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Ongoing turmoil at Kmart Corp. appears to have claimed another casualty: it's 26-year partnership with Ross Roy Communications.

Kmart last week put its $175 million retail store account into review; Ross Roy, Bloomfield Hills, decided not to participate, virtually assuring an end to the relationship. The review is just the latest in a series of sweeping changes at Kmart.

"We are taking a close look at the way we do business to ensure the best possible results from all of our investments, including our advertising dollars," said Kenneth Watson, exec VP-marketing and product development, who will lead the agency review."

In a related move, Kmart Canada, Brampton, Ontario, took its $6 million account in-house from Ian Roberts Ross Roy, Toronto.

Bowing to stockholder pressure to boost performance, the struggling retailer has drawn up plans to sell off three specialty retail enterprises-OfficeMax, Borders-Waldenbooks bookstores and the Sports Authority. Ross Roy remains agency on the $17 million Sports Authority account.

Kmart has also hired several top management executives from the outside, including Mr. Watson, to help rebuild its reputation and is said to be looking for a No. 2 person to take over day-to-day duties from Joseph Antonini, chairman, president and CEO.

Peter Mills, Ross Roy chairman-CEO, said: "I'm sure this will be a very high-profile review and advertising agencies everywhere will spend a bucket of money. We are not going to play in that game."

One agency positioning itself for several years to make a run at the account is Lintas Campbell-Ewald, Warren. Several other national agencies with Detroit area offices also are said to be interested, including J. Walter Thompson USA, D'Arcy Masius Benton & Bowles, Bozell Worldwide and N W Ayer & Partners.

Other likely interested agencies: Hal Riney & Partners, San Francisco; DDB Needham Worldwide, Chicago and New York; Leo Burnett USA, Chicago; and Grey Advertising, New York.

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