Struggling retailer Kmart turns the blue light back on

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Struggling Retailer Kmart Is Bringing Back the "Bluelight Special"

(Reuters) -- Attention Kmart shoppers: the struggling discount chain is bringing back the "Bluelight Special" in the hopes the iconic marketing approach it pioneered decades ago will breathe life into its stores and online sales.

The retailer started sounding the blue sirens used to flag the surprise, 15-minute long deals to shoppers at its 942 stores on Friday, and will kick-off a marketing campaign to highlight the move with a TV ad on "Sunday Night Football" on NBC.

The Bluelight Special was first created by a store manager in 1965 to clear slow-moving merchandise and helped fuel Kmart's growth through the 1980's when it ranked as the largest U.S. discount retailer and the phrase "Attention Kmart shopper" had entered the pop culture lexicon. It discontinued the sales tactic in 1991, around the same time it was surpassed by Wal-Mart Stores Inc in sales.

"It's part of our DNA," said Kmart President Alasdair James, a former executive at British retailer Tesco PLC who joined the company last year. "We think there is a real positive buzz coming out of it and we expect to see an increase in sales."

Kmart, a unit of Sears Holdings Corp, could use the boost. The retailer has been mired in a sales slump, with revenue at Kmart stores open at least a year down about 7 percent in each of the past two quarters. The company has attributed the recent drop to more targeted marketing and a shift away from low-margin products, and gross margins have improved.

Critics say the company has not invested enough in its stores and has been outmaneuvered by other discounters like Wal-Mart, which entices customers with consistently low prices and Target Corp, which has earned a reputation for "cheap chic".

It is not the first time Kmart has turned to the sales approach to jump-start demand. It brought back the Bluelight Special in 2001, only to go bankrupt the following year, and has since revived it in limited iterations a handful of times, including in a holiday promotion last year.

James said the difference this time is that it will be a sustained campaign, with deals popping up throughout the day at stores, as well as online. "This is intended to be an ongoing program of the way we actually will exist."

The decision to revive the sales tactic was the result of months of research that showed Kmart customers remembered the experience fondly, whether from shopping on their own or with their parents when they were kids, James said.

In hopes of tapping into that nostalgia, Kmart bought the rights to George Kranz's 1983 dance anthem "Din Daa Daa" to accompany the flashing blue sirens and "Attention Kmart shopper" phrase in notifying shoppers that an item is going on sale.

Whether bringing back the blue sirens will meaningfully lift sales remains to be seen. Much has changed in the retail industry since Kmart's heyday decades ago, with new entrants like online giant Inc disrupting traditional operating models and making pricing more transparent.

Under Chief Executive Eddie Lampert, Sears and Kmart are both focused on growing sales among members of a loyalty program called Shop Your Way. Kmart is hoping the element of surprise will keep its members coming back and spending more.

"It is all about bringing fun back into the shopping experience," said Kelly Cook, Kmart's chief marketing officer. "We are giving you that spontaneous rush which is at the heart of why the Bluelight Special works."

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