Sears Bets the Store on the Internet: Can the Web Save a Brand?

For years, Sears has been a troubled company. Despite high awareness for its brand name due to its longevity, Sears and its sibling, Kmart, have been battered by Walmart, Target, and a host of other fierce competitors. Last year, Sears had a loss that exceeded $3 billion.

Now Sears is digging in and making what may be a last-ditch effort to save itself—and a major part of the hoped-for turnaround depends on the power of the Internet and, more specifically, social media. Ironically, Sears owns Lands’ End, long regarded as an ecommerce leader, but that online marketing expertise has not carried over to the retailer.

A Unique Way of Rewarding Customers

Like other retailers, Sears implemented a customer loyalty program to encourage repeat purchases. Called “Shop Your Way Rewards,” the program offers points for purchases, special offers to shoppers who use “eReceipts” instead of paper, and contests just for members. Beyond that, Sears has overlaid onto the program a heavy dose of social media. Members can earn badges by writing reviews and recommending products, create wishlists and share them, and meet fellow shoppers with similar tastes and interests.

But the latest twist to the Shop Your Way Rewards program is thought to be a novel if not unique idea in online marketing. In a variation of the friend-get-a-friend concept, Sears is recruiting customers to make recommendations to family, friends, and acquaintances to shop at Sears stores or online and offering to pay the shoppers one to two percent of the sale. In other words, current customers become “agents” and get a piece of the action when people they’ve referred buy a product from Sears. It’s all tracked through membership in the loyalty program.

Abraham Seidmann, a professor at Rochester University’s Simon Graduate School of Business, told The Wall Street Journal it’s the first time he has heard of a retailer taking this approach. “It’s very creative and my thought is if it gets off the ground, others will follow,” said Siedmann. With customers spending less time in stores and more time shopping only, “this plays right into the dynamic,” added Siedmann.

Of course, this idea should come as no big surprise to online marketers. We’re well acquainted with the paid online referrals; that is what affiliate marketing is all about. But the fact that a major traditional retailer has adopted such an approach is big news.

Part of a New Focus on Technology

For Sears, an online rewards program is just one part of a larger strategy to employ technology for competitive advantage. CEO Lou D’Ambrosio, who was previously CEO of the telecom company Avaya, joined the company with no experience in retail but a deep understanding of the power of technology. He told The Wall Street Journal, “We saw what happened to Borders. We saw what happened to Blockbuster. You don’t change, you die.”

Already, employees at some Sears stores are using iPads and iPod Touches to access online reviews and instantly check inventory for customers. According to the Journal, Sears is working on a way for employees to greet shoppers who use their smartphones to “check in.” The employees would find the shoppers via GPS and be able to direct them to items in the store which match up with merchandise they might have looked at online.

Too Little Too Late?

Some observers see Sears’ customer loyalty program as not all that different from other retailers. Jim Sullivan, a partner at loyalty marketing firm Colloquy, told The Wall Street Journal, “A good loyalty program, which gives a company better intelligence about what its best customers really want, can be a strategic advantage. But it’s a truism in our business that even the best loyalty programs can’t fix a fundamentally broken brand.”

In addition, the use of technology alone won’t bring in new customers and increase sales for Sears. Other major retailers like Lowes have already widely employed iPhones to enhance in-store customer service, and mobile marketing has started to merge the retail and online worlds.

Sears is one more case study of a retailer with a long bricks-and-mortar legacy trying to figure out how to take full advantage of the consumer shift to a more mobile, always-on connected life. It may be too late for the Internet to save Sears, but every marketer could learn a thing or two from the retailer’s desperate attempts to innovate.

About Barry Silverstein

Barry Silverstein is a freelance writer/marketing consultant. In addition to writing for ReveNews, he is a contributing writer to, the world’s leading online branding forum. He is the author of three marketing books, The Breakaway Brand (co-author, McGraw-Hill, 2005), Business-to-Business Internet Marketing (Maximum Press, 2003) and Internet Marketing for Technology Companies (Maximum Press, 2003). Barry ran his own Internet and direct marketing agency for twenty years. You can find Barry on Twitter @bdsilv.

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