch -- which turned out to be TBWA/Chiat/Day -- was not being publicly disclosed "by mutual agreement."
The selection of TBWA/Chiat/Day, which already has some retail accounts, may raise questions of conflict. Circuit City Stores awarded TBWA/Chiat/Day's New York office its $80 million account last year, but a spokesman for the electronics chain said "It's not an issue or a problem," adding "Kmart is a general retailer and we're a specialty consumer electronics retailer."
Another retail client, Barnes & Noble, continues with TBWA/Chiat/Day as agency for its co-op print campaigns for books, a spokeswoman said.
At BarnesandNoble.com, a separate company from the book stores, Exec VP E-commerce Carl Rosendorf said TBWA/Chiat/Day's contract runs out Nov. 15. "As of today, we have a relationship with TBWA/Chiat/Day and we have no plans to change that at this time," he said.
Mr. Rosendorf said he does not consider Kmart a conflict because while both sell books, BarnesandNoble.com is very focused on intellectual and information-based books sold exclusively on the site. However, "we want to keep all options open for ourselves," he said.
Separately, BlueLight.com's VP-marketing, Fran Maier, has left the company. A successor is expected to be named soon.