ANALYSIS: Corporate PR - Kmart must shop for more honest, strategicPR plans

Kmart's ongoing travails provide a textbook example of how a

retailer can lose focus and allow competitors to craft images that

resonate with the public while it flounders in search of message points

and a marketing PR strategy.



Now in chapter 11 bankruptcy proceedings, Kmart's survival will depend

on whether its senior executives can create new PR messages that will

ring true enough in the marketplace to bring back disenfranchised

customers while keeping employees positive about the company.



"Clearly the important thing is having a clear position, but also the

right position," says Kevin Keller, a marketing professor at Dartmouth's

Tuck School of Business Administration.They can't play the Wal-Mart

game, and they can't play the Target game. Kmart clearly must sharpen

its focus, or it is not inconceivable that it could go away."



Few dispute that Kmart was an early innovator in US discount

retailing.



While competitors were still locked in cities, Kmart saw the future in

the suburbs. Abandoning its five-and-dime-store roots, it opened big box

stores in major metropolitan areas, often being the only retailing

alternative in the fast-growing smaller burgs that ringed American

cities.



A competitive market



Thirty years ago, Kmart stood for convenience and price. But as any

runner knows, leading early in a race doesn't guarantee a win,

especially in a marathon like the retailing business.



Competitors like Wal-Mart and Target slowly advanced out of their

regional bases - Wal-Mart the South, Target the upper Midwest - to

challenge Kmart on the national discount scene.



Wal-Mart began its push by focusing on employee and customer

communications (PRWeek, December 10, 2001). "They didn't do it with

press releases, but they certainly pushed their culture at the store

level," says Frederick Marx, a partner at Marx Layne & Company, a

$5 million Detroit area PR shop. "They developed a sense of

ownership by their employees."



Even today, Wal-Mart management holds twice-daily broadcasts to all

stores, and does a monthly internet employee newsletter, sharing

financial information about the company with its workers.



Wal-Mart gave customers the message that they could find items in stock

and at low prices, messages on which well-managed stores delivered.

While Wal-Mart lowered costs and invested heavily in systems that

streamlined its supply-chain management, it didn't discuss such

retailing minutiae with consumers. All it told them about was low prices

in its stores.



"In PR, you must demonstrate your message, and your stores have to carry

through on that corporate message. Wal-Mart demonstrated their message

at the store," says Eric Yaverbaum, founder of New York-based Jericho

Communications. "When you're Wal-Mart, you're price."



Wal-Mart also capitalized on the image of founder Sam Walton as a

hard-working, American success story, adds Marx. Wal-Mart became a

projection of Walton's image, much like Wendy's became identified with

founder Dave Thomas.



Minneapolis-based Target started its retailing life as the offshoot of

department store company Dayton-Hudson. Early on it had a sense of style

that once had been the PR approach favored by department stores.



"They have that sense of personality," says Marx, a retail PR veteran,

who once worked for Hudson's, one of the two department store chains

that merged into Dayton-Hudson. "They've done a phenomenal job of

branding. Everything speaks very clearly to who they are."



Target became the place to shop for people who remembered the panache

that the department stores once had, but who also wanted better value

for their money and hipper styles and fashions than many department

stores seemed to be offering at the time.



"Target reached Generation X. It just became trendy," says Adrienne

Arieff, an account director with Magnet Communications, San Francisco,

who handled US PR for Burberry's earlier in her career.



Target also did well in integrating its marketing. "Their PR message is

mirroring their advertising, and all of it is staying on the edge," says

Yaverbaum. "Target wants to be edgy and high-energy."



Target's messaging changed people's attitudes about discount

shopping.



Yuppies who once felt they were too successful to need discount shopping

went to Target because it was cool. "People are not only not embarrassed

to shop at Target, they're proud to shop at Target," claims

Yaverbaum.



As they grew, Target and Wal-Mart also both emphasized community

relations.



Their very size made them vulnerable to accusations that their arrival

would hurt local retailers, so community relations had to become an

essential part of their PR plan, Yaverbaum explains, knowing from his

work with IKEA the types of community issues a big retailer can

arouse.



An uphill battle



Kmart garnered widespread press coverage last year when it staged the

return of its Blue Light specials amid much fanfare, but the message

being put out was that Kmart would try to compete on price with

Wal-Mart. "The moment Kmart thought they could be the price leader or

the price dominator, that was an uphill climb against Wal-Mart," says

Marx.



In the past, Kmart PR focused on events rather than long-term

messaging.



And its marketing mix relied heavily on weekly ad circulars, which also

seemed to be an attempt to compete on price alone.



"I don't think they've figured out how to market yet," says

Yaverbaum.



"They talk much more about tactics than overall strategy."



Kmart last year brought in Lori MacTavish, a Daimler-Chrysler veteran,

to head its PR efforts. But senior executives seem reluctant to adapt

the more proactive PR doctrine MacTavish has tried to push. Kmart's

headquarters in suburban Detroit is called Fort Kresge by locals (Kresge

was the company's name when its five-and-tens dotted Main Street USA) as

much for its architecture as for the insular corporate culture inside

it.



Reporters who cover Kmart say there seems to be a disconnect between PR

people wanting to make senior executives accessible and those executives

shying away from interviews (PRWeek, June 11, 2001).



Fortune, for example, in early January before the bankruptcy

announcement, was rebuffed after requesting that a reporter be allowed

to spend time with CEO Charles Conaway.



Conaway so far has come across as more of a Mr. Inside than a CEO who

enjoys the media spotlight; so observers don't expect him to personally

lead Kmart's new image push with ads, a la Lee Iacocca.



One place for Kmart to start building a workable image is to listen to

customer complaints about messy stores and out-of-stock merchandise,

Marx says.



A humble, honest approach that admits past problems and commits to

better service could connect with customers, he explains.



Arieff suggests using testimonials from customers as a way to

communicate what Kmart has to offer. "There's nothing more powerful,"

she says.



While it's trying to reach consumers, Kmart also needs to aim messages

at employees who now are demoralized at the prospects of massive store

closings and layoffs. Says one PR person familiar with the situation:

"Store managers and others feel very disenfranchised. There's nothing

wrong with being real with them."



At the present time, Kmart management seems preoccupied with clearing

the financial debris that comes with bankruptcy. But if they don't start

thinking about PR and an image that will bring business back to whatever

Kmart stores remain open, they could simply be writing another chapter

in the ongoing decline of a once mighty retailer.



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