Sears' Online Sales Jump 20% in Q1

Sears has found continued strong online sales performance with and growing 20% over the prior year in Q1. The retailer has achieved these results through its extended online inventory; the rollout of its Shop Your Way membership program, mobile applications and buy online pickup in-store initiatives; and streamlined store processes. Supply chain enhancements also allow the retailer to ship in-demand products to approximately 99% of the country in two days or less.
Fifteen million items have been added to the retailer's online marketplace, increasing the assortment to more than 75 million items currently. "We're bringing the online capabilities that we've built into our stores, and bringing our store capabilities to our online business to help with inventory management and fulfillment," said Edward Lampert, CEO of Sears Holdings on a recent call with analysts.
The Buy Online, Pickup In-Store initiative leverages the power of Sears' national store footprint providing members the convenience of additional choices in when and how they want to purchase products. The Return in 5, Exchange in 5 program also provides a streamlined return and exchange process – in just five minutes – regardless of whether the product was purchased online or in-store.
The retailer has also launched a Member Assist application that empowers associates to seamlessly interact and offer advice to members no matter where they are, responding to their needs with information on demand using various mobile devices such as the iPad, iTouch and Android platforms. The Shopper Recap feature allows Sears to send members an e-mail with the information on the specific items they looked at in-store, providing them with information they need to make an informed decision even after they leave the store. These functions are supported by the retailer's investments in technology platforms, as well as wireless networks and devices in stores.
Sears has previously discussed its business model evolution as it transforms to a member-centric platform. This new model leverages stores, brand, online channels, social media assets, mobile applications, technology investments and is surrounded by the Shop Your Way membership program. Sixty percent of Kmart and Sears sales in 2012 were associated with Shop Your Way members and annual sales per member have increased by more than 8% with members spending 18% more than nonmembers.
The Shop Your Way member value program offers targeted, personalized rewards through in-store and online offers. Sears has added points to member accounts as a targeted promotional tool, and is driving excitement through contests and sweepstakes. "We want more than an occasional transactional relationship with our members," said Lampert. "We want to be a trusted advisor and have the capability to meet many of our members' needs in the most convenient manner for them."
In addition, Sears is taking steps to improve operations and return to profitability. Expense management has been an area of focus from a labor, marketing and cost of goods perspective. The retailer is taking actions to reduce fixed expenses while ensuring that the member experience is enhanced. Last year, expenses were reduced by approximately $600 million, and the company intends to reduce expenses by an additional $200 million this year. "We're changing our marketing practices to increase the emphasis on providing timely, targeted offers to our members," said Lampert. "In this process, we are reducing our reliance on fixed, long lead time traditional marketing vehicles in favor of variable real-time marketing vehicles."
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