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The nation's retailers are not only shoveling big bucks into marketing, but increasingly perceiving themselves as brands as they move closer to a new era of electronic commerce.

Evidence of retailers' increasing focus on branding is their emergence as major TV players. TV, the popular medium of choice in brand-building, claimed 39% of all retail media spending of $10.8 billion in '97. That compares with 27% five years ago, according to Competitive Media Reporting.


For retail's top 10 spenders, ad budgets increased 57.8% over the five years, as TV's share rose from 30.8% to 39.6% of total. Sears, Roebuck & Co., largest ad spender, funneled 56% of its media component into TV in '97, up from 46.4% in '92.

Retailers, accustomed to in-house agencies, are beginning to hire traditional agencies. May Department Stores Co. is reviewing agencies for national TV advertising. The winning agency will develop branding, style and promotion spots that can be applied across individual store brands.

Nordstrom, renown for customer service, hired Fallon McElligott this year to revamp its marketing and take its ad message to national TV. Hill Department Stores is peddling a $20 million TV account.

Other retailers still focus on drawing better results from their in-house agencies, inspired by The Gap's success with its in-house unit. Its earnings rose 17.9% in its latest fiscal year, ended Jan. 31, to account for a high 8.2% return on sales. The Gap's in-house unit is involved in most aspects of life at The Gap, including the tight controls imposed on all functions from apparel design to store window displays to Gap online, the latter generating as much in sales last Christmas as the chain's largest stores.

Tandy Corp.'s RadioShack, inspired by The Gap's success, is strengthening its own in-house capabilities, an executive says.


The retail segment's marketing spending spree is driven largely by the convergence of three elements -- power and profit of private-label brands, e-commerce and more directly targeting consumers.

Martha Stewart, Sesame Street and now Route 66 jeans labels have helped Kmart Corp. hit stride after a near brush with bankruptcy.

This June, Federated Department Stores established Macys.com, an e-commerce unit that will hook into the new Macy's by Mail catalog division. This virtual store addition to Macy's could turn the regional retailer, strong on both coasts, into a national brand.

Online toy sales via the new Web site for Toys "R" Us will be that traditional retailer's next crucible for e-commerce this Christmas. As online evolves and moves into more categories, retailers are spending more in online and in traditional media. With consumer spending strong, retailers are well poised financially to keep the marketing blitz going.

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