Many retailers have been implementing cash rebate programs designed to entice homeowners. At first, Sears’ ‘Cash for Appliances’ helped the company to pull in record level profits. As the real estate market faltered, homeowners were becoming more and more desperate for cash. The biggest problem with appliance cash rebate programs is that consumers are fast to learn that they can make more money with private sales. On average, Sears only paid consumers approximately 10% to 35% of the retail price for their appliances. It didn’t matter whether they were trading in a 10 year old toaster or a recently acquired stove; the bottom line is that made more money by reselling these items as refurbished goods.
As a result, Sears’ first quarter results were disappointing. Consumers are doing more online shopping now than they have in years past, and Sears has been slow to catch up. Even home improvement stores like Lowe’s have been unable to maintain their appliance sales.
Sears Chairman Edward Lampert released a public statement after the release of the company’s first quarter earnings and stated that he was to blame for performance issues. Sears will need to pay more attention to what types of home appliances are in high demand and figure out a way to make them more affordable for the average consumer. The ‘Cash for Appliances’ rebate program is still in effect, but consumers just aren’t responding as expected. The company may shift their attention to apparel, baby products and kitchen appliances in order to drive up sales.
