Sears tries a new credit plan, and Target tries a new reward

This morning’s Media Post Marketing Daily offered a story about the new 48-month credit program from Sears. The piece also mentions a recent decision by Target to give customers a 5% discount when they use the Target red card to pay for their purchases. Click here to read the story.

Implications: The Sears plan should help us determine (at least for Sears shoppers) whether people have an aversion to credit, or simply an aversion to credit cards. Credit cards are perceived by many as a debt that is too easy to never get paid off… whereas a credit plan with a finite end lets customers see the light at the end of the tunnel. It will be interesting to see whether that is enough to get people to carry retail debt again, something many have been trying to pare down since the onset of the recession.

The 5% discount could be a tie-breaker for Target, where similar gift items are being considered at similar stores across town. But again, it will be interesting to see whether this reward can overcome the “let’s just pay off our credit” attitude that has been the prevailing mentality among many consumers over the past few years.

Worth noting: The Sears plan seems intended to drive appliance sales (with a minimum purchase of $750), and the Target discount applies to any purchase using their red card.

Mike Anderson