Marketing the 'new and fresh' Kmart for the 1990s - Kmart Power Merchandising

Discount Store News, Feb 21, 1994 by Pete Hisey

For better or for worse, Kmart advertising, public relations and corporate culture are all tied up in one man -- chairman Joseph Antonini. Antonini is a classic American sucess story, starting as a store clerk and rising through the ranks to asume control of the nation's (and the world's) secondlargest retailer.

He immediately put his stamp on the organization. Kmart, he decided, would become more fashion-for- ward and dedicated to the lifestyles of the American family. Much of his energy went into methods of communicating that simple message.

Entertainment guru Martha Stewart, at the time little-known in the retail world but with a loyal following among middle-class women, was introduced as Kmart's spokewomen for home fashions and crafts, while apparel buyers and merchandisers were moved into top positions in home goods to add in home goods to add more of a fashion flair. Apparel itself had already moved away from the Polyester Place image to a more fashionable, natural fiber look emphasizing casual family goods. Former Charlie's Angel Jaclyn Smith, with enormous personal appeal to Kmart's core shopper, became the spokes-women in apparel, and remains a real winner for Kmart.

At the same time, the early stages of a store refreshment campaign were introduced that showed off the merchandise better, made shopping easier and communicated an improved overall ambience. Antonini was enlisted to become the chain's major spokesperson, and his presence on television, in print ads, and on instore signage now approaches omnipresence.

The chain also announced that it would become more friendly to minority shoppers, and hired outside advertising agency Leo J. Burnett to develop compaigns aimed specifically at African-American and Hispanic audiences.

Fast-forward from the late 1980s to the mid-1990s, and the effects on Kmart have been profound. The stores have been, on the whole, remodeled successfully, although the final stages have been slowed to concentrate funds on expansion in the food business and to retink investing money in stores that might be too small to be productive in the future; Kmart's powerful weekly circular has been revamped to push the fashion message (and now includes high percentages of minority models); merchandise has been upgraded throughout the store without greatly affecting traditional price points; and Kmart has very effectively become a national presence on television with a witty slice-of-life campaign and appearances by celebrity spokespeople like Nigel Mansell and Mario Andretti (aDtwmotives), Fuzzy Zoeller (golf), Jerry Baker (gardening), Rachel McLish (body-wear) and the latest addition, supermodel Jill Ireland, who developed a swimwear collection for Kmart.

According to senior vp, marketing, Mike Wellman, marketing to minorities has improved considerably. "Both Hispanice and African-Americans are more loyal Kmart shoppers than any other group," he noted. "They tend to be somewhat younger and have childern; that's our primary customer base." Radio and television ads have been produced for stations serving those markets and for national use, and stores with larger minority shopping bases have been micromarketed slightly to appeal better to those shoppers. Kmart, for instance, has become a leader in cosmetics for African Americans, and its apparel department shows distinct shifts, such as increased selections of leather jackets, in urban settings.

According to Wellman, the upgraded circular is due for more tweaking. "The key is the exterior with the black banner and the red 'K' on front page will now generally star two traffic drivers, with upgraded models and photograph, and the number of items on the inside will be more controlled, in search for more consistency. "New and Fresh" will be the new tagline in circulars and on television going forward, the added.

For all of its successes, Kmart continues to trail archrival Wal-Mart, and in some areas the gap has widened considerably. Antonini was correct in stating that discounters have become the new department stores for most Americans (about half of the U.S. population walks through a Kmart every month), and shoppers are clearly looking for more fashion from discounters. 0ut Wal-Mart, by hammering away at price and brands, gained the high ground with the extremely value-oriented shopper. DSN's price comparisons, as well as those of other third parties, show that Kmart has closed the price gap to an almost meaningless 2% or so in most markets, but the public perceptiwn remains that Wal-Mart is cheaper.

At the same time, competitors like Target and regionals ShopKo, Fred Meyer and Venture have moved upscale to appeal to the former department store shopper, who is not as price sensitive, but much more demanding in product quality and fashion appeal.

Kmart now finds itself in a niche that has no overwhelming price attraction to the lower end of the market and no compelling fashion message for the upper end.

Its advertising, with the tagline "The quality you need at the price you want," has attempted to differentiate the dramatic overhaul at Kmart seems to have wiped out the old Polyester Place image without replacing it with a simple, easy-to-understanding message. Whether "New and Fresh" is the ticket is anyone's guess, but certainly its not as compelling as "Always the Low Price...Always," Wal-Mart's controversial tagline.