Hub ad uses Levenson & Klein's downfall to lure new customers

September 22, 1990|By Maria Mallory

In hopes of snagging the customers of a failing competitor, Hub Furniture Centers is the latest company to use the misfortunes of a rival as a springboard for attracting new business.

In this case, customers of the bankrupt Levenson & Klein furniture stores are the targets.

In July, the three Levenson & Klein stores in Baltimore began a 120-day liquidation under the direction of the U.S. Bankruptcy Court in Baltimore.

In a newspaper advertisement appearing yesterday, termed "An Open Letter To Customers of Levenson & Klein," the Hub addressed the "thousands" of customers it assumes are wondering, "Where do we go from here?"

To the Hub, of course, the ad suggests.

Executives at Columbia-based Hub were unavailable for comment,but the ad says they "would very much welcome the opportunity to be your furniture store."

This kind of advertising -- which uses the misfortune of a competitor as a springboard for attracting new business -- is becoming more and more common.

The practice "is very, very normal," said Mark Goldstein, president of Bethesda-based Earle Palmer Brown, a large regional ad agency.

"That kind of thing happens all the time in the business world," he said, citing a recent round of newspaper ads and promotions from competing Washington-area pharmacies aimed at attracting customers of the failed Fantle's chain.

Though the practice has become accepted, some in the advertising business perceive it as less than attractive.

"It's buzzards on the dead body looking for the pickings that are left there," said one source, but "it's not like kicking them while they aredown, because they are no longer in the game."

In any case, the ads may often make good marketing sense. A competitor may be in a position to gain a significant increase in customers following the downfall of a competitor.

"There were probably thousands of people who shopped at Levenson & Klein who may be looking for an alternative," Mr. Goldstein said.

Prospective customers were incentive enough for Peoples Drug Stores Inc., a chain based in Alexandria, Va., which started a special promotion last month offering a $5 discount on prescriptions to lure Fantle's customers.

"Fantle's customers were obviously looking for a new drugstore, and we wanted it to be us," said a Peoples spokesman.

"It's not like we made Fantle's go out of business," the spokesman said.

"It's just facing the fact that these people will be looking for a new drugstore. It's picking up the pieces."

In the case of Levenson & Klein, officials managing the liquidation view the Hub ad as an unfair ploy that plays on consumer emotions.

Pointing to its liquidation price cuts, Robert Riesner, Levenson & Klein's bankruptcy consultant, described the letter as an attempt to lure customers to higher prices.

"There is obviously more value in a liquidating mode than there is in conventional mark-ups which the Hub is working on," Mr. Riesner said.

John Klipper, a representative of Alco Capital Corp., a New York company that was authorized by the bankruptcy court to oversee the furniture company's liquidation, said the Hub is unfairly "encouraging our customers to abandon us."

Mr. Riesner and Mr. Klipper said Levenson & Klein's answer to its competitor's move will be its own aggressive advertising touting the company's low prices.

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