Sears' Fresh Approach to Cutting Edge Electronics Features Some Old-Fashion Techniques
Just about the first thing Sears (SHLD) did after in after inking a deal with Sonic Solutions to stream newly released movies and other premium entertainment direct to its customers homes was to launched a campaign on Facebook directed at those customers who have become more closely linked to the company through proprietary initiatives that provide a unique package of information, discounts and financing options.
In doing so, Sears has advanced a strategy based on providing customers with a unique if not entirely new approach to doing business with it. The company is linking established and even old fashioned retailed practices, such as loyalty cards, layaway and store credit, with online efforts that range from marketing efforts on Facebook and other social networks, product promotion on My Sears and My Kmart websites and now the Sonic Solutions home theater system, which gives consumers direct access to movies as soon as they are available to for rental or purchase at retail.
In an interesting twist, Sears Facebook blurb, directed at movie buffs, didn't link to company propaganda but a CNET blog post. The piece compared Sears' initiatives to Walmart (WMT) and Best Buy (BBY) moves, essentially positioning Eddy Lampert's crew up there with the big boys. Marketing on Facebook is preaching to the choir, but that's the point.
Cost-conscious Sears isn't likely to jump into the kind of discount battles that locked up Walmart, Best Buy, Target (TGT) and Amazon (AMZN) last holiday season. However, Sears has a lot of customers â€"- maybe not quite as many as it used to, but still a lot -â€" who will visit in the holidays to purchase tools, hardware and exercise equipment, the retailer's traditional strong suits. So, the company is adding streaming video entertainment as a cutting-edge service it can promote as another reason for customers at both Kmart and Sears stores to take another look at its electronics presentation.
Sears' streaming video provider is the same working with Best Buy. However, to allow it to brand the services as unique, it will be called Alphaline Entertainment at Sears Holdings stores. The retailer is bolstering that move with the launch of an exclusive line of RCA flat-panel televisions that come ready to run its streaming video service. Sears is focusing its efforts on its most loyal customers in part with incentives that include one-percent-back loyalty card awards, a Christmas Club, store financing and a layaway program that proved successful in the past holiday season especially with customers who don't have credit cards. However, by combining financing options with directed marketing such as the Facebook effort and buyers guides on its My Sears and My Kmart social networks, the retail will make it easy for customers to consider a service that may be new to them but that has been made accessible and, for at least a proportion of shoppers, attractive enough to purchase.
Competitive battles at last year's end saw retailers offer notebook computers at prices below $300, but most of the best bargains were stocked in such limited supply that the majority of consumers couldn't get near them. Shoppers will enter this holiday season recognizing that if they can't line up early for a big bargain, it will be gone. In contrast, Sears is offering customers a range of proprietary deals, discounts and financing options that may prove more attractive than burning gas chasing elusive bargains around town.
If Sears is disciplined enough to maintain a core-shopper focus in electronics, it could build a nice, fairly profitable business. But if it starts thrashing about and counting on quickie mega-discounts to lure new customers, it will find itself in a battle it can't win, stripped of sales and bled of profits.
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