No Child Is Too Tough for Sears’ New Guarantee

Trying to rebuild slipping customer loyalty in a highly competitive market, Sears, Roebuck & Co. on Monday instituted a plan to replace children’s clothing that wears out before it is outgrown.

The Chicago-based company announced Monday that its “wear-out warranty” will apply to any Sears clothes that wear out while a child is still in the same apparel size. Sears has long had a policy of replacing broken or defective items. The new guarantee extends that replacement policy to normal wear-and-tear in the case of children’s clothing.

Sears’ newest marketing ploy comes as most of the retail industry is struggling to reverse sluggish sales. The Commerce Department reported last week that retail sales nationwide fell 0.3% in June. Sears’ sales for the month were $3.16 billion, down 3% from June, 1990.

Analysts said Monday that the main impact of the new guarantee will probably be more of image rather than substance.

“It’s not a very high-risk strategy because most kids outgrow their clothes before they wear out,” said retail analyst Sid Doolittle of McMillan-Doolittle in Chicago. But “it’s a good marketing tack to take because it emphasizes the quality and reliability of the product.”

No other major retailer in the United States has such a warranty program, Doolittle added.

The company’s return rate for worn-out or broken products has always been minuscule, confirmed Gary Ramsey, national merchandising manager of the Sears children’s apparel group.

“What we’re giving the customer (with the new guarantee) is the confidence that we’re putting our money where our mouth is,” said Ramsey, who added that, as a Sears manager, he has replaced clothes that were so shredded that they had to have been “torn apart by dogs.”

Ramsey said the new guarantee evolved out of focus-group interviews with parents.

“Our research determined that mothers and shoppers for children’s clothing had four primary concerns,” he said. “They wanted (everyday) value pricing and frequent sales, a (sizable) selection of brands, and they were concerned that kids both wear out and grow out of their clothes too quickly.”

Armed with that research and Chairman Edward A. Brennan’s mandate to restore Sears’ once-vaunted reputation for customer service, Ramsey said his group came up with a four-point program that involves:

* Ensuring that prices in Sears’ Kids & More departments are in line with competitors’, and holding more frequent sales.

* Increasing the number of name brands in its children’s sections. (The company, which focused until two years ago largely on Sears lines, now offers 100 children’s brand names at its larger stores, Ramsey said).

* Introducing the “wear-out warranty.”

* Introducing a program to take some of the financial sting out of outfitting youngsters who quickly outgrow their clothes. Sears will offer a 10% discount on a future purchase to parents who buy $50 or more in children’s clothes and a 15% discount on $100 or more in purchases.

N. Richard Nelson Jr., a retail analyst at Duff & Phelps in Chicago, said the “wear-out” guarantee is a “marketing tool” that “can only help” in Sears’ effort to restore profitability.

Two other good moves recently, he said, were increasing the number of brand names and the number of specialty departments, or boutiques, in Sears stores.

Retailing scholars say Sears originated the money-back guarantee 103 years ago, only two years after the company was founded. The company offered a money-back guarantee on a watch in 1886; delighted customers began swearing by the firm.

In 1927, it extended the guarantee to all its product lines, and customers that had once been merely faithful became unshakable.

But in the past two decades, big discount retailers such as K mart and Wal-Mart began undermining Sears with better prices.

Sears shifted marketing focus several times to try to bounce back--to no avail. One result of the marketing changes was to confuse once-loyal customers, further eroding the company’s customer base.