Kmart struggles to convey that it's business as usual

TROY, MI: IR powerhouse Kekst & Company is assisting long-term

client Kmart with its Chapter 11 bankruptcy proceedings. However, the

retailer appears to be facing more general PR challenges without its

usual stable of agencies.



Firms that have previously worked with the Michigan-based company - John

Bailey & Associates, Golin/Harris International, The MWW Group, and

Hermanoff & Associates - said they do not currently provide PR counsel

to Kmart.



When the discount house announced its bankruptcy filing six days ago,

its media hotline referred inquiries to its website - but the news

portion of the site wasn't working. The company also made a VNR

featuring CEO Charles Conway available via satellite, in which he

discusses the filing.



Kevin Foley, president of KEF Media in Atlanta, praised the company's

choice of a VNR over a more interactive SMT.



"The one-way communication a VNR affords is probably a sound strategy in

a case where tough questions would likely be asked. There's probably a

lot of questions they don't have answers to right now," said Foley.



But retail PR specialists have warned that Kmart must quickly step up

its PR to assure customers, employees, and suppliers that it will

continue operations as it moves through bankruptcy.



With media reports saying customers shop at competitors because they

think Kmart stores may close, Luke Haase, a principal with Traverse

City, MI, PR firm The Intelligence Agency, said Kmart must make it clear

that it is open for business.



"They've got to put some perspective around what's happening and say,

'We're open, we have good deals, and this too shall pass,'" said Haase,

who has done project work for Kmart.



John Bailey, president of the Detroit-area firm that bears his name,

agreed, saying, "The last thing Kmart needs is someone speculating about

them."



Bankruptcy courts traditionally allow companies to spend money on PR and

IR because they recognize it is important to maintain communication with

key audiences, explained Larry Smith, president of the Institute for

Crisis Management. He said Kmart must communicate to employees and

investors.



"Failing to do that just makes the process more difficult," said

Smith.



"The risk grows every day if they're not proactive."



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