Who Do You Trust?

The most recent Brand Loyalty Index shows that Kmart Corp. (Troy, Mich.) — in bankruptcy since January — and its exclusive Martha Stewart brands have declined significantly in customer perceptions.

The six-month study, conducted by New York consultancy Brand Keys, asked 250 Kmart shoppers every month to rate the two companies by commenting on “[It's] a brand I trust.”

In May, the Martha Stewart brand indexed at 120 out of a possible 175, while Kmart scored 106. (A score of under 100 is considered poor while 140 is exceptional.) On June 17, after Stewart was accused of getting insider stock-trading information, that brand slipped to 114. Kmart, following another month of heavy losses, dropped to 98.

By early October, after the assistant to Stewart's stockbroker pled guilty to a misdemeanor, the two indices slumped to 94 and 85.

“It's not only a perfect example of the fragility of brands that are invested mainly in a human being,” Brand Keys president Robert Passikoff told Brand Week magazine, “but also a case study of the disastrous effects of co-branding with a brand in trouble.”

Does that mean either brand is ready to sever its ties? Not Kmart, evidently. “I will make that call if I determine it's a detriment for Kmart,” said ceo James Adamson. “But, I'd rather continue to support Martha because she's a great partner of ours.”

“The statistics we pay attention to are sales,” said Dave Karraker, the retailer's director of marketing and communications. Stewart's products account for about $1.5 billion of Kmart's $36 billion revenue. Kmart is still running ads starring Stewart, including a three-year-old “White Sale” spot. A new holiday ad will tout Stewart's table top products and other items.