Layaway, Rewards Programs Top Holiday Game Plan at Sears and Kmart

Layaway Christmas shopping
Layaway Christmas shopping

Glittery fashions from the Kardashian sisters and a new Brunette Barbie will be hot gifts at Sears and Kmart (SHLD) during the upcoming holiday.

But the real stars this Christmas season are the stores' free layaway and Shop Your Way loyalty savings programs, a bid to resonate with financially strapped shoppers.

Ron Boire, president and chief merchandising officer of Sears Holdings, which also owns Kmart, sat down with DailyFinance for a one-on-one interview prior to the company's holiday press preview in New York last week.

Kardashian Kollection
Kardashian Kollection

Although the company is "optimistic" on business for the make-or-break holiday selling season, he said, it's also all too aware that in a down economy, "the customer is very stressed."

So is the retailer: The company has posted five consecutive years of sales declines, as its chains have struggled to find their niche amid players ranging from Target (TGT) to Macy's (M). That's been the case ever since Eddie Lampert, the hedge fund guru who leads Sears Holdings and is its majority shareholder, orchestrated the merger of Sears and Kmart in 2005.

Free Layaway and Loyalty Perks

Just as other big chains have enhanced their pay-as-you-go programs, Sears and Kmart are waiving the $5 layaway sign up fee for the holiday.

Kmart has eliminated the service fees until Nov. 17, while Sears will waive the fees until Oct. 29, then from Nov. 2 to Dec. 3.

Barbie Doll Brunette
Barbie Doll Brunette

What makes Sears's layaway different from other programs, Boire said, is that any item in the store can be put on layaway. And for the first time ever, layaway merchandise reserved online can be delivered to shoppers' homes.

The retailers' enhanced Shop Your Way loyalty program is another holiday push, Boire said, calling it more "robust" than competitors' rewards programs.

Shop Your Way offers special deals and differentiated offers for members based on their purchasing history and patterns, "providing unique value to consumers in real time," he said.

Unlike other loyalty programs that require shoppers to rack up points to earn discounts on a purchase, Shop Your Way allows consumers to apply them immediately. So if you're buying a Kenmore refrigerator, for example, you can immediately apply the points earned for the purchase to a pair of Kardashian jeans.

Sears and Kmart won't be joining in the lowballing price wars this holiday season, Boire said.

tool set
tool set

While "every retailer has had a similar strategy since 2008 [when the economy tanked], to play up low prices, aggressive discounting won't get you anything but a temporary customer," he said.

That doesn't mean the company is sitting out the bargain game entirely.

Kmart is introducing a "freakout pricing" promotion this holiday, highlighting gifts for $5, $10 and $20.

Overall, the chains will be pushing exclusives such as Kmart's Holiday 2012 Collector Barbie Doll Brunette for $39.99; a 51-piece Craftsman Max Axess 51-piece tool set for $69.99; and a $58 sequin jacket from the Kardashian Collection, Sears' exclusive line from the ubiquitous reality show sisters.

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