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Can Advertising Spark a Turnaround for Sears and Kmart?

On the surface, the business that Sears Holdings is dangling before advertising holding companies is juicy: the chance to handle all marketing services across its Sears and Kmart brands, which collectively spend $560 million in media each year.

Total account revenue is significant as well—amounting to at least $20 million, according to sources. So why have teams from Dentsu and Omnicom Group dropped out?

The problems of Sears Holdings transcend advertising and are, some would say, existential. In short, how does a big-box retailer not known for innovation survive in the age of Amazon? Company leaders point to ShopYourWay.com, a digitally based consumer-membership service. But even remaining contenders in the review—Interpublic, Havas and Publicis Groupe—aren’t so sure.

Sears’ search for a holding-company solution comes as it cuts agency compensation and investment in stores, sheds assets and real estate holdings, and grapples with cash-flow issues. (Fitch Ratings believes Sears Holdings will likely run out of cash in 2016.) Given all those problems, some question how big a difference advertising can make.

“No level of marketing effort with regard to quality or quantity can reverse the damage that Sears has incurred,” said Columbia University’s Mark Cohen, former CEO of Sears Canada. “Without appropriate leadership, product assortments, pricing and acceptable levels of productivity, a sinking ship like this will just continue to founder. There is no viable strategy in place that customers find attractive or compelling.”

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