Photo: Craftsman
Sears faces Craftsman competition of its own making
Two primary strains of thought popped up a couple of years ago when the news first broke that Sears Holdings was exploring the sale of its Craftsman brand. The first was that management at Sears was about to take a step that would weaken the retailer’s competitive point of difference in the market. The second was that whatever company acquired Craftsman would likely do a better job with the brand than Sears had.
James Loree, CEO of Stanley Black & Decker (SBD), the company that acquired the rights to the Craftsman brand last year, is certainly among those who subscribe to the latter theory.
“We ended up simply buying the brand because the products had been left to devolve over time to the point where they weren’t the high quality, respectable products they once were — they had migrated from made in America to virtually everything being made in China and Mexico,” Mr. Loree told TheStreet in a recent interview.
Last week, SBD announced the launch of a new line of 1,200 Craftsman tools. Initially, 40 percent of the line will be made in the U.S. with the goal of producing 70 percent within the next few years.
The $900 million deal in January 2017 between Sears and SBD allowed both companies to produce and sell the brand while adhering to shared quality guidelines. At the time, only about 10 percent of Craftsman tools were sold outside of Sears. SBD, which will sell its line in Lowe’s and Ace Hardware stores and on Amazon.com, is focused on significantly upping that percentage.
Publicly, at least, Sears isn’t sweating this new competition of its own making. Tom Park, president of the Kenmore, Craftsman and DieHard brands at Sears, writing on the company’s blog, asserted that the retailer still offers the biggest selection of the tool line and that it will receive sales royalties from SBD for 15 years.
“Make no mistake, we’ve been the home of what is arguably America’s most iconic tool brand and we’re so proud to continue to offer Craftsman products right here at Sears and Kmart,” wrote Mr. Park.
Discussion Questions
DISCUSSION QUESTIONS: What impact will Stanley Black & Decker’s Craftsman line have on the one produced by Sears? Was sale of the line a good decision for Sears? Will consumers make a distinction between the two?
Poll
BrainTrust
Dave Bruno
Director, Retail Market Insights, Aptos
Cathy Hotka
Principal, Cathy Hotka & Associates
The sale was the right move because Stanley Black & Decker is investing in Craftsman and no doubt will achieve great success with the brand whereas Sears was letting the brand along with its own business die a slow death. I think Craftsman will outlive Sears under their new ownership. It’s true the consumer knows the Craftsman name, but it is doubtful they still feel any connection to the tool brand with Sears. It is a “once upon a time” story, a thing of the past from the days when Sears was the leading national department store that everyone shopped. Those days are long gone, and Craftsman is now on its own journey of success. I commend Stanley Black & Decker for seeing the potential in the brand and for investing in what will be a prosperous future.
For Sears, the sale of assets and brands like Craftsman is a necessary evil needed to fund the company and give it short-term solvency. However, it causes immense long-term damage, especially if new brand owners manage to pull shoppers away from Sears stores — which in the case of Stanley Black & Decker they will probably succeed in doing.
But this is wider than Stanley Black & Decker or Craftsman. It is about a Sears: a company that has been so mismanaged it is having to eat itself to stay alive.
The key phrase here is “while adhering to shared quality guidelines.” I don’t know what those quality guidelines are but I’m sure fed up with the absence of quality of most tools. Unless you put out for the really high-end variety, you hope your new leaf blower or chainsaw will last one season. Even the high-end stuff has plastic pieces where once they were metal.
An organization struggling for its life, when faced with choosing cheap shortcuts or building even more quality into its products, will choose cheap. That might make the CFO happy but it’s the opposite of what will work in building consumer trust and loyalty to a brand. In short, my bet is on Stanley Black & Decker to win this war.
I just finished some market research that included Craftsman. It surprised me how powerful the brand still remained — even with professional construction workers.
Sears has NO brand. But, Craftsman still does. More bad news for Sears.
That’s interesting. In my 25 years of research work with tool brands and often including Craftsman, I’ve seen clear downhill trajectory. What we find left at this point is a shell of a good idea — but a serious loss of perception and adoption that’s been accumulating for nearly 20 years. Pros know that the 1980s were the heyday of great power tools made with the Craftsman name, for example. Perhaps it’s a difference between top-of-mind (compared with Irwin, Craftsman is an exceptionally well known brand) and serious consideration (when compared with brands like Milwaukee, DeWalt and Festool, the Craftsman brand sits in the background).
The sale of Craftsman, while perhaps a necessary evil, was a huge loss for Sears. In my opinion Craftsman’s reputation was the single most valuable asset in the otherwise dwindling Sears portfolio. Selling the rights to that asset was just begging for somebody to hammer them with better brand marketing. This was an inevitable outcome of the sale, I am afraid, and likely another nail in the coffin for Sears …
There are more useful questions. Why would a major retailer pick up the Craftsman brand — a brand that has been decaying in consumer perception for over a decade? Why does Stanley believe that their process, which eventually drives all their product to look remarkably similar regardless of brand, and their approach will rebuild the Craftsman brand?
In a few year, this will have shown to be a fleeting myth — driven by the idea of the Craftsman brand 30 years ago. Unfortunately, it’s extremely hard to reinvigorate a brand after so much time and without a core motivating idea around it.
Was the sale a good decision for Sears? Probably. The sale hurt them. Yet their only choice has been to attempt to eke out a living and they needed cash.
The Sears brand promise is dead and gone — sold off. The Craftsman brand promise is alive and well and has a future. The Craftsman brand had to leave its war-torn country of birth to find a new life on more fertile shores.
I don’t agree. There has been clear degradation for a couple decades in Craftsman –including some miserable choices by Sears. The spread of Craftsman into other stores like Ace or Orchard hasn’t done them any good.
For a simple way to see this, just do a Google trends search within the US on Craftsman Tools vs Kobalt Tools. They cross in 2010. Craftsman is entirely on a downward arc and Kobalt was on a sweet upside curve. (Kobalt will probably die now that Lowe’s has made the mistake of major commitment to Craftsman.)
Yep … no doubt Craftsman is a little beat up and bruised. And Kobalt makes a fine product. I own some of both. And I think you give a good example. Lowe’s could have made a lot of different bets. They picked Craftsman.
The real question is, what does the Craftsman brand mean to consumers? Does it represent a tool that you can only buy at Sears or is it a high quality tool that you can buy everywhere? The former was true in the past, but IMHO the latter is today’s reality.
Will there be some confusion in the marketplace? It’s somewhat unlikely for two reasons. First there are going continue to be fewer and fewer Sears locations. The second is that most tool buyers will not be making direct comparisons of the tools.
Years ago we watched the brand Craftsman literally turn the tool world upside down. Who ever heard, back in that day, of unlimited guarantees on tools? And that stuck, and is still stuck to that brand name. By Sears successfully positioning that brand in consumers’ brains — occupying the top position of the ladder — that brand name still has favorable and important value. Was Sears right in selling it off? Nope, but as one commenter has said: “you have to eat.” This brand is ripe to still be a major category winner.
Stanley Black & Decker will be able to market the Craftsman line better than Sears as the line will be available in Lowe’s and Ace Hardware. Sears selling off the brand was a bad idea as it was a well known brand associated with the retailer, and it is hard to understand what Sears stands for any more. Consumers will make a distinction between Sears and Craftsman and the other stores that carry the brand, and Sears will lose even more business.
Eddie Lampert is either a genius or missing the boat completely with Sears. My bet is on the latter.
We are a long way from the olden days, when Sears, Roebuck was a powerhouse retailer. Stanley Black & Decker appears to have a clear understanding of the potential to grow Craftsman and leverage its brand promise. At this point, too, everyone knows what a disaster its former owner is.
This is now a question of brand positioning. If Craftsman becomes a brand for well-priced, high quality tools (which seems the only real play left in the market), priced below the premier “contractor” brands but built and priced better than the commodity consumer products, then the brand probably has a play. However there are really only four places left with the volume possibility to sell a brand positioned like that; Home Depot, Lowe’s, Ace and online. Sears does not make that list.
Whatever. There’s a reason 6 out of 7 choosy voters chose SBD as the likely “winner” of this deal, and it has little to do with the specifics of the actual arrangement, but rather a complete lack of faith in Sears to do anything right. I’d love to be proven wrong — as I’m sure would everyone else — but few will be holding their breath.
This was a smart move by Sears, when they needed cash, and could not properly manage, market, and sell the Craftsman tools. SBD can do this better, while giving Sears cash flow to sustain itself. This is a win/win for both parties and the public!
I imagine Stanley Black & Decker will position Craftsman at the top of their line and even trade on the lifetime guarantee — at least on non-powered hand tools.
Craftsman is unusual among tool lines in that its range includes both power tools like Black & Decker and wrenches and screwdrivers, like Stanley. SBD will need to be highly strategic to make the most of this addition to its portfolio.
Hopefully, its collaborative deal with declining Sears won’t prove to be an Achilles heel.
Having better quality products may help Sears in the short term but over time, Stanley Black and Decker will prove to be the winner. No “normal” consumer will see a difference and until reading this article, I had no idea that Craftsman tools were only or maybe mostly available at Sears. I would rather own the Amazon store for the brand then the Sears % of this deal over the next 20 years.