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Sears Softens Low-Price Policy, Again Touts Sales : Retailing: The strategy has not been a big success with shoppers, who seem to feel that the everyday prices were too high.

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From Reuters

Sears, Roebuck & Co. is retreating from its 10-month-old strategy of offering the same low prices everyday and starting to rely more heavily on promotions in an effort to boost mediocre sales, according to retailing experts.

The nation’s largest retailer, which in the past generated much of its business through promotions, is not abandoning altogether the low-pricing formula it unveiled last March, but is modifying its approach, industry analysts said.

“ ‘Everyday low pricing’ crippled their flexibility. They’ll make some adjustments to get competitive again,” said Frederick Marx, a retailing executive turned consultant.

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Analysts said the most obvious evidence of Sears’ shift is the reintroduction of highly publicized sales, although the retailer says they do not represent a change in strategy.

When it unveiled its everyday low-pricing approach with much fanfare, Sears said it would run far fewer sales promotions than in the past. The company set new prices that were between its old “regular” and “sale” prices and urged shoppers to “think of it as a sale that never ends” in an unprecedented ad campaign heralding the change.

A Sears spokeswoman said claims that Sears is backing away from the everyday low-pricing approach are “absolutely untrue. We’re quite satisfied” with the results, she said.

In December, Sears sales rose 3.6% over last year after adjusting for discontinued merchandise lines, while many competitors had gains of 10% or more.

“To summarize our everyday low-pricing position, we are committed to the concept,” Michael Bozic, chairman of Sears merchandise group, told Wall Street analysts in November.

Retailing experts said competitors such as Wal-Mart Stores Inc. have undercut Sears’ prices and drawn away even more of its eroding customer base, forcing the 103-year-old retailer to once again resort to promotions to generate business.

For example, this week Sears ran two eight-page sale circulars in Sunday newspapers, one touting a national appliance sale “so big it only happens twice a year.”

Despite Sears’ problems, analysts say the company should not be dismissed as a retailing force. It has the financial resources to stick with its strategy, as well as excellent store locations, a powerful credit card operation and promising plans for new store formats, they said.

“Sears has lost some ground, but they’re still highly thought of,” said Marx.

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