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
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7 Comments on "Brands Unite In Sears/Kmart Deal"
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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.
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.