Photo: Sears Holdings
Will Craftsman be better off without Sears?
Sears Holdings’ stock price got a lift yesterday on reports the retailer is moving closer to receiving bids on the company’s Craftsman tool brand that could reach as high as $2 billion.
Earlier this year, Sears Holdings announced it would consider selling its three big brands — Craftsman, DieHard and Kenmore. The consensus of a RetailWire discussion at the time was that such a move would constitute a white flag moment for Sears Holdings, which has looked for ways to raise money as Kmart and Sears continue to falter. But, one might ask, from the perspective of the Craftsman brand, could a sale represent a new lease on life?
Among those mentioned by Bloomberg as potential bidders are Apex Tool Group and Black & Decker from the U.S. as well as Husqvarna AB (Sweden) and Techtronic Industries (Hong Kong). Proposals, which are due by the end of the month, will not constitute a formal agreement. That will need to be worked out between Sears Holdings and the eventual buyer.
At 28.5 percent market share, Craftsman remains the leader in the hand tools and accessories category, according to Stevenson TraQline, via a Bloomberg report in May. The brand’s portable power tools have a nine percent share. Both lines have seen sales decline in recent years.
Sears Holdings is exploring the sale of Craftsman at a time when Edward Lampert, the company’s chairman and chief executive, has lashed out at reports that Kmart is nearing its end. The chain, which will close some 130 stores this year, was identified by the Moody’s ratings agency as a contributing factor in its downgrade of Sears Holdings last month. Moody’s cited “the uncertainty of the viability of the Kmart franchise in particular given its meaningful market share erosion” in its press release on the downgrade.
Posting on a company blog, Mr. Lampert called the Kmart reporting “irresponsible” and “likely intended to do harm to our company to the benefit of those who seek to gain advantage from posting these inaccurate reports.”
- Sears’ Craftsman Said to Get Interest From Black & Decker – Bloomberg
- Committed to our Members, Kmart and our Transformation – Sears Holdings
- Sears CEO Says No Plans to Close Kmart – Dow Jones Business News
- Moody’s downgrades Sears’ Speculative Grade Liquidity rating to SGL-3 – Moody’s Investor Service
- Should Sears sell off its Craftsman, DieHard and Kenmore brands? – RetailWire
- Sears to explore options for Kenmore, Craftsman, DieHard – Bloomberg/San Antonio Express-News
Discussion Questions
DISCUSSION QUESTIONS: Do you think the Craftsman brand would fare better under new ownership? Do you think new owners would continue to concentrate their efforts on growing the brand through Sears or go another route?
Poll
BrainTrust
Dick Seesel
Principal, Retailing In Focus LLC
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Absolutely. Craftsman is being hindered by the Sears brand, which has been rupturing for at least a decade. Sears used to stand for tools and appliances. But in the rush to be everything to everybody, Sears became for no one. If there are new owners, they should definitely look for other outlets and re-institute the once valuable tool brand.
Selling its three key brands to the highest bidder might give Sears Holdings a short-term cash infusion. But it’s the beginning of the end if Craftsman, Kenmore and DieHard are available anywhere. If you can buy a full array of Craftsman tools at your local DIY superstore (not to mention on Amazon), the most compelling reason to visit Sears is gone.
This may be the biggest rhetorical question of all time — at least in retail time. Absolutely it would. I just hope that if another tool company buys Crafstman they don’t melt it down for parts.
I think Craftsman would thrive under new ownership. New owners could properly support the brand through distribution, advertising and in-store efforts. New owners would not be encumbered by the Sears brand or its erratic owner. Selling Craftsman, Kenmore and DieHard could be one of Lampert’s two remaining big paydays (the other being selling Sears’s real estate holdings). It’s sad to see a once great company die, but Lampert’s actions have left him with little wiggle room to revive his stores.
White flag moment, indeed. Everyone knows that Sears is in a death spiral, despite Mr. Lampert’s comments to the contrary. And while selling off the best-known brands would provide needed short-term cash, Sears would need to come up with other compelling reasons for customers to visit, beyond a middling apparel assortment. If you were running Sears, what would you do to make the store experience more compelling?
Interesting question, Cathy. I think of Kohl’s, a middle-tier Midwestern retailer making a name for itself in Milwaukee. Along with most department stores, they’ve faced some difficulty lately. Still, the Kohl’s Cares campaign recently (quite publicly) donated $1.5 million to the Milwaukee Art Museum. They sponsor an interactive learning room within the museum itself, solidifying the brand as Wisconsin’s middle-tier retailer.
Sears and Kmart need to create a brand identity, CSR, and start giving where we can see it.
Since Sears’s future looks shaky at best, the sale seems like a good opportunity to cash in on some of the brand’s value. Go for it.
It’s been sad to watch the downward spiral of one of the most powerful retail brands of the 20th century. Recall, Sears was the largest retailer in the U.S. until 1989. The notion of selling off Craftsman, still a truly relevant brand and one of Sears’s last crown jewels, is just another sad turn for this one-time retail juggernaut. I had hoped that Sears could find its place in the 21st century retail landscape (and I still think it could), but selling off its key brands like Craftsman will not be helpful.
I don’t think Sears and Craftsman have much choice. But the Craftsman brand is already suffering lack of focus from being put out in weak retail chains.
A substantial part of the strength of Craftsman was their dominance in the Sears store — which communicated vitality and excitement. A small selection of Craftsman brand tools at my local Ace takes all that vitality and makes it look, well, desperate.
The Craftsman brand will trickle on for decades — brand strength dies slowly. But Craftsman has lost its strength and it’s hard to envision circumstance where where any of these suitors can dramatically change that. Sears and Craftsman helped each other. But like most great duos, neither can have the strength apart.
Some of the Craftsman quality has dropped as they slowed down at Sears and started using Ace and others as channels. If I were Craftsman I would cancel on alternate channels, bring the shop home and create a break-off plan to re-launch Craftsman and DieHard on a new, non-Sears website to cover Christmas. After Christmas I would pull out of the Sears stores totally. I would also pull together the Craftsman update trucks that visit cities and let you trade your old Craftsman tools for new models. This gets the dedicated Craftsman shopper re-dedicated and pulls the Millennial children of Boomer Craftsman-addicted dads into the loop.
Lots of planning and SHOCK-driven execution can lift Craftsman beyond the old DOA Sears image it was stuck with.
Auctioning off the Craftsman brand is another death knell for Sears. On the upside, this can be a great commercial adrenaline rush for the Craftsman brand. The Craftsman brand may now have the opportunity to flourish. I for one would be delighted to further support my locally-owned hardware store if they carried Craftsman tools.
In a word? Yes! And, the new owners will go their own way.
That’s my 2 cents.
Ask Ace. My local store had all its Craftsman goods on deep discount. Craftsman’s strength, like Kenmore/DieHard, was the benefit bundle of buying from Sears. That competitive advantage was lost when The Home Depot and Lowe’s became national brands. DIYers know tools now come from the same factories scattered around the globe. When Sears ditched the “lifetime guarantee” the last compelling benefit was lost. Of course, the garage sales of worn out tools had a lot to do with that.
To entry-level or light DIYers, Craftsman might hold positive equity. Its place will be in Harbor Freight.
Retail ain’t for sissies!
Black and Decker? While I’m sure they would continue the name — for a while at least — wouldn’t that essentially be the end of the brand (at least in the sense of having any kind of independence)?
Honestly, though, I’m not sure how much future it has, regardless. Certainly Sears’s ineptitude hasn’t helped, but Craftsmen’s erstwhile dominance harkens back to a simpler time when U.S. consumers were largely restricted to domestic brands — much as car buyers were — and I don’t see that period returning (November’s result’s notwithstanding).
Craftsman as a tool brand has great potential to be sold by other retailers. It’s a solid, mid-priced tool brand and has brand value that can be leveraged better than it is today. Good development (if true) for Craftsman.