Target Corp., Minneapolis, last week filed suit against Kmart Corp., Troy, MI, charging its rival with false advertising.
Filed in U.S. District Court in Minnesota, the suit claims Kmart’s Dare to Compare national ads and in-store signage have errors in 74 percent of price comparisons.
Target says it notified Kmart of overwhelming errors in its comparisons, and hired research firm Leo J. Shapiro & Associates, Chicago, to document the scope of the errors when Kmart kept using the ads.
“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,” says Target exec vp-general counsel James Hale. “False advertising hurts every retailer by undermining consumer confidence in all advertising.”
From July 31 to Aug. 8, Shapiro staffers visited 98 Kmart stores close to Target stores in five markets (Atlanta, Detroit, Los Angeles, Miami, and Minneapolis) and checked 622 in-store signs, and allegedly found 74 percent of signs to contain at least one error.
Kmart said it will continue comparison pricing, citing its own market research showing “significant gains in pricing perception for Kmart” and increases in store traffic and transactions. (Shelf signs include the date of comparison and amount saved.) “It’s unfortunate when a competitor has to resort to needless, costly litigation when they discover that they are falling behind in pricing in the retail arena,” a Kmart statement reads.
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