SBJ/20100823/This Week's News

Wal-Mart to climb aboard Gordon’s car?

Wal-Mart’s potential move into NASCAR has led the retail giant deep into negotiations with Hendrick Motorsports over sponsorship of Jeff Gordon’s No. 24 Chevrolet next season.

There continue to be several moving parts to the Wal-Mart discussions with Hendrick and NASCAR, which began in the spring and have progressed through the summer. Wal-Mart’s play could have tentacles in both sponsorship and licensing at the team and league level, according to industry sources.

The retailer has been hesitant to spend money on sports sponsorships in the past, so Wal-Mart’s entrance to NASCAR would provide a huge boost to a sport that has been ravaged by the recession and attracted little new sponsorship money in the last two seasons.

“It’s very significant,” said Mark Dyer, senior vice president at IMG and formerly chief of the licensing division at NASCAR until 2007. “We tried for years to get Wal-Mart’s attention when I was at NASCAR and we made some inroads. If they truly decide to take a position in the sport, that’s a big deal to get a company that should have been in that space all along.”

While Wal-Mart ponders a new place in NASCAR, other consumer packaged goods sponsors are clearly energized and they’re not waiting for contracts to be signed before mobilizing.

Sources say that six of NASCAR’s official consumer packaged goods partners met earlier this month to discuss a retail strategy for Wal-Mart. Those sponsors were Coca-Cola, Kraft, Mars, MillerCoors, Procter & Gamble and Unilever.

DuPont has been the only primary sponsor for the car of
Jeff Gordon (left) since he became a full-time driver in 1992,
but its most recent deal with Hendrick ends this year.

Phil Grieco from Mars’ sponsorship and marketing division helped arrange the meeting, according to industry sources. Matt Shulman from NASCAR’s partnership marketing division attended, as did Erik Brothers from Bulldawg Marketing, a retail-focused agency based in Mooresville, N.C., near many of the team shops. Bulldawg has worked with NASCAR and its consumer packaged goods partners on retail programs in the past, including this year’s promotion with Brookshire’s, a Texas-based grocery chain, and the Ahold chain of grocery stores.

Those executives reached said they couldn’t comment on the meeting because of the continuing nature of their planning.

Wal-Mart was not present, but sources said the consumer packaged goods marketing executives met to discuss ways to take national programs to Wal-Mart, with the belief that the retail giant is close to finalizing sponsorship and merchandising agreements to enter NASCAR.

“We’ve never been able to put together a national program with Wal-Mart,” said one source familiar with the talks. “A multivendor campaign, which would be exclusive to NASCAR partners, would put more weight behind it.”

The meeting, which took place just outside of Wal-Mart’s headquarters in Bentonville, Ark., was described as an all-day brainstorming session to form plans for a 2011 promotion that would be exclusive to NASCAR official partners.

For companies like P&G, Unilever and Kraft with similar products, they would stick with only the brands that have NASCAR official designations for the promotion.

“The opportunities with this are huge,” the source said. “In the past, you could get regional activation with a Wal-Mart close to the track, but they liked to control their national promotions. They typically develop their own programs and then bring in the manufacturers that they choose. But we’re hearing that it could be changing.”

The store’s sponsorship of Gordon would be the most visible bet that Wal-Mart believes an association with NASCAR would help its business. Sources say that Wal-Mart has been seeking ways to reconnect with its core U.S. customers, who compare favorably with the avid fans in NASCAR.

Wal-Mart has experienced gains internationally with strong sales growth in Mexico, Brazil and China, but domestic sales continue to lag. Stores in the U.S. that have been open at least a year have seen sales drop for five straight quarters as core customers continue to be pressed by high unemployment and tight credit.

During its second-quarter report, Wal-Mart said its strategy to roll back prices did not work as well as hoped and it is exploring other options to spur sales.

Gordon, who ranks second in this season’s Sprint Cup standings, remains one of the sport’s most popular drivers and is a likely future hall of famer. DuPont has been his only primary sponsor since he became a full-time driver in 1992, but the most recent deal between DuPont and Hendrick Motorsports ends this year.

While DuPont might be back on the No. 24, it is expected to be in a reduced role. Pepsi and National Guard also have associate sponsorships on Gordon’s car this year. Gordon, 39, has said that he plans to drive for four or five more years and that he’s over the back injury that at one time was considered a threat to his career.

If Wal-Mart completes an agreement for the No. 24 Chevrolet, it remains to be seen whether the retailer will keep its marks on the car or sell off races to vendors.

Wal-Mart also has been in discussions with NASCAR’s licensing trust to be the sport’s exclusive retailer in the mass merchandise space. If NASCAR granted Wal-Mart a direct license, it would allow the store to select its merchandise partners and set prices. Those talks have been going on since the spring.

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