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Banking on the Big Book

BY CSA STAFF

In 1893, the first Sears, Roebuck and Co. catalog—a 6-by-9-in. booklet featuring watches and jewelry—was distributed via a fledgling postal system to mostly farmers hungry for accessible goods. The next year, company co-founder Richard Sears launched the expanded “Book of Bargains: A Money Saver for Everyone” and ignited a century of mail-order revolution.

In 2007, under the marketing leadership of former IBM veteran Maureen McGuire, 55, the Big Book Catalog (as it came to be called) has been unearthed to serve as the foundation of a new advertising campaign designed to, as she put it, “ignite true possibilities for life at home” (see From the Editor’s Desk).

Leveraging one’s heritage isn’t a new strategy. But it is one that, when mixed with just the right amount of modernity, has shown itself to be successful. It appears that’s what Sears Holdings Corp. is banking on to aid in its turnaround.

The day that McGuire and her marketing team unveiled the new ad campaign, to a room full of reporters at a hotel in New York City, was 114 years after the first Sears catalog debuted. And it was 48 hours after Sears Holdings Corp. had released its first-quarter 2007 results—showing Sears domestic same-store sales down 2.4% and sister Kmart down 4.7%.

New campaigns for both concepts are a move toward turnaround. The Sears marketing direction includes TV spots that trace the retailer back to its Big Book Catalog roots. Kmart has a new mascot, a little guy named “Mr. Bluelight” intended to recall the days of the Blue Light Special. Neither approach is a quick fix, and McGuire isn’t suggesting such. But it’s a start. McGuire talked with Chain Store Age senior editor Katherine Field about the newly unveiled marketing plans.

Chain Store Age: In your just-launched ad campaign, you debuted the tag line “Sears. Where it begins.” What is its significance?

Maureen McGuire: We felt that the new tagline really speaks to our customers, as they enter each new life stage, about how Sears can be or has been a part of their lives through the years. Sears is the place where a new kitchen can begin for the empty-nesters who always wanted a gourmet kitchen. Sears is where a new family can outfit their entire first home. And Sears is the place where a do-it-yourselfer can find the inspiration and tools to build his or her next great project.

We went through an extensive creative process to develop this tag line, and we felt that this was the one that really stood out as articulating what we want our customers to feel about Sears.

CSA: What are the components of the campaign?

McGuire: This is a fully integrated campaign. As with any new campaign, it will gradually become more and more integrated into all of our marketing efforts.

The first elements are the television ads, which launched May 6 for the Mother’s Day spots and May 13 for the brand spots. The circular will gradually take on a new character. The new cover, which launched May 6, is now focused on telling a single story, and the inside pages will move more toward the story focus throughout the course of the year. The sears.com site will also take on a new look and feel. The first significant changes went live on May 13, and the site will continue to build in more elements of the campaign throughout the year. In-store signage will also begin to reflect the new positioning in June.

CSA: What are your objectives with the launch of the campaign?

McGuire: The objectives of the campaign are really twofold: first, to reconnect with our current and former customers and remind them of all we have to offer and, second, to become part of the consideration set with potential new customers currently shopping elsewhere.

We know that we have a lot of customers who are loyal customers for Craftsman or Kenmore, but rarely shop the rest of the store. We want to showcase to them that Sears has a lot to offer in our clothing lines, which have undergone major upgrades in quality, style and fit. We have a tremendous selection of home electronics and fitness equipment that many of our customers probably aren’t aware of. I could go on and on. Most of all, we want to reawaken the feeling of endless possibilities that so many people across the country used to have when they opened the Sears catalog and saw all the great products and ideas Sears had to offer.

Sears Holdings Corp.

Headquarters: Hoffman Estates, Ill.Annual sales: Approximately $55 billionNumber of stores: 3,800 full-line and specialty retail storesArea of operations: United States, Canada, Puerto Rico

CSA: Kmart has also launched a new campaign, championed by a new mascot Mr. Bluelight. What’s his story?

McGuire: The Kmart campaign launched May 14 with the introduction of Mr. Bluelight on television, online, in the circular and in-store. In all of our marketing vehicles, Mr. Bluelight’s job will be to help distinguish what’s new, different, better and special about our products—pointing out limited-time-only offers as well as unexpected discoveries. It’s important to note that although Mr. Bluelight is named for the company’s Blue Light Special of the 1970s and 1980s, he does not just represent a sale or clearance anymore. His job is to highlight the great quality Kmart offers and to provide individual customers friendly guidance for their shopping needs.

CSA: You have said, “Retailers have to not only think like merchants but also think like customers.” Why is that important to you?

McGuire: We can’t be a successful retailer if we concentrate only on what we want to sell, not on what our customers think, need and want. If we can’t think like customers, then we can’t be relevant to them and develop a more emotional connection with them.

CSA: On a personal note, are you able to enjoy media without “critiquing” what you see and read? Can you ever escape?

McGuire: I tend to view all media with an eye for how it relates to Kmart and Sears, so no, you can’t really “escape.” I look at competitor approaches, trends and new ideas, but mostly I look for opportunities—to see if there is something relevant for Kmart or Sears in what I’m reading or watching.

Sears’ new campaign was created to speak to customers as

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Sears comps hurt by energy costs

BY CSA STAFF

HOFFMAN ESTATES, Ill. Sears Holdings today reported net income of $216 million, or $1.40 per diluted share, for the first quarter ended May 5, compared with net income of $180 million, or $1.14 per diluted share, for the first quarter ended April 29, 2006.

“In part, our domestic operating results reflect the impact of some of the same challenges being faced by our customers, such as rising energy costs and a slower housing market,” said Aylwin Lewis, Sears Holdings’ ceo and president. “However, as an organization, we need to overcome these factors by better controlling costs and developing innovative solutions that better meet our customers’ needs and allow us to generate a more reasonable level of profitability even in the face of such challenges.”

Domestic comparable-store sales declined 3.9% during the first quarter of fiscal 2007. Sears domestic comparable-store sales declined 3.4% for the quarter, while Kmart comparable-store sales declined 4.4%. We believe these declines reflect both increased competition and the impact of external factors such as rising energy costs, a slower housing market and poor weather conditions during the latter part of the first quarter of fiscal 2007. Kmart experienced lower transaction volumes across most merchandise categories, most notably within home goods, health and beauty products, and food and consumables. Similarly, Sears domestic recorded comparable-store sales declines across most merchandise categories and formats, with a notable decline in home appliance sales, which we believe reflects both a slower U.S. housing market and the impact of increased competition.

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Big Lots 1Q net sales up 3.4%

BY CSA STAFF

COLUMBUS, Ohio Big Lots today reported first quarter fiscal 2007 income from continuing operations of $29 million, or 26 cents per diluted share, compared to income from continuing operations of $14.5 million, or 13 cents per diluted share, in the first quarter of fiscal 2006. Including the impact of discontinued operations, first quarter fiscal 2007 net income totaled $28.8 million, or 26 cents per diluted share, compared to $13.7 million, or 12 cents per diluted share, in the prior year.

Net sales for the first quarter ended May 5, increased 3.4% to $1.13 billion, compared to $1.1 billion for the same period in fiscal 2006. Comparable-store sales for stores open at least two years at the beginning of the fiscal year increased 4.9% for the quarter.

For the second quarter 2007, the company expects income from continuing operations of 7 cents to 10 cents per share versus income from continuing operations of 4 cents per share last year. Comparable-store sales are expected to increase 2% to 4%, compared to a 5.2% comparable-store sales increase recorded last year.

For fiscal 2007, the company expects income from continuing operations of $1.25 to $1.30 per share versus income from continuing operations of $1.01 per share last year.

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