Reallocating $1.5B: Sears shifts from promotions

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Sears, Roebuck & Co. is realigning its $1.5 billion in marketing expenditures to rely less on promotional events.

There are a "number of changes dramatically taking place in our advertising," Sears CEO Alan Lacey told analysts in a conference call last week, some of which were seen in spring TV spots for the retail giant's Covington women's line. Other changes in execution will be seen in work next month for appliances and for the entire Sears store by the end of the year, he said.

But Sears' shift will go beyond creative. "We have over the last couple of years walked away from an enormous number of unprofitable promotional events and marketing media to basically get ourselves rebased to a marketing spend that basically did generate profitable revenue," he said. "As we go through the rest of this year we think that we've got the right insights into now beginning to invest more significantly in our marketing and that it will drive profitable revenue growth."

abandoning `tonnage'

A Sears spokesman said details of the changes Mr. Lacy alluded to "are not available or public at this time." However, an executive familiar with the situation said Janine Bousquette, Sears' exec VP-chief customer and marketing officer, earlier this month held a meeting of about 100 executives involved in the retailer's massive marketing operation. At the meeting, she discussed significantly reducing the numbers of sales and other promotional events on the Sears calendar, replacing them with more seasonally driven promotions, said one participant. "They're starting to walk away from the tonnage," the participant said.

The meeting also was intended to place the marketing focus on the lifestyle of the Sears' customer to create an emotional connection. For example, spots for a Craftsman saw will portray it not simply as a mere appliance but as a means to build decks and dollhouses, the participant said.

Already, Ms. Bousquette has begun to apply a consistency in Sears' marketing-for example, taking a 1970s style flower design and using it to symbolize spring in all marketing executions, from the Sears Web site to in-store ads. Important changes also have been made to the 53 million circulars Sears distributes each week, giving it a cleaner look and breaking down barriers among the department store's fiefdoms-showing, for example, dresses and shoes together.

Ms. Bousquette has been working with Sears' agencies, WPP Group's Young & Rubicam and Ogilvy & Mather, Chicago, on the new work. Ogilvy referred calls to Sears; Y&R could not be reached for comment.

In another change, key executive Gilbert R. Davila, VP-multicultural management, left the company. Sears confirmed the departure but would not comment on information that he plans to join Walt Disney Co. in a similar post.

Under Mr. Davila, who joined Sears in 1995, the retailer became the sixth-largest U.S. Hispanic marketer, spending $42 million last year. Mr. Davila, who recently became chairman of the Multicultural Marketing Committee of the Association of National Advertisers, turned a catalog for Hispanics into a slick six-times-a-year magazine titled Nuestra Gente, the largest Spanish-language magazine in the U.S., with a circulation of more than 860,000. He also pioneered other promotions, such as the company's Fiesta Mobile.

Mr. Lacy's remarks came as the retail giant, battered by 19 months of declining sales at stores open for more than a year, has put its $30 billion credit card portfolio up for sale to concentrate on retail.

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