Sears Holdings Corporation is banking heavily on members of its Shop Your Way loyalty program, but industry experts are saying it may be “too little, too late” for Sears.
Robert Schriesheim, CFO for Sears Holdings Corporation said during a financial earnings call that one of the primary culprits for the year-over-year revenue decline was closed stores, which accounted for 32% of the drop, or $185 million.
Sears Holdings Corporation reported it will continue to grow its online business and increase the services and products provided to members through its online channels.
Member sales for the Shop Your Way platform in the first quarter represented the highest level ever, according to CEO Eddie Lampert. They reached 74% of eligible sales, up from 68% in the first quarter of 2013. Points redeemed from Shop Your Way increased by more than 30%.
Schriesheim said the Shop Your Way program has allowed the company to retain a portion of members who shopped the closed stores, reducing the revenue impact of the closures.
Lampert said Sears is putting Shop Your Way members at the foundation of its business model, with a focus on building relationships through personalization.
Dennis Armbuster, vice president of LoyaltyOne, said Sears has a large loyalty program with some value propositions. He said, however, one could question whether the program – and specifically the customer data/insight – was being used properly to support its strategic growth objectives and current business challenges.
“To be successful, Sears will need to operate in a culture of collaboration that leverages the data and loyalty platform to its fullest extent,” said Armbuster. “I’m not sure if Sears is there yet. That kind of change will require strong collaboration across all departments.”
Armbuster added that to date, this may be something that still eludes Sears and many other established brands.
Robert Passikoff, founder and president of Brand Keys, said all Sears has done is trade away coupons with points. He said the Shop Your Way loyalty program doesn’t surprise, but that it is “a self-fulfilling prophecy.”
“I don’t see this as the new penicillin of the digital age,” said Passikoff.
Passikoff said Sears has become a category placeholder. For a lot of years, he said, Sears didn’t know who they wanted to be when they grew up – they went for selling tools, then they wanted to do the softer side, then they turned around and tried to position themselves yet another way.
“After a while you don’t need them,” Passikoff said. “This was the nature of change in terms of an industry that is losing more and more to online sales.”
He said the issue is that a lot of people join loyalty programs because it is easy to sign up for. But having it help change behavior toward the brand is the hard part.
“It is all brand centered, what the brand stands for, and Sears stands essentially for last century’s old clothing,” said Passikoff.
Passikoff said Macy’s is a retailer that is doing a successful job with its loyalty program. He said it is based on strong, recognizable brands that people are focused on.
“The issue is how long can (Sears) keep giving stuff away?” asked Passikoff.
Passikoff said Sears hasn’t done itself any favors through a pricing and couponing approach that over the years has caused shopper confusion over the true value of its products.
“The day that Sears has something that you want and that you think is worth having, it won’t matter how much it costs and how many points,” said Passikoff.
Debra Ellis, president of Wilson & Ellis Consulting, said Sears waited too long before trying to solve its problem.
“Is it too late for them to bounce back? I think the loyalty program is good for the company,” Ellis said. “With a paid membership program, from the company side, it is generating income. Going with an income stream that improves service is a win-win for the company and its customers.”
Ellis said the loyalty program can grow if Sears does multi-level memberships like Sam’s Club and Costco. She said Costco “wins hands down” because you have to have a loyalty card in order to shop there.
“They are so customer centric, it is unbelievable,” said Ellis of Costco.
Ellis said it is not mandatory to have a loyalty program, but it is mandatory to have a customer strategy. Having the loyalty program increases engagement and commitment.
“I see it really helping (Sears),” Ellis said. “I think it is a game changer for them.”
Jeannie Walters, CEO of 360Connext, said that while loyalty programs like Shop Your Way are beneficial for a company whose sales are tumbling, for Sears it too little too late.
“People are very confused about who Sears is and what do they do for me anymore,” said Walters.
Walters said Walgreens is doing a successful job with its loyalty program. The company is focused on wellness and has trained its employees.
Walters said Sears has fallen behind other brands like Target which are innovating, and hasn’t kept up with the way people are shopping.
Walters said Sears needs to talk to its customers in order to find out what they want to buy. She added they should watch what Target and Walmart are doing in order to take advantage of areas where they are not meeting customers’ needs.
“Sears is such an iconic brand, it would be a shame if it didn’t succeed, but at the same time, they are behind,” said Walters. “There is a long way to go and that is unfortunate.”
Sears said it will close 80 stores and possibly more this year. The company did see comparable store sales growth of 0.2% as compared to a 2.4% decline last year.
Kmart, also under the Sears Holdings Company, saw a decline in store sales of 2.2%, compared to a 4.6% decline last year.