In case you hadn’t heard.
Note that K-Mart is the purchaser.:eek:
Both brands suck. K-Mart has been a joke since at least the 70s, and Sears is just pathetic, having flushed a good brand down the jakes and now this, being bought by yesterday’s embodiment of cheapness and lumpen proletariat culture.
The fact that this merger will create the nation’s third largest retailer (after #1 WalMart and #2 Target) is technically true but functionally irrelevent.
In retail, as opposed to the physical world, the heavier object really does fall faster.
Their paltry good points.
Sears has many excellent locations, assets that it has done its best to squander over the past 25 years. In theory a good retail operation could put these to use. The same can be said about K-Mart: it has locations that a decent bigbox retailer like Target could use effectively.
The Sears brand, I suppose has a certain cache with the over-50 set. Even to people my age (33), it conjures up warm memories of the 1977 Christmas catalog, whose toy section was just about the most thrilling thing in the world. But even by 1979 Toys R Us (now a struggling retailer in its own right) had blown Sears away in terms of selection and price. Sears would never seem cool again.
Sears also has a large credit card/finance operation.
I am not old enough to remember the day when K-Mart served any serious purpose. Remember back in the 1970s that nauseating smell of carmel corn, circus peanuts, and cotton candy that hit you as soon as you entered, or before? That stink, to me will always be K-Mart, and K-Mart that stink.
In short, K-Mart has been a joke for at least the past 30 years. Their brand symbolizes nothing positive. They do nothing that WalMart and Target have not done better for a very long time. If ever there was a brand that deserved to die–decades ago–K-Mart is it. But K-Mart, having shagged its previous stockholders in an orifice not of their choice, is back–and with enough capital to buy a brand that actually would have had potential in the right hands.
Sears is a different story. Not only did Sears used to have a good toy selection, it used to be a store for serious carpenters and mechanics–back in the day when its Craftsman brand was well made. Sears also used to have one of the best appliance departments around. Oh wait, it used to have a decent clothing department, too. Come to think of it, Sears used to do everything pretty darn well and was part of nearly American citizen’s shopping life.
But since the late 1970s, Sears has been a living Harvard case study on how to blow, totally and irrevocably, every marketing advantage you posses. I’m too lazy to sleuth up the dates, but two failed, and widely publicized efforts, spring immediately to mind. The first is (late 80s or early 90s?) its “everyday low pricing” gimmick. People, understandably, went to Sears’ appliance department thinking that Sears would beat anyone’s price. Uh, no, we’re just, you know, not so pricey. That debacle generated approximately 1/10 the bad press of New Coke, which is still quite a lot.
The second was the egregious “softer side of Sears.” Actually, that might have been a mild success, a last jolt of speed from a once unbeatable jade. Not that it matters now.
In any case, Sears has been consumptive for the past 25 years or so. Unlike K-Mart, which has been a joke forever, Sears has been a cherished, loved brand that we’ve been forced to watch slowly wither. Sad.
**Irrelevence of new #3 status.
This is a pretty simple point: the only thing that the K-Mart and Sears brands have in common is their heavy layers of tarnish. Neither brand was built to appeal to the same customers. Their locations are totally different, their lines of merchandise overlapping both too little and too much.
Talk of synergy in this instance will be BS and wishful thinking, unless a suicide pact can be thought of as synergistic.
It’s true that companies manage different businesses so as to cover an entire category completely: the Gap and Old Navy are the same company, each appealing to a slightly different segment. GM back in the day invented the idea of layerd brands, so that the driver of a Chevy one year would trade up to a Cadillac once he got flush. Anheiser-Bush makes Bush, Bud, and Michelob to cover the low, mid, and (pseudo) high end of the beer market. It’s a valid strategy–when the conditions are right.
But they are not right for K-Mart and Sears. If what they did were more similar it could work. One can imagine (hope?) that all WalMarts could suddenly become Targets without the retail concept changing much. On the other hand, if what they did were more different, one could apply 1960s style conglomerate thinking, in which excellent management (haw haw) can manage different businesses with the same deftness.
But K-Sears will truly be a Frankenstein’s monster with the part at odds with one another. For K-Mart is a valid retail concept (value bigbox) that has been managed with great ineptitude, whereas Sears’ model (traditional multi-department quasi-full-price department store) is simply obsolete (plus ineptly managed).
Target has nothing to fear from this unholy massing of failure. Because…
The more massive object falls faster.
Mergers are hell even on strong companies. They create office politics that make the 30 Years’ War seem like paddycake. And just from a logistical standpoint, they create a lot of drag as heads roll, accounting systems are merged, and the execs move into bigger offices. What this will mean for immuno-compromised K and S can’t be anything very good.
In order for me to make truly informed predictions, I would have to study both retailers’ locations, assets, finances, etc.–really get into it. You’d have to pay me to do it, and even then I wouldn’t want to. Because my intuition already tells me that this turd is heading straight for the bottom of the jakes.
Neither retailer will see meaningful improvements in sales. What the hell are they going to do, improve their ad campaigns? Although K-Mart has a valid retail concept, WalMart (cold and heartless but effective) and Target (kinder, gentler, but loses in the ruthlessness department) already have the two wickets covered. That pie is et. And as for Sears, what are you going to do–inject the mummy’s lips with collagen? It’s hopeless.
There is a chance, but it would require smart management, which the new “entity” doesn’t have. But I’m willing to do some free consulting here, just for the heck of it:
The K-Mart brand is dead; if it has any value, it’s negative. Trash it, forget it, cremate it. The Sears brand still has nostalgic value. The news stores will all be named “Sears.” Now what do you have? You have f*** all except one thing: your locations and your stupidly loyal customers. The question only question, the sole question of impotance, is what to put in those locations.
Best Buy does appliances better. J.C. Penny and a dozen other in the mall do clothing better. Macy’s and Ayres do housewares better. You, Sears, do nothing with excellence. That needs to change now, else ye die.
But I have concept for you. In this age of outsourcing, you’re going to go 100% American made. Yes, every item in the store. You’re going to scour this great land for the best of everything.
In your mall locations, you are going to sell the best mid-range American clothing and housewares you can find. You’re going to hire buyers who know their stuff, who can get creative, who can source for your various regions and for the chain as a whole. You’ll be different. You’ll sell real Navaho blankets (made in USA) and candles from South Caroline (made in USA).
Your current K-Mart locations will look just like a WalMart or a Target. But every damn item in them will be labeled “Made in USA.”
Sure, all of this will cost more than the cheap shyte from China. But you’ll be 10 steps ahead of the pack when the dollar crashes and you’ve got to source stuff from the US anyway. Going 100% American made, no exceptions, will generate a literal flood of good press. A torrent. Get your ark made. And it won’t just be press, it will be genuine good will from every US citizen. The time is right.
I genuinely think that the above concept could work. In any case, it will take something thus radical to save this newly built Fane of Failure. But this is the New Economy, and you know who’s out to help whom. Expect a new chapter 11 within 11 months of the merger’s finalization, and lots of happy golden parachutes floating off into the distance.