Dealers Say Sears Looking to Put Them Out of Business

Discussion
Jun 28, 2005
George Anderson

By George Anderson


Dealers who operate independent Sears stores around the country say that when they signed on with the retail chain, it promised “it would keep them in business for life.”


That promise, some dealers argue in a lawsuit, went out the window when Sears merged with Kmart. In fact, say the dealers, pretty much the opposite has taken place now that popular
brands such as Kenmore and Craftsman sold in their stores are now available at local Kmarts.


The Dealer Store Owners Association, which represents more than 200 Sears stores owned and operated by families or individuals, filed the suit in Minneapolis federal court.


The group’s president, Steve Granger, told Reuters, “Most dealers invested their life savings and 401(k) plans in these stores. Now they risk losing it all. … This is hardly the way to build trust in a brand name.”


Sears counters that it is not in breach of its agreement with the dealers.


Larry Costello, a spokesperson of Sears Holdings said the exclusivity provision does not allow Kenmore products to be sold at a competing store in the same ZIP code as a dealer and the company is living up to its agreement.


“Any changes that are made to the Sears or Kmart stores located near the dealer stores are to enhance the shopping experience for our customers,” he added.


Moderator’s Comment: What can dealer stores do to effectively compete against nearby Kmart locations selling Sears’
brands?

George Anderson – Moderator

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4 Comments on "Dealers Say Sears Looking to Put Them Out of Business"


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David Livingston
Guest
15 years 7 months ago
Did we ever think that Sears would sink so low to have to be rescued by a bankrupt retailer? Perhaps in a couple of years, when there are no more Kmart stores, this will not be an issue. If I were these dealers, I wouldn’t be too worried about anything Kmart is doing retail wise. It would be like Wal-Mart losing sleep over Winn-Dixie’s next bright idea. Kmart has turned off the American public and are operating at such low sales per square foot levels that they really do not pose much of a competitive threat to any retailer. Kmart and Sears change plans about every two weeks. As far as execution on the retail end, Kmart hasn’t followed through on much lately. So far just a few token Sears Essentials openings to get the attention from the press. So what’s taking so long to get them converted? I’m still waiting to see all those Sears Grand stores that were announced last year. What’s all this zip code nonsense? What do you do if the… Read more »
Gene Hoffman
Guest
Gene Hoffman
15 years 7 months ago

Kmart Holdings agreeing not to sell Sears products in a Kmart store within the same zip code as a Sears dealer store is like offering a sleeve out of the Lempert Vest in this day of exuberant car/SUV/truck travel.

What can dealer stores do? Try to add popular products to their assortments from other suppliers such Toro, Honda, etc. That effort would undoubtedly create a new lawsuit but it gives the current lawsuit the publicity that the dealers need against Kmart Holdings.

Melanie Varela
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Melanie Varela
15 years 7 months ago

What happens when 2 failing companies merge? You get one MAJOR failure.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
15 years 7 months ago

As an aside, the ZIP code argument is specious because ZIP codes have grown ever smaller with the advent of nine-digit codes.

The principle issue, however, seems to be survival of some sterling brands. Not only Kenmore and Craftsman, but DieHard, Lands’ End, and Martha Stewart have major stakes in the success of Kmart Holdings. I’m guessing that more consumers would decry the cessation of these brands than of the buildings labeled Kmart and Sears.

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