Not long ago, I found myself in Sears (NASDAQ: SHLD) buying a video game. While at the point of sale -- which was a nightmare, not because of anything related to the checkout process, but because a jerk cut in front of me and, after the completion of his transaction, proceeded to deluge the poor associate at the register with a bunch of random, techno nerd-talk that said associate clearly couldn't care any less about (but I digress) -- I noticed something pertaining to a Christmas Club card. Sounded interesting, but I didn't pay much attention to the selling material.
Well, last night I was checking out some articles at Brandweek.com, and lo and behold, I came across this one discussing the holiday card. You know how Christmas Clubs work at banks, correct? Same principle applies here. In a simple nutshell, you get the plastic, you store funds on it, and then you can access those funds later on in the season to acquire presents. It's basically like a gift card that you use for budgeting purposes. Not only is Sears involved in this, but so is Kmart. And there's a promotion going on that's mentioned in the article where you can earn a nominal amount of bonus money on it. I don't know the details; I would suggest checking with Sears/Kmart for further information.
You know, I have to give Sears credit for this. The retailer has its problems, and I'm not saying you should buy the stock because of a Christmas initiative. I'm just pointing out that this is the kind of innovative thinking that management should focus on.
I am a bit biased on the issue, because I have used gift cards as budgeting tools myself. I think many consumers have. The great thing about them is you are able to sock money away that is essentially irretrievable except for the purpose for which it was intended.
The marketing value of a Christmas money card seems high to me, if it is sold correctly. It offers a point of differentiation for the company, and it can capture new information about shopping habits. Of course, the downside is the ease of entry. Any competitor, say a Wal-Mart (NYSE: WMT) or a Target (NYSE: TGT), can replicate this strategy. Also, I'm sure not a few consumers will be turned off by the concept of being limited to the Sears portfolio in terms of where the saved money can be spent. And then there's just the concept itself. How many people would like to save cash in this fashion?
Like I say, this doesn't make Sears a buy. Quite frankly, I'm not sure what would (and if you read about the latest quarterly report, you'll start to understand why I'm bearish). Still, I see the concept as a useful attempt at grabbing the attention of the consumer in a highly competitive retail environment, one that is still suffering from the effects of a horrible downturn.
Disclosure: I don't own any company mentioned; positions can change without notice.
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Reader Comments (Page 1 of 1)
9-08-2009 @ 10:14PM
RandomNess said...
I unfortunately currently work as a Kmart checkout associate. And heres some more info about these cards, they're more or less just gift cards with the word "Christmas" on them. It only takes $5 to activate it and from then on you can put more money on it up until christmas. It will also put an extra 3% on top of however much money you have on your card up until Nov. 14 if I remember correctly with a max amount of $100. So if you have $1,000.00 on your Christmas card you'll receive an extra $30 on top of it with the 3%. You don't have to wait until Christmas to use them, so the same day you activate it with $5 you can use it.