Sears Cuts Prices to Capture Market Share

Discussion
May 28, 2003
George Anderson

By George Anderson

Sears said it planned to expand selection of low-end appliances and cut prices to help the chain capture sales currently being lost to Home Depot, Lowe’s and other retailers.

The department store chain has reported declines in same-store sales of appliances for 20 straight months. Currently, Sears represents 39 percent of appliance sales in the US
down from 41 percent two years ago.

Despite dropping prices, Tina Settecase, head of Sears’ appliance business is looking to maintain margins. She told Reuters, “We’ve taken (margins) into account. We have been
offering some innovative products at the high end that have resonated with consumers. That helps to offset the margin loss at the low end.”

Moderator’s Comment: Does Sears new appliance strategy offer it a means of achieving a sustainable marketing advantage over the competition?

Sears needs to do a better job of communicating low prices on home appliances. It also needs to quantify for consumers other benefits the department store
has over DIY centers and others.

Ms. Settecase said Sears offers a better selection with stores carrying approximately 4,000 appliances compared to 2,500 items at the nearest competitor.
It also has an extensive network of technicians to help consumers when appliances eventually break down as they always do.
[George
Anderson – Moderator
]

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