Target Sues Kmart Over In-Store Marketing

Target Corp. said yesterday it is filing a federal lawsuit against Kmart Corp. charging its rival retailer with “perpetrating a nationwide false advertising campaign” after a market research firm audited Kmart's “Dare to Compare” in-store advertising and found that 74 percent of the price comparisons were inaccurate.

Kmart's “Dare to Compare” campaign uses in-store signs to promote its prices and compares those prices against its competitors', including Minneapolis-based Target.

Target said it notified Kmart about the errors in its campaign but that Kmart continued to “promote false comparisons.” It then contracted independent market research firm Leo J. Shapiro and Associates to document the scope of these errors. The lawsuit is being filed in U.S. District Court in Minnesota.

Shapiro and Associates audited the campaign in 98 stores in Atlanta, Detroit, Los Angeles, Miami and Minneapolis-St. Paul, examining 622 Kmart signs referencing Target pricing and finding a 74 percent error rate.

“An astounding number of 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,” James Hale, Target's executive vice president and general counsel, said in a statement. “False advertising hurts every retailer by undermining consumer confidence in all advertising. An advertising campaign with a 74 percent error rate is beyond comprehension.”

Kmart, Troy, MI, said yesterday that it remains committed to the “Dare to Compare” campaign.

“It is unfortunate when a competitor has to resort to needless, costly litigation when they discover that they are falling behind in the retail arena,” the company said in a statement.

Target said the audit, conducted from July 31 to Aug. 8, found that 74 percent of Kmart's signs had at least one of the following errors: Kmart's pricing was wrong; Kmart listed the wrong Target price for a similar item or Kmart compared a product that competing Target stores do not sell.

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