Kmart Looks to Build Business with Power Tools
Ever since Kmart and Sears agreed to merge back in November 2004, one of the projected benefits of the deal was thought to be that popular exclusive brands such as Crafstman, Kenmore, Diehard, Martha Stewart Everyday and Joe Boxer would be made available to shoppers at both companies’ stores.
While there has been some migration of Sears’ brands to Kmart (none vice versa), it has been limited in scope. That, however, may be about to change with the announcement yesterday that Craftsman tools will be sold in nearly all the 1,400 stores operated by Kmart in the U.S.
Before now, Craftsman products were sold in 120 Kmarts in 2005. The chain expanded the test with sales of the brand during the 2006 Father’s Day season.
“We took the concept of selling Craftsman products into select Kmart stores this spring to gauge customers’ reactions,” said Greg Inwood, vice president of tools, hardware and paint at Sears Holdings Corp in a company press release. “Customer response exceeded our expectations.”
According to Mr. Inwood, consumers appreciated “the added convenience of buying Craftsman tools at additional locations and we feel that providing Craftsman products in all Kmart stores will allow our customers to shop for the tools they love while picking up items for their everyday needs.”
The number of Craftsman tools will vary by location, according to Kmart, based on the store. Recently remodeled Kmarts will carry more than 1,800 Craftsman items while others may have as few as 500 SKUs.
“We see this as a tremendous opportunity to enhance Kmart’s tool and automotive departments. Craftsman products have been used by generations of Americans and by delivering a sizable selection of high quality, durable Craftsman tools and merchandise we really feel we can deliver more great products to our customers,” said Bill Stewart, chief marketing officer at Kmart.
Discussion Questions: What will Craftsman mean for Kmart’s business now that the brand will be sold in almost all the chain’s stores? What is your reaction
to Greg Inwood’s statement that “providing Craftsman products in all Kmart stores will allow our customers to shop for the tools they love while picking up items for their everyday
needs”?
Craftsman, Kmart reminds us in its press release, is:
- America’s number one tool brand;
- The official tool brand of NASCAR (National Association of Stock Car and Auto Racing);
- The primary sponsor of the NASCAR Craftsman Truck Series.
Whenever a retailer adds a category or a single item, another category or item needs reduction. Will Kmart tool sales stay flat but margins increase? I suspect Kmart sales and margins will both increase since Kmart will reduce low-performing assortments in other merchandise categories. Will Sears location Craftsman sales get hurt? Will the Kmart gain outweigh any cannibalization of Sears volume? Will Kmart’s Craftsman assortment be the same as Sears, or will it get unique items?
My assumptions: (1) Kmart’s volume will outweigh any dent to Sears stores, and (2) certain Craftsman items at Kmart will be exclusive to Kmart and certain Craftsman items at Sears stores will be exclusive to Sears stores. This should’ve been done a while ago, and I doubt the Craftsman brand will be hurt as long as the lifetime guarantee is kept. Customers love that guarantee.
As I see it, what is wrong with Kmart will not be ameliorated with what is right about Craftsman. Peripheral modifications like this don’t address the larger issue of how Kmart will shift shoppers perceptions that the store is worth the trip.
My guess is that a NASCAR watching, Honey-doing, backyard mechanic may like the fact that he (or she) doesn’t have to drive an extra mile to get that replacement 5/16 wrench, but they’re also not going to stop to smell the soft goods.
Kmart continues to perform at such low sales per square foot levels that it is beyond me how they keep the doors open. I think the last place I would want to promote a valuable brand name would be in the nation’s worst performing retailer. In my opinion this is just hype to keep hope alive.
The best that I can, to Kmart stores, say,
Is put your dreams away for another day.
The great Craftsman is a working man’s tool,
That won’t blend well with Martha’s softgoods cool.
Not to be overlooked is the business that will come from small cities and rural markets where there is a Kmart location but no Sears for 50+ miles. I disagree that Kmart is doomed; and feel that Wal-Mart is creating a “gap” that Kmart may be able to fill as the no-nonsense, low price leader. It won’t be tomorrow, but it could happen. The two Kmarts I keep an eye on both seem to be busier and the stores looking sharper.
All Sears/Kmart has left is its “power brands,” and rather than let them sit and slowly wither in stores that no one goes to anymore, Eddie Lampert should just throw in the towel and sell Kenmore and Craftsman to a Home Depot or Lowe’s, and sell the real estate while the going is good. In a few years, Sears and Kmart will be just a memory anyway when the next recession comes, but at least Lampert & Co. will come out ahead.
Stocking Craftsman tools in Kmart will sell some units, but not save the chain. Considering Kmart is well known as self service with little or no customer sales assistance will hurt sales. Power tools are purchased by both males and females as gifts. Many females require sales input to make a decision, which is not likely to happen in a Kmart. In the end, it does not really matter. No retailer with double digit decline in sales will survive over time.
Sears has guarded the Craftsman brand zealously. It has tremendous equity in the brand, and the brand is quite powerful with consumers. Adding the Kmart locations as additional retail outlets certainly will help the Kmart locations. Perhaps the real questions are whether adding the Kmart locations will increase sales overall or merely dilute sales at existing Sears locations, and whether the Kmart brand will detract from the perceived quality of the Craftsman brand.
Sears has become a bit more willing to use its power brands (e.g., Kenmore). In recent years, the Craftsman was used on toy tools which provided a nice tie-in (especially on Father’s day) to the real tools. Adding the Craftsman tools to Kmart also distinguishes Kmart from Wal-Mart in a major way. All-in-all it should be a positive and I’m sure given the test it has been a plus to sales rather than simply dilutive so far. Sears is evolving, and becoming more willing to exploit its power brands is another way Sears can distinguish itself from the pack.
The Craftsman Tools brand is an American icon and broadening its availability is a good move. The problem is that consumers will have to navigate to the back of a Kmart store to get it.
Ultimately, you’re judged by the company you keep. Which means the delusion of Craftsman’s perceived value and the possible enhancement of Kmart’s for a net/net yawn of indifference at the end of the day.
Sorry Kmart, that’s just the way I see it playing out.
The consensus seems to be that this is a “rearranging the deck chairs on the Titanic” type of move and I agree. Kmart has some very good locations in densely populated areas and a properly edited, streamlined, and well merchandised presentation of key items, brands and prices could turn them around, but why in the world would anyone think that the present management team is the one to execute such a massive turnaround?
The Craftsman brand will be devalued by the offering of Craftsman tools at Kmart. Kmart will gain some sales from the sale of Craftsman in their stores, however the overall loss isn’t worth their efforts. Greg Inwood’s comments are just an extension of the party line Sears and Kmart have offered since Eddie Lampert’s merger of the two retailers. However, the ultimate outcome is still the same shrinking revenues. History will show the entire move to be ill fated.
If the strategy is to slowly blend the offerings of Kmart and Sears so that it is, in effect, one store representing the retailer, this is certainly a big step in that direction.
Consumers will be confused for awhile trying to determine which products are at which store. This certainly flies against the Food Lion strategy of creating specific kinds of stores to appeal to specific kinds of consumers. Consumers will have a difficult time determining which store to visit to purchase which kinds of items. If the merge overlaps a lot, what’s the difference in the stores?
This strategy appears to work well with creating some efficient distribution but not to have been well thought out in terms of store image and offering to the consumer – unless they are planning to have the two stores become one brand.
I totally agree with the negative consensus above, however the big mystery here is – how does the Sears stock price continue to rise?
Somehow Kmart has remained afloat despite all attempts by Edward Lampert and company to sink it. Now that a smart move has been made, we should acknowledge it and wish Kmart well since who knows when management will get something right again?
This was one of the first things everyone said these two companies would do when they merged. I’ll make a long-term prediction; in 10 years, Sears stores will be gone and the Craftsman, Kenmore, and Die-Hard brands will be sold in a wide variety of other retailers the way other national brands are sold.
What Eddie Lampert needs to do is convert all of those high ceilinged Sears Grand store elephants into Sears Home Stores, knocking out the clothing and bringing in everything for the home, with all the hardline Sears departments that the chain is known for.
As far as adding Craftsman and Kenmore to Kmart, it is a super idea that is long overdue. I am so fortunate to live by one of the Kmarts that has been transformed with Craftsman and Sears products. For over a year and a half, the store has flourished because this is the marriage of all the good brands from Sears Holdings. These prototype stores are clean, well stocked, and very pleasant to shop.
So all Sears needs to do is continue the transitioning of Sears brands into Kmart. Let Kmart sell the soft goods and these hardline Sears goods in their Kmart stores, and transform the largest Sears stores into Sears Home and drop forever soft goods at Sears.
The Softer Side of Sears is an embarrassment. Kohl’s and JCPenny know how to sell soft goods and home decor. Traditional Sears would better be served selling hard line goods.
Some great opinions here. Personally, I don’t think Kmart/Sears is “doomed” as some believe. There is a new sense of purpose at Sears HQ offices. They have made many changes and are more open now than ever to ideas and concepts.
Selling Craftsman and Kenmore in Kmart stores is long overdue and a “no-brainer.” Target is all about “cheap chic,” but finds a way to sell it at a higher price. Wal Mart is trying to find its way into leveraging more premium priced brands/items, vs only cheap, cheap, cheap or price, price, price.
As the two behemoths Target and Wal-Mart fight it out. Kmart can fill the gaps very nicely – if, and only if, they leverage their positioning and Sears relationship with consumers.
I don’t believe Craftsman tools will necessarily translate into increased sales of soft goods. It will increase some level of foot traffic to their benefit.
Why do I care where I buy my Craftsman tools? It’s the quality and the life-time guarantee that matters. Those who spend a little more for the quality of Craftsman tools usually know what they want and don’t need the advice of a department store salesperson. So what if I have to walk to the back of the store to find the tools I need? It’s a lot easier than the mall stores and may reduce costs.