Sears, Kmart Roll Out Christmas Clubs to Drum Up Holiday Spending

Having gotten good results last year by marketing layaway options in its Sears and Kmart brands, Sears Holdings is adding a twist to another idea from an older retail time: the Christmas Club saving account.

Starting today and through Nov. 14, both Sears and Kmart users can open a Sears Christmas Club account and begin saving for their holiday shopping at those retailers. The cards can be applied for and activated either in-store or by visiting www.sears.com/christmasclub or kmart.com/christmasclub.

Once the account is activated with a minimum $5 deposit, a customer can add value either by making in-store deposits or online at the Sears or Kmart Web sites.

There’s no set deposit plan for club membership. But the two brands are encouraging active participation by offering to reward users with an additional contribution to their funds: 3% of whatever their Christmas Club total is on Nov. 14, up to a maximum contribution of $100.

Consumers will not be able to get cash or credit refunds on the cards except where required by law. But the savings accrued in the accounts will not expire and thus can be spent after the holiday shopping season.

The 3% premium from Sears makes the brand’s Christmas card comparable to the interest-bearing Christmas club accounts once offered primarily by banks. However unlike bank-related holiday clubs, money saved on the Sears card can only be spent at the online or brick and mortar stores operated by Sears Holdings: Sears, Kmart, Lands End, and the Sears-owned online shopping/ in-store pickup site.

The rollout of a Christmas savings option is at least in part a response to credit-squeezed customers who are trying to pay for more purchases in cash, to cut their charge-card bills. But it may also help drive more business to Sears in a holiday season that’s looking increasingly problematic for most retailers.

With the crucial back-to-school season now underway but showing signs of softness in retailers around the category, Sears stores are preparing for Christmas. Twenty locations are adding toy departments to counter traffic pressures from both big-box retailers such as Walmart and pure-play toy retailers like Toys ‘R’ Us.

Sears Holdings posted large drops in both sales and profits during second-quarter 2009 with U.S. same-store sales down 8.6% year over year. Much of the decline was attributed to falloff in housing related categories such as appliance sales, although apparel sales were also down.