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Wednesday, January 12, 2011

K-Mart's New Rewards Program-Cutting Edge, or Rip-Off?

Although mass retailer Kmart once stood as one of the largest companies in America (holding a larger market share than Walmart at one point) it has recently fallen on hard times. Many blame Kmart's reluctance to modernize their stores and product, while its competitors have, for the recent decline. In an effort to separate itself from its two strongest competitors, Kmart has introduced a new rewards program, entitled "Shop Your Way Rewards."

Shop Your Way Rewards is free to join, and rewards Kmart shoppers with "points" every time they make a purchase. These points then translate into Kmart merchandise credit, equivalent to 1% of every purchase made. Along with the 1% return, Shop Your Way Rewards also offers shoppers the chance to win "K-Ching" prizes, which range from a free 20 oz. soda to $100 gift cards.

Although shopper rewards programs are nothing new to retail and convenience stores, Kmart is the first of the Big 3 to introduce one. The benefits of the rewards card can seem appealing, however, there are also pitfalls involving the program. Some members of the rewards program have complained about the returns policy, which can actually force some users into a negative points balance. Merchandise exchanges can also cause problems with the reward points.

The 1% rewards, although unique to Kmart, oftentimes do not account for the price gap between Kmart and other stores. For a purchase of $5 or under, the use of a re-useable shopping bag at Target (and some Walmarts) results in a larger discount. Also, reward cards can increase the desire to make unnecessary purchases, as shoppers feel they are simply increasing their reward points, rather than spending money.

Despite these pitfalls, the Shop Your Way program can be useful for many shoppers. Those who use the pharmacy on a regular basis, which is competitively priced, can quickly earn rewards points. Use of Kmart's layaway program can also be a way to earn many points while taking advantage of another program not offered at Walmart or Target stores.

Verdict: Mixed. If you are a shopper who regularly uses Kmart, then a Shop Your Way card is a good idea. However, on its own, the Shop Your Way program does not provide enough incentive for shoppers to abandon other stores and shop at Kmart full time.

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