Firm Begins Effort to Restore Its Image After Fraud Charges
Trying to stem a deluge of negative publicity surrounding alleged customer rip-offs at its auto repair centers, Sears, Roebuck & Co. is launching a “pro-Sears” advertising campaign this weekend.
However, some industry analysts and consumer advocates say Sears has already lost some consumer confidence, and they suggest that other Sears operations may suffer if the retailer does not make drastic changes in its auto repair business.
“It’s like certain crimes--it’s a hard tarnish to get rid of,” said Larry Lowery, senior vice president for consulting firm Booz, Allen & Hamilton, a Chicago-based consulting firm.
The allegations were made after the state Consumer Affairs Department conducted an 18-month probe into selling practices at 33 Sears auto repair centers across California. The department said undercover agents who brought cars to Sears were charged an average of $223 for unneeded repairs.
“We’ll explain the situation and point out where we disagree with the allegations,” said Greg Rossiter, a Sears spokesman. Rossiter said the ads, which will appear in newspapers and be broadcast throughout the state, “will note that if there were honest mistakes made, we will resolve them.”
He also said the Chicago-based retailer may send letters to many of its 28 million charge card holders to reassure customers of Sears’ “long history of quality service.”
However, some analysts and consumer advocates say the retailer must also take action.
“Unless the advertising campaign deals directly with the problems identified, the campaign will fail,” said Ken McEldowney, director of the San Francisco-based Consumer Action, a consumer education group. “Sears will have to accept some responsibility for what state investigators found, offer refunds to those cheated and make sweeping changes in their auto repair operations.”
McEldowney and other industry observers suggested that damage might extend beyond Sears’ automotive services and beyond California.
“My guess is that it’ll spread,” said Edward A. Weller, an analyst with Montgomery Securities in San Francisco. “Obviously, it’s going to undermine that confidence they spent years building up.”
That customer discomfort was clearly visible at the Sears automotive center in Santa Monica, where mechanics nearly outnumbered customers Friday.
Janos Kiss, a golf-cart mechanic, was one of the few who ventured in for automotive repairs. Clutching an “$11-off clip-and-save brake coupon” that promised a “free brake inspection,” Kiss said the negative publicity had placed “a doubt in my mind.”
“But a company like this--you feel in your heart that it is a large company and they treat you fairly,” Kiss said.
