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Friday, February 19, 2010

Craftsman, Sears Auto Center to be farmed out

Update [2/23]: Link to list of store closings: http://www.searsmedia.com/tools/close_022310.pdf
For the year, domestic comparable store sales declined 5.1%, and included a slight decline at Kmart of 0.8% and a decline at Sears Domestic of 8.7%. The flat store sales at Kmart are a good sign, but still concerning since it includes shoe sales (which were taken over last year from a 3rd-party supplier, Footstar) and since the number of Kmart stores has dropped by almost 1/3 in the past 8 years (there were 2,114 Kmart stores open in 2002, and now slightly more than 1,300 remain) meaning usually the most underperforming stores have been cut and cut, so same-store sales declines should decrease as well. Plus, "peers" Target and Walmart have generally seen both same-store sales growth as well as new store openings.

62 Kmart/Sears stores were closed fiscal 2009 and 46 in fiscal 2008. Already at least 21 store closures have been announced this year. There are now only around 2,200 remaining Sears and Kmart stores, not counting franchisees such as Sears Hometown and smaller formats such as Sears Outlet centers.

[End update]

Some pictures of Sears Essentials (what I think of as examples of the numerous miserable failures of Sears Holdings) collected from around the internet, as a sign of what might be more common in the future:









So in addition to offering franchisees the DieHard and Sears Auto Center brand, now the Craftsman brand seems to be being gradually sold and divested for short-term cash. Ace Hardware stores will start carrying the once-mighty and once Sears-exclusive Craftsman tool line. While still the supposed #1 tool brand in America, Craftsman's reputation probably took a little hit when it moved into Kmart stores, but it helped boost Kmart's offerings and appeal, so that move was overall probably a boon. But now, Craftsman will be in other retailers - will this negatively impact Sears/Kmart sales? (It will be good for the contracted tool manufacturer, for sure, but will Sears reap a rich reward?) Also, the Sears Hometown Stores franchisees will probably be royally angered, as they are often in direct competition with other local smaller hardware/tool stores like Ace, and one of their key assets is brand quantity, quality, and exclusivity. (They were pretty mad when Craftsman went into Kmarts, but this one will hurt even more. Do I sense a lawsuit?) Once again, it seems like Sears has failed to capitalize on their strengths and is selling off the company piece by piece. If only five years ago when the Kmart-Sears merger happened, that Sears re-invested and upgraded its stores nationwide (many analysts encouraged and predicted a whole ditching of the Kmart brand for a new Sears store type - instead we got a miserable, haphazard Sears Essentials failure), perhaps today it could compete better against the well-run Wal-Mart, Target, and other retailers. The number of stores has fallen by the hundreds in the past decade, and even the revamped Sears.com and MyGofer sites, while quite impressive, will ultimately face extreme difficulties competing with the established Amazons of the e-retailing world. Indeed, it may already be too late to save Sears/Kmart, and spinning off or selling the best-performing assets like Craftsman, DieHard Auto, and Kenmore may be in the investors' best interests. A previous press release, "creating value rather than solely building market share or sales", makes clear the obvious truth that Sears is not investing in its stores and retail business, but seriously, the cost-cutting and bare-bones capital spending probably has hurt the reputation too much with market share loss nearly irreversible - the so-called death spiral of stores. But for retail fans, we wish you the best of luck in actual retailing, SHLD!

Story:

Craftsman, America's most trusted tool brand, will now be sold through Ace Hardware stores. In May, approximately 100 Ace stores will begin selling Craftsman products.

Under the first phase of the agreement, qualifying Ace stores will be able to sell the Craftsman brand including hand tools, portable power tools, compressors, wet/dry vacs and tool storage. As the number one tool brand in America, Craftsman continued to increase its popularity in 2009 among Americans who want to take on DIY projects with a tool they can trust to get the job done.

In June, Ace will promote a number of Craftsman products, giving all 4,500 Ace stores the opportunity to offer the Craftsman brand to customers.
full article http://money.cnn.com/news/newsfeeds/articles/prnewswire/CG58107.htm

5 comments:

  1. Kind of makes the name Sears "Essential" sound like a cruel hoax, since they've been determined to be non-essential by SHLD.

    Another format that is facing extinction is the SuperK. Stories have trickled out that Norfolk, VA and Terre Haute, IN SuperKs are losing the grocery part and becoming BigKs. Only about 34 SuperKs left.

    ReplyDelete
  2. In fact, it was rather interesting when Kmart made more profit than Sears during one of the yearly quarters! I believe Kmart still has more potential than Sears, as the former Kmarts were better left off alone instead of becoming Sears Essentials! I think Kmart has more products to offer than Sears, and offers a little bit of everything, while regular Sears stores only offer clothes, shoes, lawn and garden, automotive (limited), hardware, bedding, appliances and electronics! Kmart offers everyday essentials like cleaning supplies, stationary, pets, health and beauty, sporting goods and a food pantry while Sears does not! I only noticed Sears through their merger with Kmart although I do enjoy their Craftman and Kenmore products!

    ReplyDelete
  3. Sears is not investing in its stores and retail business, but seriously, the cost-cutting and bare-bones capital spending probably has hurt the reputation too much with market share loss nearly irreversible - the so-called death spiral of stores.

    ReplyDelete
  4. I think the merger was a bad idea from very start. Sears and Kmart are competing brands. The Kmart stores seem to have the most potential. All the Kmart stores I know of are typically busy. The Sears stores are always dead with many closed off entrances and are located on the dead sides of local malls. Also, it is pretty much imposable to get help there. However, it seems only Kmarts end up shuttered.

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  5. matha stwert has finaly done it she bank ruped Kmart not counting all the others who had thair hands in the pie think back when sears and robuck first started out after they sold out they all went down hill

    ReplyDelete

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