By: Dorothy Giobbe
WHILE KMART PLANS to close multiple store locations across the country by early next year, a Kmart spokeswoman said the company has no plans for major cutbacks in newspaper advertising.
Earlier this month, the Ann Arbor, Mich.-based retailer announced that it plans to close 110 unprofitable stores in 30 states as part of a corporate restructuring plan.
The closures, to be completed during January and February, will affect 6,000 employees and will occur mostly in the South and Midwest.
Texas and Indiana will experience the most store closures, with 12 each, followed by Missouri, which will lose six stores.
Mary McGeachy, spokeswoman for Kmart, said any newspaper advertising cutbacks will be “nominal” and will occur in areas where Kmart has completely “exited the market.”
Kmart’s newspaper advertising consists mainly of its weekly “roto” ? a four-color 10- to 14-page circular. Additionally, some newspapers receive limited ROP advertising for special promotions or sales.
Since many of the Kmart closings are slated for areas where there are multiple Kmart sites, or where there are other Kmart stores within driving distance, the same advertising presence will be needed, McGeachy said.
For the most part “we will still be in the newspapers that we are in now,” she said. “In many places where the stores will close, there are other Kmarts in the same market.”
In other areas, “if people see an advertised product in the roto, they’ll be willing to drive.”
According to Competitive Media Reporting, from January through June of this year Kmart Corp has spent $54,393,100 in newspapers. Last year, Kmart Corp. spent $277,370,400 on advertising, of which $121,100,700 was spent in newspapers.
Currently, Kmart operates 2,350 stores nationwide. By the end of 1996, Kmart will have 2,500 locations nationwide, McGeachy said, including 500 Super Kmart Centers, a 166,000 sq.ft. combination Kmart/grocery store.
Kmart hasn’t announced which newspapers will see ad declines, and newspapers in towns where stores are slated to close are trying to assess the impact.
Terry Wise, Kmart account manager for the 10,160-circulation Times-Herald, in Washington, Ind., said it’s too soon to tell what affect the closure of the local Kmart will have on the newspaper. He added that “there’s no question that the store closure could have some impact” on ad revenue, although “it is by no means devastating.”
Kmart uses the Times-Herald to distribute its weekly insert. If that is cut, Wise said the newspaper will pitch two nearby Kmarts, as well as push other retailers for additional inserts.
Shelbyville, Ind., recently has seen the demise of a Target department store and a J.C. Penney location. The Shelbyville Kmart will also close, and Dennis Bonner, advertising director for the 11,440-circulation News, said that if Kmart cuts advertising, it will have a “sizable impact” on the newspaper’s ad revenue.
The weekly insert accounts for approximately 7% to 8% of the News’ preprint income, Bonner said.
Additionally, Kmart has placed about $4,000 worth of ROP year-to-date.
The Kmart insert accounts for just under 8% of preprint revenue at the 4,788-circulation Daily News in Snyder, Texas.
Publisher Roy McQueen said since receiving word that the Kmart location will close, the News has “made inquiries” about receiving preprints from another Kmart in the area.
That’s also the case in Orange, Texas. Diana Martini, a sales representative for the Orange Leader, said it’s “still to early to tell” what effect closing the Kmart will have on the 9,665-circulation newspaper.
Because there is another store about 20 miles away, she is hopeful Kmart will continue to advertise in order to reach the same customer base.
Larger newspapers seem to be relatively unruffled by the news.
Phil Buffington, a retail salesman for the Indianapolis Star and News said the closure of a single Kmart will have “no real impact” on ad revenue, because there are ten other Kmarts in the greater Indianapolis area.
Similarly, Greg Carson, account manager for the Ft. Worth, Texas, Star-Telegram said while the city will lose one of its Kmart locations, there are five others in the market so “there’s enough market to support their existing ad campaign.”
Also, the Star-Telegram has received additional Kmart ROP and insert business because a Super Kmart Center is opening about 20 miles away and is running promotional ads in the newspaper.