Customer loyalty strategies determine the department store champion

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Sears loyalty: Earn points for each $1 spent; Walmart credit card: Cash advances at time of purchase
Sears loyalty: Earn points for each $1 spent; Walmart credit card: Cash advances at time of purchase

Sears Holdings Corp.
2,248 stores in the U.S.
2010 revenue totaled $43.3 billion

Wal-Mart Stores
647 stores in the U.S.
2012 net sales totaled $258.2 billion

In addition to long-standing tenure in the retail space, Wal-Mart Stores and Sears Holdings Corp. apply a similar approach to direct marketing, including direct mail, email, social media outreach, loyalty rewards and extensive e-commerce platforms.

Unfortunately, the comparison doesn't end there. Both retailers have recently suffered setbacks. Sears Holdings reported a decline in revenue of 1.6% to $43.3 billion for fiscal year 2010, and Wal-Mart Stores reported sales at discount stores and U.S. same-store sales declined in 2009 and 2010.

As a result of these failures, Wal-Mart's e-commerce chief resigned in August and David Friedman, Sears' SVP and president of marketing, will resign his post in January.

As we reported in Direct Marketing News last month (“Marketers add location-based strategies to digital arsenal”), both companies have made a concerted effort to beef up their digital elements, including social media and e-commerce communications, particularly for the signature Walmart and Sears brands (Wal-Mart Stores owns and operates four subsidiaries, including Sam's Club, and Sears Holdings owns and operates five subsidiaries, including Kmart).

Whether or not each brand's digital enhancements satisfy consumers will likely determine which retailer will have a bounce-back 2012. With nine product offers available and more than 20 clickable tabs, Walmart brand's e-commerce site is cluttered. Despite the noise, the retailer does an excellent job calling out its email newsletter registration, local ads and daily deals, and it integrates social media onto product landing pages as well as the homepage.

“Walmart's [e-commerce strategy] is stack-em-high-and-let-em-fly,” says Laura Saati, VP of strategic marketing services at marketing agency 89 Degrees. “I liked the opportunity Walmart gave me to ‘like' the product as I was placing it in my cart. I loved that they had a call-out to sign up for email when viewing the Black Friday circular.”

Kara Trivunovic, global director of strategy for the Agency Services division of StrongMail, a social media and email marketing technology services provider, says both sites are well-organized and offer similar left-rail and upper-navigation bar layouts. However, she says she found Walmart's clutter to be distracting.

“The Sears site felt more organized and a little less busy,” she says.

Both Walmart and Sears also missed an opportunity to connect with consumers through email, according to Saati. “I only received a welcome email from Sears after I officially registered an account on their site,” she said.

Whereas Sears only sent Saati an email after she created an account, Walmart only did so after she registered for email alerts.

“I signed up and the welcome email arrived in my inbox more than 24 hours after,” she says.

“Delaying like that leaves a lot of money on the table as an immediate welcome email always outperforms a delayed one by at least a factor of three to four times.”

Trivunovic wasn't troubled by the frequency of the emails she received from both brands but rather with how each brand optimized its content. Walmart provides a series of offers above the fold, as well as a link to a daily deal, which Trivunovic says should be included in the email, instead of forcing consumers back to a landing page.

She praises Sears for its two-headed email program that allows consumers to receive a standard message as well as a separate deal of the day. However, she thinks the standard messaging is unsuccessful because content is not optimized above the fold.

Both brands are also leveraging social media. Walmart launched 3,500 store-specific Facebook pages in October that enable consumers to receive offers and updates from local retail locations. In addition to these offers, Walmart goes out of its way to interact with and engage social customers.

“I liked that Walmart was trying to use their Facebook page to connect the channels,” says Saati. “There was some prominence given to touting their new iPhone app that lets you scan quick response codes and use your voice to create shopping lists.” She also praises the retailer for offering a “feedback” tab on the Facebook page for users to ask questions and share ideas.

Saati gives Sears credit for making direct offers via its eGift functionality on Facebook, but she ultimately gives Walmart the edge because of the sheer volume of fans it interacts with; their 10 million fans outnumber Sears's fans 10-to-one.

When it comes to print marketing, it comes as no surprise that Sears holds the edge. The retailer was originally founded as Sears, Roebuck and Co., a mail-order catalog company in 1888. To date, Sears has never truly abandoned its direct mail roots.

On the company's e-commerce page, a tab is dedicated to the Sears brand catalog, as well as each catalog underneath the Sears family umbrella, all of which can be ordered or viewed online. Consumers can also click on local weekly ads to browse the current circular for their nearest retail location.

“The catalog was easy to navigate,” Trivunovic says. “You can sort by page, by category, and you can add to your shopping list while staying engaged with the communication.”

Although Walmart's direct mail offerings don't match up to Sears, the retailer offers robust print options that can also be viewed on its e-commerce site. The company's Black Friday catalog features a store map that highlights special items. Like Sears, Walmart also offers a weekly circular both in print and online that enables consumers to browse their nearest retail location's offerings.

Walmart fails dramatically when it comes to loyalty rewards. Unlike Sears, which features the dynamic “Shop Your Way Rewards” program, Walmart offers only the Walmart credit card. The standard card offers nice bonuses, such as 10-cent savings per gallon at all participating Walmart gas stations and cash advances at time of purchase.

The retailer also offers a Walmart Discover card to cardholders that are eligible, but additional rewards for Discover cardholders only amount to 1% cash back on all purchases.

Sears, however, provides loyalty program members with points for every dollar spent. Shop Your Way Rewards members also have access to special deals unavailable to the general public, and special offers, such as holiday promotion, allow members to earn double rewards for dollars spent.

“Loyalty programs are tough because everybody has them,” says Trivunovic. “But there's a die-hard community of Walmart fans, and not having a program is a missed opportunity for them.”

Brand Champion

In terms of classic direct, Walmart is able to hold its own against Sears, arguably the inventor of the catalog business. The brands are neck-and-neck when it comes to email marketing strategy, with both exhibiting a number of hits and misses. Walmart far surpasses Sears in terms of its dedication to social media outreach. However, without a strong loyalty program in place to reward its best customers, Walmart's direct marketing initiatives pale in comparison to Sears.

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