Sears’ Strip Mall Strategy For Appliances

Jun 24, 2004
George Anderson

By George Anderson

Sears sees a future for its appliance and electronics business in strip malls.

The chain announced it plans to open 30 new appliance and electronics outlet stores in strip mall locations by the end of next year in an effort to regain market share lost to
mass merchandisers, DIY outlets and consumer electronics stores.

Karen Peters, Sears’ director of outlet stores, told the Chicago Tribune the new stores will be “about 25,000 to 35,000 square feet in strip-center-type locations, and
we typically sign a five-year lease so it allows us to expand pretty quickly with a relatively low-cost format,” Peters said.

The stores, which will operate under the Sears Appliance Outlet banner, are an attempt by the department store chain to stem the flow of customers to the likes of Home Depot,
Lowe’s and others.

Adding Sears Appliance Outlets continues on the chain’s strategy of trying to make its white goods more accessible to the public. The chain has brought in lower-price appliances
to its mall-based stores and, earlier in the year, it began selling appliances in all its stand-alone Sears Hardware stores.

“We want to expand our position in the appliance value segment by positioning the outlet channel as a viable alternative to home centers,” said Ms. Peters.

Moderator’s Comment: Is Sears’ loss of market share in household appliances and consumer electronics a result of its
products being less accessible to consumers than those in other retail formats? What are your thoughts on the company’s development of Sears Appliance Outlets?

We found a couple of troubling comments in the Chicago Tribune piece.

The first was Karen Peter’s assertion: “Our customers are willing to drive about 19 miles to get to us.”

If Ms. Peter’s is correct, it might explain why Sears has fewer customers for its appliances. How strong is Sears’ reputation for quality and price in appliances
that consumers would drive past all the other options available to them that are much closer to home?

The second troubling statement came from Jim Robisch, senior partner for the Farnsworth Group. According to the Trib, Mr. Robisch has “seen appliances
at Sears outlets that were priced higher than a Best Buy and only a shade below Sears’ full-line stores.”

Again, we ask, why would consumers make a 38-mile roundtrip for this?
George Anderson – Moderator

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1 Comment on "Sears’ Strip Mall Strategy For Appliances"

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W. Frank Dell II
16 years 8 months ago

Sears is losing ground simply because it has not identified a target market, and created a format that serves that market. They keep testing, but each one I have seen is ready to fail before opening. Sears had a good franchise, but stayed too long without changing to adapt to consumer demands. There is no common factor between the softer side of Sears and Craftsman. Craftsman is one of the most recognized private label brands, and they are killing it by offering cheap alternatives. If Sears wants to stay in business, they need to identify who is not a Home Depot customer and target them. There are many people who want quality products. By only selling good, not better and best products, Wal-Mart, Home Depot and Staples, to name a few, have segmented the customer base. Others, like Target, understand this and have targeted a different customer. Until Sears gets the message, they will continue this slow decline.