Sears Hikes Credit Limit in Bid to Spur Holiday Sales
Sears, Roebuck & Co. said Wednesday that it had extended billions of dollars in additional credit to 10 million Sears charge-card holders in hopes of boosting sales for the holiday season and the coming year.
Sears notified about 40% of its cardholders of their higher credit limits in letters mailed out during the past month, said Philo Holland, a spokesman for the Sears Merchandise Group.
The cardholders were selected for both their credit worthiness and the likelihood that they would use the extra credit, Holland said.
Sears also lengthened the repayment period for those accounts to 36 months from 30 months, thereby reducing minimum monthly payments by at least 20%.
‘An Ongoing Program’
Holland acknowledged that the credit extension “certainly does have an effect in terms of the holiday season.”
But he called it “an ongoing program to provide greater purchasing power to our customers, not only through the Christmas season but throughout the year.”
The company had $13 billion in loans outstanding to its store card holders, or an average of about $515 an account, at the end of 1987. Holland would not disclose the exact amount of additional credit that Sears had made available or the average credit line prior to the extensions.
The company said it was optimistic about the Christmas season, which retail industry analysts are predicting will be moderately strong.
“If you look at the rest of the industry, we’re doing pretty well,” Sears Chairman Edward A. Brennan said in an interview on Tuesday. “Customers seem in a mood to buy.”
Shift in Pricing
The company has attempted to spur holiday sales with heavily advertised sale prices, including steep discounts on home appliances.
Sears, which also is a major player in the financial-services arena, recently announced a major restructuring of its retail business that will include a switch to “everyday low pricing” at all of its 825 stores. It currently uses a policy of regular prices with frequent sales on specific items.
Holland said the extra-credit program was not designed specifically to reduce Sears’ inventory in preparation for the pricing switch, which begins next spring.