Retail loyalty programs are designed to keep shoppers coming back to the same stores, making repeat purchases, and remaining loyal. At Sears, the loyalty program, called “Shop Your Way,” has achieved these outcomes; members call it their favorite program, deal-sharing sites cite it as the best program running, and users love the offerings it provides. But for the troubled merchandiser, the real question is, At what price?
Sears already has entered into bankruptcy reorganization proceedings, and it continues to struggle to keep afloat. A key challenge has been its inability to attract shoppers, who instead prefer the low prices of Walmart, the fashionable image of Target, and so on. Thus fewer people shop at Sears. Yet for those that remain, it provides what is widely considered the most generous loyalty rewards among all the national chain retailers.
In particular, shoppers earn a point for every $100 they spend in Sears or its sibling company Kmart. Then they can earn a point for every Uber ride they take. Points rack up when they purchase from partnering companies like Ulta Beauty and Expedia. If they link their credit cards to their Shop Your Way account, consumers can earn points on virtually any purchase, even those made at competitor chains. On top of these various opportunities to earn points, Sears frequently issues “free money,” giving away points to attentive shoppers who click on the offer when it appears in their email inboxes.
Then each point they earn is worth $1 in Sears stores. Considering how quickly the points can accrue, through so many different channels, price-sensitive shoppers often can find ways to walk out of the store with bags full of items, without ever paying any actual money for them. One frequent shopper showed off a receipt, indicating that her purchases should have cost her $150, whereas by applying her points, all she wound up paying was $18.
Beyond direct payments, the loyalty program offers added-value benefits for the most frequent shoppers, which it designates VIP Platinum members. They can receive up to four oil changes per year at a discounted cost, as well as the services of a personal shopper. And then they get an added bump in their point totals during their birthday month.
The high costs of such a program to Sears seemingly would add to its woes, though executives insist that they still find value in it. Participating in the loyalty program means that customers give Sears information about what they purchase and when. When they redeem their points, it also indicates to the retailer that they appreciate the marketing effort and are closely engaged with its stores.
Yet a challenge, for both the retailer and its customers, is the diminishing access to the program benefits, resulting from the reality that it continues to shutter vast numbers of stores. Savvy shoppers do not try to redeem their points on Sears’ online store, because doing so does not count toward the minimum purchase they need to make to receive free shipping. Instead, they want to visit an actual Sears store. But there are only about 200 of those left throughout the country (down from more than 2000 stores just a few years ago). Thus even if they want to stay loyal, some customers have found that it’s impossible. The store simply isn’t there for them to shop.

Discussion Questions:

1. What are Sears’ loyalty program benefits?
2. Is it a good program for Sears? Why or why not?

Source: Suzanne Kapner, The Wall Street Journal, April 2, 2019