Faced With New Challenges, Retailers Seek Out Agencies

If only it were just the tepid economy that was driving retailers to review their advertising accounts. Then, when the economy turned, so would the fortunes of JCPenney, Kmart, Staples and others. Sadly for struggling retailers, though, something more fundamental is at play. The nature of shopping has changed, thanks primarily to the Internet and mobile phones. Today, consumers know more about brands and prices before they enter a brick-and-mortar store, that is if they enter at all. So, while a new brand positioning can help a retailer, it’s no substitute for a core rethink of how it runs its stores, according to brand and business consultants. “Everything at retail is a marketing opportunity,” explained Daniel Wadia, managing director at Redscout, a brand consultancy in New York. “Retailers really need to think about the beginning-to-end experience.” That said, retail stores still need to drive daily consumer traffic, and new advertising can help. That alone explains why six players that collectively spend more than $900 million in media annually have launched reviews since January. Beyond JCP, Kmart and Staples, the group includes Sleepy’s, H.H.Gregg and Petco—an early-stage search that Adweek first reported last week. Of those, only JCP has completed its process—hiring Young & Rubicam two weeks ago—though Kmart and H.H.Gregg are in their final stages. More are likely to follow. “Retail is in turmoil,” said Michael Silverstein, senior partner at Boston Consulting Group in Chicago. “If you aren’t performing, you look to suppliers for help: agencies, consultants, vendors. You know the things you are doing aren’t bringing in adequate traffic. So, you look to find new ways to express your value proposition and new consumers to target.” Bigger picture, a BCG report last year identified 10 broad trends that are reshaping retailing, including “empowered, discriminating consumers” who have become full-time shoppers thanks to “ubiquitous connectivity.” The report also cited “challenged store economics” wrought by the rise in online purchases. Indeed, consumer hesitance to buy goods online has melted in the face of aggressive pricing, fast delivery and easy returns—all hallmarks of Web giants like Amazon. Still, if brick-and-mortar players can improve their in-store experiences—be it in customer service, promotions or merchandise— they can conceivably steal back share. Apple, Trader Joe’s and Target certainly have proven this, and in the case of Target, marketing has played a central role. But if there’s a disconnect between the ads and the experience, you’ll do more harm than good, warned Harlan Kennedy, director of strategy at vbp orange, the business consulting arm of Venables Bell & Partners. “If you’re driving someone to an experience that is suboptimal, then advertising has enormous potential to actually hurt your prospects,” said Kennedy. “You have to get the experience in order. And if it’s great, then that becomes something that you can actually amplify in the advertising.”

Brand Marketing

Faced With New Challenges, Retailers Seek Out Agencies

JCPenney, Kmart and Staples among them

Andrew McMains

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Andrew McMains