Federal Lawsuit Says Kmart Ads Lie to Consumers; Target States Kmart's 'Dare to Compare' Ads Have 74% Error Rate
MINNEAPOLIS, Aug 21, 2001 /PRNewswire via COMTEX/ -- Target Corporation (NYSE:
TGT) is filing a lawsuit today in U.S. District Court in Minnesota charging
Kmart Corporation with perpetrating a nationwide false advertising campaign. A
leading market research firm audited Kmart's "Dare to Compare" advertising and
found that 74 percent of Kmart's advertised price comparisons were wrong.
Kmart's "Dare to Compare" campaign uses in-store signs to promote Kmart's prices
on different products and to compare Kmart's prices to those at other retailers,
including Target. Before filing the lawsuit, Target notified Kmart of
overwhelming errors in its comparisons to Target. When Kmart continued to
promote false price comparisons, Target retained an independent market research
firm to document the scope of the errors.
"An astounding number of the signs have the wrong Target price, regularly
misstate Kmart's own prices and often make comparisons on items that the
competing Target store does not even sell. These errors have occurred
nationwide," said James T. Hale, Executive Vice President and General Counsel
for Target Corporation.
"Price competition is in the consumer's best interest and Target is very
aggressive in delivering quality merchandise at low prices," said Hale. "But the
first priority of any retailer ought to be to treat the guest with respect.
False advertising hurts every retailer by undermining consumer confidence in all
advertising. An advertising campaign with a 74 percent error rate is beyond
comprehension."
Target's suit charges Kmart with violating the federal Lanham Act, which governs
truth in advertising and Minnesota's consumer protection laws.
Leo J. Shapiro and Associates, one of the nation's premier market research
companies, conducted the audit of Kmart's price comparisons. The audit
encompassed 98 Kmart stores in five markets: Atlanta, Detroit, Los Angeles,
Miami and Minneapolis-St. Paul. There were 553 errors on the 622 Kmart signs
referencing Target.
Shapiro researchers found a 74 percent error rate on "Dare to Compare" signs
that compared Kmart to Target. That is, 74 percent of the signs had at least one
of the following errors:
-- Kmart had its own price wrong;
-- Kmart listed the wrong Target price; or
-- Kmart made a comparison to a product that the competing Target store
does not sell.
"Kmart is lying to consumers. Its 'Dare to Compare' advertising is based on
deceit," said Hale. "Having ignored the responsibility to be honest with
consumers, Kmart now should be held accountable for its reprehensible behavior,"
said Hale.
Target Corporation operates large-store general merchandise formats, including
discount stores, moderate-priced promotional and traditional department stores,
as well as a direct mail and on-line business called target.direct. Currently,
the company operates 1,348 stores in 46 states. This includes 1,019 Target
stores, 265 Mervyn's stores and 64 Marshall Field's stores.
BACKGROUND ON THE "DARE TO COMPARE" RESEARCH
Leo J. Shapiro and Associates is one of the country's leading market research
companies. For over 50 years, the Shapiro firm is involved in providing
nationwide market research services to Fortune 500 companies and others on a
variety of business issues, including retail marketing. The firm's retail
marketing clients have included such companies as Toys 'R' Us, Nieman Marcus,
Montgomery Ward, Petsmart, Zainy Brainy, Phillips Van Heusen, Home Depot, Sam's
Club, Staples, and McDonald's. In the past several years alone, the Shapiro firm
has conducted hundreds of surveys and dozens of reports on retail marketing.
Shapiro and Associates are involved in a full range of qualitative and
quantitative research, including data collection and processing services. The
firm's research and data collection covers national trends relating to:
-- retailing;
-- consumer products;
-- product branding and advertising; and
-- evidentiary research.
The Shapiro firm was retained by Target Corporation to collect data regarding
the accuracy of Kmart's "Dare to Compare" campaign. The firm was retained
because of its independence and its demonstrated expertise in market research.
The following facts provide some detail on the Kmart audit:
-- The research was conducted between July 31 and August 8, 2001.
-- It was conducted through personal visits by Shapiro expert staff
members made to Kmart stores in five markets nationally: Atlanta,
Detroit, Los Angeles, Miami and Minneapolis-St. Paul.
-- Research was conducted at 98 stores in these markets. The stores were
selected because of their proximity to Target stores.
-- In the 98 Kmart stores investigated, researchers evaluated information
on every "Dare to Compare" sign that made a price comparison to Target
in each of these stores. A total of 622 signs were evaluated.
-- Seventy-four percent of the signs had at least one of the following
errors: it misstated Kmart's own price on the advertised product; it
misstated Target's price on the advertised product; and/or, it compared
a Kmart item to an item not carried by the nearest Target. A total of
553 errors were identified, with many signs having more than one error. |
