Brands Unite In Sears/Kmart Deal
By George Anderson
When shareholders of Sears, Roebuck and Co. vote tomorrow to approve the retailer’s merger with Kmart and form Sears Holdings Corp., they will be betting that the combined appeal
of brands, such as Martha Stewart and Craftsman, are strong enough to create one successful retailer where two unsuccessful ones previously existed.
According to a report in the Chicago Sun-Times, Sears Holdings will look to build on the established image of exclusive brands, such as Ms. Stewart’s, Craftsman, Kenmore,
DieHard, Joe Boxer and Jaclyn Smith, with proprietary labels, such as Lucy Pereda and Thalia Sodi, targeted at Latinos and African Americans.
To improve upon the less-than-spectacular performance of the past, industry experts believe Sears Holdings will need to significantly improve its in-store merchandising performance
and create a more compelling media campaign to attract shoppers.
Customer service, particularly in hard lines, is also essential to keep customers from moving to brand alternatives sold elsewhere.
According to the Sun-Times, many believe Sears’ top merchandising exec, Luis Padilla, will be given the task of putting the polish on Sears Holdings’ stores and public
image campaign. Mr. Padilla came to Sears via Marshall Field’s and, before that, Target.
Moderator’s Comment: How strong are the exclusive brands of Sears and Kmart? Do they make sense under one roof? Are the brands’ equity strong enough
that, with competent merchandising and promotion, Sears Holdings can be successful? –
George Anderson – Moderator
Each of these brands is sufficiently strong enough to advertise by itself (as they have for years – what’s the big deal?) and tag the spots with “Available exclusively at Sears and Kmart.” No sweat. Simultaneously, Sears and Kmart will conduct separate “omnibus” campaigns for their stores to meet whatever each has identified as their primary, unique marketing communication objectives. This is not rocket surgery.
I find this cluster of powerful store brands an extremely exciting promotional opportunity. Yes, of course they can co-exist successfully. The trick will be to manage them equally well on parallel yet complimentary tracks, just as Hendricks Motorsports races six successful NASCAR cars at the same time. The challenge for the holding company’s marketing management will be to view tempting synergistic promotion ideas with skepticism. The allure of cramming a bunch of powerhouse brands into a single campaign – say, around Christmas time – may be irresistible but should be approached with caution. Customers are easily confused.
Simply put, each brand and each store logo should issue its own unique invitation to customers. Different shoppers will visit for different reasons, but now Sears Holdings can give them more reasons than ever before.
In theory, it would make sense. However, since Kmart has been one of the biggest retail failures over the past 20 years, and Sears not far behind, I doubt they have the wherewithal to keep operating retail stores for much longer. They could start by opening up one of these combination stores so the consumers could actually see one. They have been talking for several months about opening these stores. OK, so stop talking and actually open one. At this rate, Wal-Mart will probably open another 100 Supercenters before Kmart/Sears cracks open a can of paint for a remodel.
P.S. to my comment above. The Wall Street Journal reported that Sears’ Alan Lacy sold over $60 million worth of his stock last week and it made me wonder if he needed that much additional cash with the new merger coming on.
I would like to thank the Sun-Times business reporter Sandra Guy, for publishing a weeklong series on the Kmart/Sears merger. The first entry was yesterday, Monday 3/21.
Let’s face it, both of these retailers have difficulty relating “who they are” or “where they are going” to the consuming public. Watching the 30 second or 1 minute advertising spots on the TV; I for one am unclear as to what they are trying to convey to me. Sears’ best advertising is on “Extreme Makeover – Home Edition.”
How will the new Sears Holding Corporation advertise itself that it is a new company, combining both companies into one that will give consumers a destination point for its combined “great brands” at reasonable prices? Consider both Internet web homepages and brick/mortar outlets.
One thing is for sure. Mr. Paul Guyardo, formerly of HSN, and now with Kmart, who orchestrated Kmart’s partnership with Warner Brothers TV advertising not too long ago, is working on this as I write.
The media advertising presentations that Sears Holding rolls out could hold a key, and a very important one at that.
Right here and right now, the biggest obstacle I see is that Sears rank-and-file employees are against the merger while the same employees at Kmart are for it. Kmart is “driven to get it done.” And I agree with the ‘analyst’ who said in a recent article, “Sears’ biggest obstacle is Sears.”
Nothing stays the same forever, not even the behemoths Wal-Mart and Target, and I for one look forward to seeing Mr. Lampert’s “Extreme Makeover – Retailer Edition” for the new Sears Holding Company. Who doesn’t root for the underdog?
Sears and Kmart’s combination of brands is an incredible strength, leaving few if any category holes. I look forward to checking out Sears’ Essentials concept which will focus on Sears’ best brands and hopefully leave room for carefully-edited Kmart additions. Wal-Mart has been slow and spotty in the proprietary brand acquisition arena which should give Sears/Kmart an early leg up as they combine the best of the two entities.
There may come a time when the great brands of today’s largest retail lambs, Sears and Kmart, are melded together to create a fearsome new retail tiger in the marketplace to compete quite effectively against today’s lion, Wal-Mart, but at this writing I am still betting on the lion.
I don’t see the synergy between the brands of Sears and Kmart, much less between the individual brands in their stores by themselves.
It seems to me that neither store knows what its focus is, and you see this reflected in the different exclusive labels they carry. This should be one of their greatest strengths. But, let’s look at Kmart: Martha Stewart is geared towards one group, their ethnic clothing line is geared towards a completely different one, etc.
Hypothetically, it strengthens the company. If it had better management in place, it could easily differentiate itself and not just survive, but succeed.