Sears Tests Home Appliance Store Concept and Seeks Elevated Customer Engagement

Last week, Sears announced the May 19th opening of its first 10,000-square-foot Sears Appliance store in Fort Collins, CO. If this test goes well, this will be the first of what is expected to be a broader rollout later this year to spark elevated customer engagement.

Loyalty360 caught up with Leena Munjal, SVP, Customer Experience and Integrated Retail, Sears Holding Corp., to find out more about this test.

What factors prompted the testing of smaller stores, where are they being tested, and how much smaller are they than a current Sears?

Munjal: As the retail landscape continues to evolve, we’re always looking for innovative ways to serve our members. Fort Collins is a great example of how we are focusing on our best categories, stores, and members and how the value of a physical store combined with Sears’ digital capabilities is a win for our members and this community. Physical stores are very important to our strategy, but as we transform our company, we are looking at how different stores can serve our members who utilize all of the digital capabilities we have to offer.

In fact, we don’t think of this location as a smaller store, rather, it represents one of our largest home appliance departments, albeit in a standalone space. This store allows us to bring the Top 10 appliance brands and services that only Sears offers to our members in the Fort Collins market, while introducing a fresh, innovative, and convenient way to shop. The 10,000-square-foot store features interactive displays that allow members to view home appliances in kitchen vignettes, including the breadth of Sears’ leading integrated retail services. The size of an average Sears store is approximately 138,000 square feet.
What are your goals for the smaller stores and, potentially, what would be involved in a future, broader rollout?

Munjal: Among the metrics for success of any store are profitability, Shop Your Way member engagement, and member feedback. Ultimately, we want to ensure that customers living within the Fort Collins area have full access to the top appliances for their homes and view Sears as the best destination for appliances for years to come. Additional stores are planned, but we have no details to provide at this time.
Last week CEO Eddie Lampert spoke about the fact he believes the Shop Your Way loyalty program has under-performed. Can you talk a bit about why this is the case and what plans/options there are to drive enhanced customer engagement/customer spend within the program?

Munjal: That is a misrepresentation of what our chairman and CEO said. What he said is that, although Shop Your Way is already driving 75% of our sales, it has significant upside. And that the teams here are charged with finding ways to enhance and deepen the relationships with our members so that they have even more reasons to shop us more frequently.

As he pointed out in his annual letter to shareholders: “This past year, we saw a marked increase in member engagement with the full suite of Shop Your Way rewards and benefits. Overall, investment in Shop Your Way as a cornerstone of our member-centric transformation continues to drive material benefit to Sears Holdings. In 2015, we awarded more points to members than ever before. Through refinements in our member targeting and segmentation strategies using real-time analytic input on our members’ specific needs and shopping patterns, we continue to improve our ability to deliver the right offers to the right members at the right time while maintaining a profitable return on those issuances. Shop Your Way programs and offers have not only saved members time and money, but have also driven increased trips and larger basket sizes while contributing to the profitability of our company. Our Shop Your Way membership remains high and engagement remains strong with our core members.”

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