Kmart may be known as a discount retailer, but it's a
significant ad spender. According to Kantar, at least $170 million
in domestic measured media is devoted to the brand. The Ad Age
DataCenter places its parent, Sears Holdings, among
the top 20 ad spenders in the U.S. The company spent $1.69 billion
on U.S. advertising in 2011, the last full year for which figures
are available.
According to industry executives, there's no consultant managing
the search process; it's being led by Kmart's procurement
department. Kmart has been operating with an interim chief marketer since
Mark Snyder departed.
The creative search comes after lengthy media review that ended
less than three months ago. At the end of that process, incumbent
Havas' MPG, was retained.
Because the retailer's business spans various sectors --
including clothing, electronics, pharmacy, furniture and home goods
-- much of adland will have conflicts that could keep many shops
out of contention.
One thing that could give interested shops an edge: A Chicago
office that is close to Kmart's Hoffman Estates, Ill.,
headquarters, executives familiar with the matter said.
Sears Holding Corp.'s Kmart tapped Chicago-based DraftFCB as its
lead agency in 2007, in the wake of the merger of Draft and Foote
Cone & Belding.
Before that the account had been handled by WPP's Grey. Around the
time DraftFCB picked up the account, there were a number of
significant wins the agency pulled in such as the U.S. Census
Bureau, Qwest and Sharpie. The reason Kmart was such a plum win was
that it helped fill a hole left by a big client that exited, when
Walmart yanked its
then-$580 million account (amid a well-known industry scandal).
That Kmart is conducting a procurement-led review -- during
which cost will likely be a major consideration -- is fitting
because parent Sears Holdings has been struggling for years,
posting consistent declines since 2007.
In November, the company posted a third-quarter loss of $498
million, with sales falling $548 million to $8.9 billion. Kmart had
fared somewhat better than its sibling brand during the recession,
but those tailwinds have subsided. In the third quarter, Kmart
posted a 4.8% decline in same-store sales, while Sears posted a
1.6% decline.
Eddie Lampert, the billionaire investor who is the struggling
retailer's largest stakeholder and Chairman of the Board of
Directors, was recently appointed the company's next CEO. He will
become the company's fifth CEO in seven years.
In May 2011, Minneapolis-based Peterson Milla Hooks, Ad Age's
Comeback Agency of the Year, snagged Kmart's
apparel and home business, which had been handled by DraftFCB in a
review. That portion of the business is not affected by this
review.
