Sears Holding Company announced this week that consumers who buy appliances on credit using a Sears Credit Card will be able to keep the appliances and have some or all of the debt forgiven in the event they lose their jobs. (Source: Bloomberg, June 29, 2009)
Customers who spend at least $399 on appliances between July 6 and August 1 will receive a guarantee — one twelfth of the purchase price will be credited to their accounts for each month they’re out of work. Consumers who are jobless for more than one year will have the entire debt forgiven according to company spokesman, Larry Costello.
Customers who lose their jobs 60 days to one year after the purchase date will qualify for the offer according to the company.
Sears and other retailers are feeling the effects of new consumer behavior. The national savings rate is up and the consumer spending dependent US economy is feeling it.
While the US Government’s massive spending is designed to spur consumer spending, debt laden consumers are reluctant to part with their money; instead they’re choosing to save and retire debt.
Excessive debt is by its very nature deflationary and until consumers work through this excess debt, I believe offers made by retailers like Sears will be lukewarm successes at best.
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