Sears Shows a Softer Side
If it had lower prices, Sears might be able to make the case
that it’s the retailer looking out for the little guy. The chain offers layaway
for the credit challenged and now it’s rolling out a payment protection plan
for holders of its credit card who lose their jobs after purchasing major
appliances at one of its stores.
Customers who charge $399 or more to Sears’s credit card for
appliances and related products between July 6 and Aug. 1 and lose their
jobs anywhere from 60 days to a year will get one-twelfth of the purchase
price credited to their accounts for every month they are out of work. If
the customer is out of a job for a year, they owe nothing and get to keep
the appliance.
“Our customers have told us that even with the Sears best price guarantee,
they have been deferring much-needed appliance purchases,” said Kevin Brown,
vice psident and chief marketing officer for home appliances at Sears, in a
press release.
“With Sears’ Buyer Protection Program, customers can move forward with confidence
and make a purchase knowing that if something unforeseen happens with a job,
the Sears Buyer Protection Program will credit their Sears account for that
purchase and allow them to keep the appliance,” Mr.
Brown said.
Discussion Questions: How successful
will Sears’ Buyer Protection Program be in getting consumers to move
forward and purchase major appliances from the retailer? Will this
program, along with layaway and other initiatives, create a clearer point
of difference between Sears and its competitors in the minds of consumers?
Sears has to make some defensive moves like this to protect its franchise in appliances. Part of the reason is the company’s fading market share in softlines; part of the reason is driven by the economy. This feels and sounds like some of the payment guarantees issued by the car companies recently, and is probably going to be effective in reviving some traffic in its hardline departments.
If the car companies can do it, so can appliance retailers. This is a smart re-use of a solid strategy for durables. Kudos to Mr. Brown at Sears. I plan to chat this up, it can help people all over the country!
One aspect of the program at Sears that this article fails to mention is Sears’ lowest-price guarantee. A consumer can check competitors’ prices at Sears and Sears will beat the lowest price. This feature, more than buyer protection and lay-away, should grab consumer attention.
Sears has always been strong in appliances. The new, lowest-price guarantee is a bold move on the part of Sears, but then again, Sears needs bold moves and low prices if it is going to survive.
I doubt this will be very effective. My guess is there is a lot of fine print. I’m sure there is a limit on what they would pay. Someone like me could just go in, buy some appliances, and then fire myself from my corporation. The finance charges have to be huge to make this work.
Think about it, it only costs a few thousand dollars to fully equip a home with appliances. Anyone who is so broke they have to finance that little amount of money is in serious financial trouble to begin with. I can see financing a house, perhaps a car, but appliances? I think they are better off with lay-away. That way the item doesn’t leave the store until it’s paid for.
Margins, peace of mind, brand loyalty, and store loyalty all make this worthwhile. This is true credit, like the old days, and Sears is making it profitable. The winners will outweigh the losers, and Sears will ultimately win, both now and in the future. Great strategy for a winning position.
I don’t know if this will lead to new business, but the metrics are interesting. Assuming Sears is running a good margin, if Sears can generate a higher rate in incremental sales than people losing their jobs, they come out a winner.
While we haven’t turned the corner yet on job losses, the bulk of the losses are largely behind us…I hope. With the recent job losses of another 500,000, the unemployment rate will hit 10%. It is not likely to go to 12% and if it goes to 15%, Sears and all retailers’ problem will be more serious than lost margin on Buyer Protection program.
This could be a good move for Sears, as their name still says quality and service in home appliances to many shoppers. Execution is the key, as other channels like furniture and electronics are looking to simplify purchase with enhanced terms and provide service options.
D-I-Y stores are not able to match the in home service and warranties–yet. Sears customer and credit services are gaining a reputation as complicated to navigate and resolve. If Sears moves quickly to sort these issues, they may differentiate and move ahead as the economy strengthens.
This is a good strategy for Sears. I think the consumers will appreciate this and anyone who has concerns about making a bigger appliance purchase with the economy the way it is will look to this kind of a program to help them decide on the purchase. Until other major appliance sellers make this kind of a move, Sears will have the advantage.