Sears, Tweens, the Internet and comments from Tom Shay

It is never too early, or toward too young a customer, for your business to work to get their image in front of the customer. Take a look at what Sears is doing.   Tom

Sears Tries to Alter Image, Co-Opt Cool in Web Push

Traditional Retailer Partners With Facebook, MySpace, Vanessa Hudgens in Hot Pursuit of Tween Market

By Natalie Zmuda

Published: July 14, 2008

NEW YORK (AdAge.com) — The coolest digital destination for kids this fall: Sears, Roebuck & Co.

The traditional retailer known for its print catalog is taking a decidedly untraditional approach to back-to-school marketing, blanketing the online world by partnering with just about every youth-focused social, virtual and entertainment network out there — all in hot pursuit of 8- to 14-year-olds that don’t exactly see Sears as fashion forward.

Sears’ back-to-school website features Vanessa Hudgens, star of ‘High School Musical.’

“Our belief is that, particularly for this tween market, there’s a little bit of undiscovered opportunity within Sears,” said Richard Gerstein, Sears’ chief marketing officer. “Part of what … Sears needs to do is build credibility with this tween market. There are a lot of people out there that have that credibility, so we’ve partnered with them to help us do that.”

To co-opt that cred, Sears is teaming with partners such as Facebook, MySpace, Seventeen, CosmoGirl, Nickelodeon and Disney, which are creating custom content or sponsorships for the retailer, and with Addicting Games, FunBrain and Neopets, which have developed exclusive Sears games. There will also be virtual Sears boutiques, fashion shows and competitions featuring apparel for avatars within virtual environments including Zwinky, Meez, WeeMee, The N and Poptropica.

Each tie-up will serve to drive customers to Sears’ “Arrive Lounge,” a key part of the retailer’s overall “Don’t just go back. Arrive” theme for the season. The website features Vanessa Hudgens, star of “High School Musical,” as well as behind-the-scenes footage from back-to-school commercials with the actress. Sweepstakes, downloads and fashion highlights linking to Sears’ e-commerce site are also featured.

Gamble
Mr. Gerstein declined to discuss details of the retailer’s overall budget or say what media budgets are losing funding as a result of the increased focus on digital programs. “It’s definitely a much bigger element of our back-to-school program than last year,” he said. “And digital continues to grow as an element of our marketing program across our company. We invest heavily in search, digital and other programs.”

While digital can be a less expensive alternative to flashy TV campaigns, it’s still a gamble for the struggling retailer. In its most recent quarter, ended May 3, Sears Holdings, parent company of Sears and Kmart, reported a $56 million loss, as sales declined 5% compared with the same period a year ago. According to Ad Age’s 100 Leading National Advertisers report, Sears Holdings’ market share slid 0.2 points in 2007, while overall ad spending was down 1.4% to $1.6 billion.

Despite its financial troubles, Sears is being both creative and aggressive when it comes to attracting tween customers during the all-important back-to-school season, its partners said. “It’s emblematic and important because Sears is a relatively traditional marketer in some ways, and this is a really impressive, innovative program that is using all of the coolest things that Web 2.0 has to offer,” said Samantha Skey, exec VP-strategic marketing at Alloy Media & Marketing.

By creating clothing for tweens’ avatars, Ms. Skey said, Sears is further entrenching itself with those customers. The retailer is also creating the opportunity for its branded items to live well beyond the life of the campaign. For now, Mr. Gerstein said, the campaign is somewhat open-ended.

“Obviously, back to school is when we put a focus on this market,” he said. “But we’ll let our customers guide us. Where they have interest, we’d be happy to … invest.”"

Sears’ creative agency of record is Y&R, Chicago, while Whitman Hart, Chicago, handles digital. MPG, along with its Boston-based Media Contacts unit, handled media for the campaign.

Business Week on retailing and Tom Shay’s comments

There are several aspects of seeing this happen that bothers me. The first is that businesses are waiting until there is a problem before deciding to do something to get people in the door. Notice that the article talks about businesses teaming up; this sounds like power promoting to us. Power promoting is something we have been promoting for over a decade. And then the aspect of cutting prices? (See my comments of earlier today regarding Wal-Mart) This is not the time for a retailer to decide to change their image of what they want their business to me. And by dropping prices toward a new image, it is tough for a business to go back to the previous price image.

Take a look at what Business Week has to say by following this link:

Business Week: Doing Whatever Gets Them in the Door

Local First Arizona organization is a real winner

This local organization should be duplicated in every state and province. As i get the email updates from this organization, I am always amazed at what they are doing in their communities. Take a look at this page from their site and see what a great promotion they have going:

Local First Arizona Promotion

The governor of Arizona has endorsed it. Notice that there is a ‘golden ticket’ to give participants an extra enticement to shop with participating businesses, and I very much like the idea of asking local dignitaries to tell you of their favorite places to do business.

Lehigh Valley’s ‘Think Independent’ campaign

While we don’t have a sample to include in the blog to show you, I would suggest that you click on the first link below to see a very create local promotion. This type of print promotion would work well in conjunction with a community utilizing the National Independent Retailers Week event that we created. National Independent Retailers Week is held in July of each year.

Here is a link to their page of sample posters:

Samples of Lehigh Valley’s Think Independent Posters

Here is a link to the front page of their website:

Sustainable Business Network of Lehigh Valley, PA

Tom Shay’s thoughts on the Sharper Image bankruptcy

As you read this article, notice two things: It is no surprise that Sharper Image has this problem. I don’t think they have had a “sharper” item in several years. At their store in Fashion Square in Las Vegas, the statue of Superman has been in the window display for years - how boring.

Read further and see how Brookstone is capitalizing on this. And as Brookstone redeems the gift cards to gain customers, they can resell them on the secondary market if Sharper Image pulls it out of the bankruptcy. If Sharper Image doesn’t pull it out, then Brookstone has one less direct competitor.

NEW YORK (AP) — You know that Sharper Image gift card you
got for Christmas? Right now, it’s worthless. And other gift cards in
your wallet could lose their value, too.

A customer-service representative said shoppers would eventually be able to use Sharper Image gift cards.

As more retailers file for bankruptcy or go out of business, more than $75 million in gift cards are at risk of becoming worthless pieces of plastic this year.

“If I knew this was going to happen, I would have used them right away,” said Jon Tapper, a public relations executive from Boston who received two Sharper Image cards as business gifts just a few weeks ago. Their total face value is $50.

“I love gift cards, but now this makes me think twice.”

The Sharper Image announced late last month that it was suspending the acceptance of gift cards, at least temporarily. It urged shoppers to check the company Web site later this month for an update. That is typical of businesses that reorganize under Chapter 11 bankruptcy, which treats gift cards as a loan to the company, not as cash.

For many shoppers, it’s a harsh lesson about the risks of gift cards. Consumers spent an estimated $26.3 billion in gift cards at retailers alone last holiday season, compared with $24.8 billion in 2006 and $18.48 billion in 2005, according to the National Retail Federation.

C. Britt Beemer, chairman of America’s Research Group, says “you will see a lot of frustration among customers. You basically stole (money) out of the customers’ pocket. They will never forgive you.”

The number of retail bankruptcies or liquidations this year is expected to reach the highest levels since the 1991 recession.

Brian Riley, senior analyst at The Tower Group, estimates that shoppers could lose more than $75 million just from stores and restaurant closings in 2008.

Tower Group’s figure doesn’t include mom-and-pop services like the local nail salon. Riley said such small operations, which are most vulnerable to economic downturns, pose the
biggest risks to gift card holders.

The gift-card problem provides more ammunition to consumer-advocacy groups that have lashed out against expiration dates and burdensome fees imposed if cards are
not used within a certain time frame. More than 20 states have passed regulations loosening restrictions on the use of gift cards.

“Consumers need to buy gift cards with their eyes wide open,” said Jack Gillis, a spokesman for the Consumer Federation of America.

Bankrupt businesses also face the risk that card holders left in the cold could defect to other stores just when struggling merchants need their customers the most.

Even if bankrupt retailers want to honor the gift cards, they may not be able to, according to Howard Kleinberg, director of the bankruptcy practice at Meyer, Suozzi, English & Klein.

Either they can’t afford it or their creditors’ committee or the bankruptcy court may not allow it. Gift cards amount to debt, and therefore holders are not necessarily going
to get paid, Kleinberg said.

Sharper Image officials did not immediately return phone calls but a customer-service representative told a reporter that shoppers would eventually be able to use the gift
cards. She declined to say when.

Gift card holders fall in the class of unsecured creditors, which is “low in the pecking order,” Kleinberg said. Those at the top of the list are secured creditors — with debts backed by assets such as real estate or accounts receivable.

Of course, if a company is purchased through a Chapter 11 bankruptcy process, the new buyer could honor gift cards.

That appears to be the case with Fortunoff, the jewelry and home furnishings chain that agreed last month to sell to an affiliate of NRDC Equity Partners LLC, which owns Lord & Taylor department stores and plans to expand the Fortunoff chain. A Fortunoff spokeswoman said the company is honoring gift cards.

Riley, of The Tower Group, estimated that the retailer did about $32 million in business last year from gift cards.

Sharper Image’s rival, Merrimack, New Hampshire-based Brookstone Inc.,
is capitalizing on the situation. It announced last week that it would
exchange Sharper Image gift cards for 25 percent off any purchase.

“We thought it would be a great way of acquiring new customers,” said Brookstone spokesman Robert Padgett. “We are here for the long haul, and thought it would be good to let them know.”

Ricki Gard, a manager of the Saks Fifth Avenue’s Premier salon in New York, said it
has been able to attract new clients from high-end spa Georgette Klinger, which abruptly closed its locations around the country a week before Christmas, leaving gift card holders in a lurch.

The Saks salon, leased to an outside company, has been offering 30 percent
discounts on first-time services for Georgette Klinger gift card holders, though that was little comfort to many who had thousands of dollars stored on their prepaid cards.

Carol Ann Razza, a Long Beach, New York, resident and Georgette Klinger customer for 18 years, lost several hundred dollars when the salon closed its doors.

“You really feel like you were robbed,” said Razza, who had a prepaid credit stored on the spa’s computer.

Experts say shoppers should never assume that if a retailer files for bankruptcy but remains in business, that their gift cards will be redeemable. Sharper Image, for example, plans to close 90 of its 184 stores soon after selling their inventory.

On the other hand, aggressive store closings can give some consumers the impression that
the company is gone for good, and their gift cards are worthless.

Lonnie Miller thought her $50 gift card from KB Toys Inc. wasn’t valid. The Wayne, New Jersey, resident thought the toy retailer went out of business after watching a few stores in her area shut down. Upon learning that KB toys is in still business, she said she will use her card online.

As for her $25 Fortunoff card — a gift from her aunt — she went out Friday to spend it immediately.

“With the uncertainty today, I didn’t want my aunt’s gift to be only a card,” Miller said.

Copyright 2008 The Associated Press. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

Getting the gift cards out

We will probably talk about this in the monthly e-retailer but for those that read the conversations, here is a head start. If you sold gift cards or gift certificates during the holiday season, now is the time you want to invite customers to redeem them. Logic would state otherwise; you have the customer’s money and the merchandise while the customer has this piece of plastic or paper.  What could be better?

Actually, you do want customers to redeem them as it will make your financial statement look better.  When done properly, you do not have a ’sale’ until the card or certificate is redeemed. What you have is a ‘deferred liability’ - you are holding onto someone else’s money until they decide to use it. I know this sounds weird, but this is how it is done in accounting.

Welcome to advertising issues

In this section of the e-ret@iler conversations, we invite you to ask questions and make suggestions about how to better utilize your advertising dollars. This section is also for promotional ideas. If you have read our books on Power Promoting, this would be the place to tell us about your results as well as how you have tweaked the ideas from the books to work in your business. Here is a “truck load” sale from in front of my grandpa’s store.