Sears slashes prices amid sales slowdown

December 08, 1990|By New York Times News Service

Two weeks into a disappointing holiday season and two years after introducing a discount pricing policy, Sears, Roebuck & Co. is cutting prices again, starting its after-Christmas clearance sale now.

Reacting to sales chilled by a possible recession and tensions in the Middle East, the nation's largest retailer is slashing prices on apparel and durable goods such as washers and offering zero percent financing on some product lines including home electronics and furniture.

Sears' latest sales strategy follows by nearly two years its introduction of a brand-name "everyday low price" strategy to compete with large discounters such as K mart and Wal-Mart. That strategy implied there would be no sales.

Some analysts have said the move confused consumers and did nothing to address a more fundamental Sears problem, that it is a high-cost retailer that tries to sell too many product lines to too many kinds of customers.

"We are moving as quickly as we can to deal with conditions right now," Perry D. Chlan, a Sears spokesman, said of the pre-Christmas sale.

Some marketing consultants expressed doubts about the move, saying it would further cloud Sears' image and would not help in its struggle to regain customers.

"They are undermining their image for quality," said John Morton, senior vice president of Total Research Corp., a market research company that analyzes consumer perceptions of brand names.

"Oh boy, it tends to communicate that they're in a lot of trouble," said Jack Trout, president of Trout & Ries, marketing consultants in Greenwich, Conn.

Securities analysts, quickly revising their earnings estimates for Sears, project that 1990 profits might be off by as much as two-thirds from last year's $1.45 billion.

Sears said earlier this week that its sales dropped 1.6 percent in the four weeks that ended Dec. 1. Other large retailers such as Carter Hawley Hale, J.C. Penney and May Department Stores also reported sales declines in November.

At all of its 850 stores, Sears is moving up its traditional after-Christmas sale on apparel to the period between now and Christmas Eve, reducing prices 20 percent to 40 percent.

On certain days, Sears will cut the prices on brand-name merchandise such as washers and driers, vacuum cleaners and microwave ovens reduce by $5 to $500. the company will offer zero percent financing home electronics, furniture and jewelry Dec. 11-12.

To encourage early shopping, Sears will begin today to offer 10 percent discount coupons to shoppers who buy between 8 a.m. and 10 a.m., as well as other "bonus bucks" coupons at other times.

The new strategy will be heavily promoted in print and broadcast media with the slogan "After-Christmas prices just in time for Christmas."

When Sears initiated discount pricing two years ago, it also switched from emphasizing its private-label brands such as Craftsman hardware and Kenmore appliances to a "Brand Central" theme with national brand-name merchandise.

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