Kmart's call for ideas irks leading shops

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Agencies that would normally fall over themselves to land a $267 million account are hedging over Kmart's invitation to hunker down in a remote Aspen location and pitch ideas for the beleaguered retailer's future positioning.

With uncertainty over the size of the account in play, the marketer's payment record and, even more fundamentally, whether this is actually a new business pitch rather than just a culling of ideas, several agencies have turned down the call.

Kmart contacted Omnicom Group's BBDO and DDB Worldwide along with Interpublic Group of Cos.' Foote, Cone & Belding Worldwide and Campbell-Ewald, sources said. The agencies declined to comment, though executives close to BBDO, DDB and FCB said they were not participating.

Incumbent TBWA/Chiat/Day announced late last week-after Kmart had already issued an ambiguous request for proposals to other shops-that it was resigning the Kmart account not over "an advertising issue" but rather over "a financial one." The Omnicom agency is said to have spent months chasing payment for work it had completed.

Such financial question marks over Kmart, which came out of bankruptcy in May, concern some of the agencies invited to Aspen. One senior agency executive asked to make the trip said it was "extremely unlikely" that Kmart would be able to match what it spent on measured media in 2002 ($267 million, according to TNS Media Intelligence/CMR).

Another agency executive was surprised that when he asked how much business his agency was pitching for, a Kmart executive turned the question around and said the agencies should suggest what they think spending should be.

What's worse, in the eyes of some of the shops, is that Kmart has not been clear whether it is looking for a new agency of record, or whether it plans to hand out an assignment. Even Kmart's own spokesman could not specify the nature of what it is looking for. "We're shopping for ideas, we're listening to ideas that respond to the broader market," he said. He added that Kmart is not looking to "take ideas from anybody" and would "come to an agreement," but shied away from the idea that the retailer was hunting for a replacement agency of record.

Agencies were also rankled by the fact that Kmart has asked them to make presentations July 29 and July 30, which effectively gives them only eight days to pull together ideas. This despite the fact that the shops are expected to arrive armed with "complete media plans; in-store programs and in-store signage; communications plans, both internal and external," according to the RFP obtained by Advertising Age. According Kmart's "presentation ground rules," the retailer is asking agencies to consider positioning, marketing, advertising and communications and establish the strategic vision and holistic communications program.

`you're toast'

One agency head not invited to the get-together said Kmart has a near impossible task of winning back share from discount retailers such as Wal-Mart Stores and Target, saying, "When you're in the middle of the road, you're toast. They've been in the middle of the road for 10 years. If they can't figure it out, I don't know how anyone else can figure it all out by July 29."

TBWA/Chiat/Day had handled the brand since 2000. In that time it has dealt with three CEOs-Chuck Conaway, Jim Adamson and current CEO Julian Day-along with numerous marketing chiefs. They have included Larry Davis, the senior VP-marketing who quit after five years on the job, followed by Chief Marketing Officer Brent Willis, who left after six months; Steve Feuling, senior VP-marketing, who left in March, and Barbara Firment who left after a 30-year career in advertising at Kmart two months ago.

Karen Austin, chief information officer, was handed Ms. Firment's duties. Ms. Austin is conducting the agency review, though newly installed Chairman Edward Lampert is also said to be directly involved in the positioning talks with agencies. Mr. Lampert, who owns stakes in both Kmart and Sears, Roebuck & Co. through his investment vehicle ESL Partners, was a former board director at Publicis Groupe's Saatchi & Saatchi in 1990. No one from that agency responded to calls about whether it has been invited to pitch.

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