SEARS TO REVAMP STORES, STEP UP MARKETING EFFORTS

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SAN FRANCISCO (AdAge.com) -- Sears, Roebuck and Co., Hoffman Estates, Ill., said it has a repositioning plan to double profits by 2004 and intends to triumph in the holiday retail wars by bringing in customers to its stores on key Saturday shopping days in December.

David Selby, senior vice president of marketing, told Wall Street analysts Wednesday the intense competition in the retail sector will escalate this holiday season, with continued price wars and pressure to offer deeper discounts and broader coupon efforts, a spokeswoman said.

Sears, however, is aiming to center its promotional ammunition on early-morning Saturday events throughout the store, Mr. Selby said.

Mr. Selby's comments came during a lengthly analysts' session during which Sears' Chairman-CEO Alan J. Lacy announced the revamping of one of the nation's oldest department store chains.

Under the plan, Sears will morph into a new breed of retailer, one which is neither neither department store nor discounter. Changes will range from the installation of discount-store-type central checkout areas to a shift in merchandise with fewer brands and, in the apparel arena, having only one Sears private label casual brand across its men's, women's and children's clothing lines. Sears also will move to feature electronics and appliances in smaller stores.

As part of the plan, Sears also announced extensive layoffs, cutting 4,900 employess, or 22% of its salaried workforce.

Sears this fall launched a new advertising campaign tagged "Sears, Where else?" It was aimed at building the brand as well as showing off, through light humor, the variety of merchandise available at its stores. Those branding efforts will continue, Mr. Lacy indicated. But the retiler said one of its marketing goals was to focus on the 36 million households representing the retailer's best customers. Of those, 5.4 million are responsible for 33% of revenue.

In other marketing changes, Mr. Selby said he will back more direct-mail and e-mail messages, and will increase efforts aimed at the multicultural market. One effort will include a Sears Spanish-language preprint.

Overall, however, Sears will make significant changes in marketing spending, Mr. Selby said. Without giving the specific dollar amount involved, Mr. Selby said brand advertising will be up 47%, with relationship marketing up 15% and multicultural marketing up 19%. Promotional broadcast advertising will increase 3%, while spending on preprints will be down 8%.

In recent years, Sears' annual advertising spending has remained at about $1.5 billion. The retailer's position among the top advertisers in the nation, however, has slipped from No. 6 in 1998 to No. 12 in 2000, according to Advertising Age's Leading National Advertisers report.

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