Top Ad Concern: Dept. Store Decline

By: Jennifer Saba The state of retail advertising dominated the topic of conversation at the Newspaper Association of American's conference held in conjunction with the American Society of Newspaper Editors. From the opening session remarks to individual break-out panels, the message was this: Newspapers must confront the decline of the department store and the rise of Wal-Mart.

Department stores, which once advertised so much and so often that some papers had to turn them away, are now closing, consolidating or completely changing the way they reach their customer. Specialty stores like the Gap and Williams-Sonoma have cut into traditional retail store sales. Couple that with the changing face of the media planner who once was a local contact for newspapers; now they make national buys bypassing papers in the process.

Perhaps the biggest threat is the rise of Wal-Mart, said Carl Steidtmann, chief economist of Deloitte Research in the opening session remarks on Wednesday morning. Not only does Wal-Mart dominate the discount store space, but grocery stores too.

Most troubling is that the retail giant barely advertises. Steidtmann said that the percentage of sales to advertising is a quarter of one percent. Most retail stores' ratio of sales to advertising is 4%; for new stores it's between 7-8%.

There is an upswing in all of this: "Just about everybody is a retailer now," Steidtmann explained. "It's all about the brand and communicating that. It's Wal-Mart's world and less newspaper advertising will be coming out of that. But the good news is more people are thinking like retailers."

That may be the case, but newspapers have to rise to the occasion and drastically change the way advertising is sold.

"The salad days are gone," said Mary DeNiro, vice president of advertising for Capital Newspapers in Madison, Wis., to a group of publishers during a break-out session. She recalled a time where the media buyer and store merchandiser were schooled in newspapers, making it an easy sale. She remembered a time where rates were raised despite declining circulation and that the paper could get away with knowing little about a store's customer. The retail advertising dollars would just pour in.

"The cavalry isn't coming out of nowhere to save us," declared Don Stinson, senior vice president for marketing at Gannett Co. Inc., who urged publishers to start going after the specialty stores that don't advertise in papers. One way to do this, he suggested, is to get newspaper databases up to snuff in order to offer ZIP code information -- something that advertisers love.

John Kimball, senior vice president and chief marketing officer of NAA, also advocated that papers do something now. "The NAA is committed to this," he said. "I assure you, this is not the last you will hear from us. Hopefully, you'll get involved in the initiatives to bring everyone together, if we're going to get out of this rut."