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Kmart hires new ad agency
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September 26, 2000: 11:41 a.m. ET
TBWA/Chiat/Day tapped to help retailer achieve strategic turnaround
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NEW YORK (CNNfn) - Kmart Corp., the third-largest U.S. retailer, has dropped Campbell Mithun Esty, its advertising agency of record for five years, and hired TBWA/Chiat/Day.
The move marks one of several new strategic moves by the Troy, Mich.-based discounter's new CEO, Chuck Conaway, to revamp the company's stores.
 Kmart's stock, which have fallen 50 percent since last December, traded up 13 cents at $5.50 Tuesday afternoon, a 2.3 percent increase.
"The Chiat/Day team will be a strategic partner as we change and reposition Kmart," Conaway said. "Their insight, creativity and passion will help us deliver a world-class advertising and marketing program that is fully integrated and broad in scope...Together, we will build a powerful, consistent and complete communication plan that leverages the Kmart brand, drives sales and strives to create a sustainable emotional bond with our customers."
Kmart (KM: Research, Estimates) spokeswoman Mary Lorencz said the company's decision to drop Campbell Mithun, which developed the current Route 66 brand television spots, had nothing to do with board or shareholder dissatisfaction with the agency.
"It's just that as we're rebuilding Kmart, we need to look at new marketing and advertising efforts that will support our strategies," Lorencz said.
Conaway, the former CVS Drugstore CEO who succeeded Floyd Hall at Kmart in May, has instituted several strategic moves aimed at rekindling the blue light in shoppers' eyes.
The company has missed earnings expectations despite 3.6 percent revenue growth to $36 billion in 1999. Analysts cite sloppy stores, poor customer service and competition from No. 1 U.S. retailer Wal-Mart (WMT: Research, Estimates) as well as Target (TGT: Research, Estimates) and Kohl's (KSS: Research, Estimates).
Conaway closed 66 underperforming stores and 6 Super Kmart stores, the concept engineered by Hall that initially helped reinvigorate the company in the mid 1990s. He also is in the process of instituting a number of changes such as equipping all 2,164 stores with state-of-the-art scanners and cash registers to help speed up check out time, and streamlining management and customer service.
The company expects to have the new equipment installed in all stores by November, Lorencz said. 
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Kmart
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