Should Sears sell its Craftsman, DieHard and Kenmore brands?

Discussion
Photo: Sears Holdings/Kmart
May 27, 2016

Sears’ long downward spiral continues. Following another quarter of disappointing sales, the company has gone public about potentially making its few remaining valuable brand assets — Craftsman, DieHard and Kenmore — available in a larger number of outlets outside of Sears or Kmart stores. The other option is selling one of more of the brands outright.

Expanding the sale of the brands to other retailers is not a new concept. Under Edward Lampert, Sears Holdings has been tinkering with the idea going back to at least 2005 when it first introduced Kenmore and Craftsman products to a Kmart in Norridge, IL.

In 2006, vendors to Sears began telling the press, off-the-record, that the department store was killing its most famous brands due to cuts in advertising. The decision by Mr. Lampert to neglect store remodels further hastened the chain’s decline.

According to a TWICE report, the Kenmore appliance brand held a 27 percent market share in 2004. Today, the brand accounts for 12.5 percent of appliance sales.

Same-store sales at Sears were down 7.1 percent in the chain’s first quarter. The company pointed to weakness in apparel, appliances, consumer electronics, footwear and Sears Auto Centers as the biggest factors in the decline.

DISCUSSION QUESTIONS: Is Sears done as a retailer? What would you do with Craftsman, DieHard and Kenmore if you were running Sears Holdings?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"These brands have stories that are authentic and legit, and it would be a darn shame to let them die out ..."
"I remember my days at Ohio State, studying Sears in our marketing class. It is a great story, but like the Pony Express, it is close to the end."
"Boy, that’d be suicide."

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29 Comments on "Should Sears sell its Craftsman, DieHard and Kenmore brands?"


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Carol Spieckerman
BrainTrust
Carol Spieckerman
President, Spieckerman Retail
5 years 11 months ago

As appliances become the new grocery (in terms of hot categories), the timing for an asset auction could be auspicious. If nothing else, further expanding the presence of CDK in other retailers would seem to make sense. These days, keeping a brand to yourself is a ticket to obscurity (and as Sears has experienced, a drain on brand equity). Sell now before value seeps out.

Max Goldberg
Guest

Sears is done as a retailer. It no longer has a cohesive core story to tell consumers, employees or vendors. But that doesn’t mean that Mr. Lampert won’t try to keep it running. If it were to have another shot at relevancy, Sears should undertake an advertising campaign to reintroduce itself to consumers, using Kenmore, Craftsman and DieHard as key components of its core story.

Kim Garretson
Guest
5 years 11 months ago

Probably a wacky idea: What if Sears sold the Kenmore and Craftsman brands to Houzz, or developed a unique co-selling proposition. Houzz has raised $216 million and is described as: “the world’s leading online platform for home remodeling, architecture, interior design, decorating, landscaping & home improvement.” Houzz has become the go-to source for homeowners to find remodelers and other home service pros, and the go-to source for the pros to get great leads. And now the company sees e-commerce as the key to its hockey stick growth because of the huge number of consumers and pros it serves, and the ability to help them buy smarter and better. What if the pros featured Craftsman tools in promoting the work they do, and Kenmore appliances as the best choice for kitchen and laundry remodels?

Nikki Baird
BrainTrust
Nikki Baird
VP of Strategy, Aptos
5 years 11 months ago

Well, let’s start with the big question — is Sears done? This line caught my eye: “The company pointed to weakness in apparel, appliances, consumer electronics, footwear and Sears Auto Centers as the biggest factors in the decline.” What, exactly, was left off the list that WAS a success? I’m thinking “nothing.”

The only value left in the company is the real estate, which has already been parceled off into REITs, and the brands — which are now naturally on the table. No surprises here. It’s only a matter of time. Anyone want to start an over/under pool on the actual date of the company’s filing?

Peter Charness
BrainTrust

Well, whether they sell the brands or make them the “last man standing” as Sears continues to spiral down, it makes sense to separate them into a brand-based (and probably store-based) separate business unit. Such a move would enable a sale, or potentially be the start of a new company that grows out of the ashes of the traditional department store business.

Anne Howe
Guest

Sears should sell the brands to retailers who have the bandwidth to re-introduce the brands to consumers, as long as the brands are still quality oriented. These brands have stories that are authentic and legit, and it would be a darn shame to let them die out just because Mr. Lampert won’t see past his own ego.

Lowe’s new CMO Marci Grebstein would probably jump at the chance to re-invigorate Kenmore as an exclusive!

Ian Percy
BrainTrust

Is there nothing sacred in retail any more? These brands ARE Sears. Sell them and Sears will have to deal with divine wrath.

Of course my colleagues here are much wiser than I. So all I can say to Sears is, “Don’t go near the light!”

Brian Kelly
Guest
5 years 11 months ago

Not quite yet. But all indications are that Sears will soon be done as a retailer.

For the shareholders, I would get as much value out of the proprietary brands as possible by selling them off. I would do it quickly as they decay in value each day under the current management.

I’ve written that the value of Sears brands were wrapped in a bundle of benefits. When conceived, at the core was America’s first proprietary credit card. It gave Americans an “opening to buy,” it was the core of Sears’ profitability and it enabled U.S. growth. The Sears Card was the key brand.

Nowadays, those benefits have been replicated or have out-lived their original value. And so KCD have also out lived their original value. It’s time to take the markdown and sell them off.

Or as we like to say, “retail ain’t for sissies!”

Lee Kent
Guest

As I stated in a previous post here, I didn’t even realize that the Sears CDK brands still existed. I haven’t seen any ads or heard anything in years. Maybe that’s just me, but hey, if vendors have been talking about the death of these brands since 2006, I guess I’m not alone.

Now, on the other hand, I have always been an advocate for the underdog and Sears is surely that right now. I have to give Eddie an E for effort, though. He has certainly tried a lot of things, however most had nothing to do with boosting the brand itself or the CDK brands, which were a big part of their bread and butter.

Can Sears be revived? With enough money and the right course of action, maybe but … if it were my money, I would market the heck out of CDK, push it out to more stores and get out of the retail business.

Can’t believe I just said that but hey, that’s my 2 cents.

Dr. Stephen Needel
BrainTrust

Stick a fork in it — Sears is done. Sell off what you can and call it a day. Or, as Max says, try to start all over again. But Sears is not where America shops.

Gene Detroyer
BrainTrust

Sears has been “done” for a long time. You don’t have to close the door to know you are dead.

Sears Holdings has never been in the retail business and is not an adept marketer. The brands likely don’t show any value on the balance sheet nor are in the value equation for the stock price. The objective is to increase shareholder value. That could easily be accomplished by this divestiture. The Sears stock will not go down one iota. It would put cash on the balance sheet and maybe, just maybe, if a couple of good marketers pick up the business, it may mean additional sales for Sears.

But they better hurry. I am not sure how much value remains in those names.

Charles Whiteman
Guest

There is no question that Craftsman, DieHard and Kenmore have valuable brand equity. But this value was built on the visibility these brands have received from their in-store presence. As store traffic falls so does this brand equity.

While their value is certainly falling, I doubt many buyers would be willing to pay a premium to acquire the brands as they require distribution to recoup the value. I don’t see why a company with distribution (like Walmart, Lowe’s or Home Depot) would buy another retailer’s private label brand unless they got it on the cheap — and didn’t have to compete with Sears selling the brand too.

Dick Seesel
BrainTrust

I would leverage the value of the brands sooner rather than later. Auctioning off their rights when Sears is that much closer to defunct will result in a fire sale. At least now, the three brands still have some equity in other retailers and as a revenue stream for Sears Holdings.

I thought Sears had already decided to sell Craftsman tools through Costco awhile ago, but I see no evidence of this online or in my local Costco store. But I can definitely see the potential for Kenmore at Lowe’s or Home Depot as J.C. Penney tries to move into this territory.

Ed Rosenbaum
Guest

Sometimes your time has come. But usually the company it is time for does not realize or accept it. For Sears it came a long time ago. Sell these valuable name assets, cut whatever losses you can and make real estate deals that are acceptable. We keep writing about Sears and nothing ever happens other than the story never changes. Neither will the ending. It was a good run but …

Mark Heckman
BrainTrust

I realize I represent the dissenting opinion on Sears, but I believe there is still hope to revive the retail brand through smaller, smarter stores. In addition, a laser focus on leveraging the existing cache in their well known brands, Craftsman, Kenmore and DieHard, is critical. I would also recommend reviving their service commitments as well as building an expert reputation among their stores and online associates.

Competitors abound, but Best Buy, Lowe’s, Home Depot, hhgregg, Fry’s and others all require the shopper to navigate through big footprints and finding someone that even knows how to plug something in is a challenge, despite concerted efforts at these big box stores to improve the expertise of their associates.

Nikki Baird
BrainTrust
Nikki Baird
VP of Strategy, Aptos
5 years 11 months ago

I think that’s a great idea, Mark. If only Sears was run by someone who actually cared about making the retailer a success, rather than there simply to suck it dry, it might’ve had a chance. As it is, it’s been so sad to watch the inevitable decline, I think I’ve become numb. In my head, Sears is already dead. But you’re right — big box stores are vulnerable. It would be an interesting way to go after them.

Jerry Gelsomino
Guest

Sears should consider selling their historic brand names, just before they close their doors for good. Those names and reputations are all they have left.

David Livingston
Guest
5 years 11 months ago

Yes they should sell the brands. Since they don’t seem to be selling well in Sears stores, perhaps another retailer can do better.

Paula Rosenblum
BrainTrust

This entire escapade (the ownership of SHC by Lampert) is the most bizarre thing I have ever seen. I think it makes Nardelli look like a retail genius.

So the brands that should have been the focus of the business are now being sold off. I don’t know what history will say. The CFO, who just left to pursue other interests said “Mr. Lampert is an unconventional retailer.” That’s called being kind.

Brian Numainville
BrainTrust

These brands are all Sears has left (except perhaps the real estate). Selling them may prop the company up a while longer but will result in a total loss of whatever brand identity still remains and indeed will remove the heart and soul of Sears. But expanding these brands within other retailers could make sense to expand the presence and availability of these brands (since many folks are no longer visiting Sears anyway).

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
5 years 11 months ago

These brands supply reasons to go to Sears — and these days there aren’t many other reasons than these brands. The fact that Sears started trying to sell the Craftsman brand several years ago has already hurt the brand.

Seems to me this is the crisis moment for Sears. Choose to commit to staying open by keeping these brands and investing in rebuilding them, or sell them and go softly into the shuttered-store night.

That said, I don’t know that I’d advise anyone to buy the brands. Much of their significant strength and personality came from Sears. It’s mythology to believe they can be separated from Sears and retain that full strength.

Rick Moss
Staff

Excuse the interruption… Just wanted to say welcome, Doug, to the RetailWire BrainTrust. You’ve been a terrific contributor for some time now. Great to have you on board the panel!

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
5 years 11 months ago

Thanks, Rick. You run a great site — honored to contribute.

Lee Peterson
BrainTrust

Boy, that’d be suicide. As a matter of fact, perhaps they should think about the opposite: dump the Sears moniker and proliferate the terrific brands under that old tent.

Tony Orlando
Guest

I remember my days at Ohio State, when we studied Sears in our marketing class and how they got their start. It is a great story, but like the Pony Express it is close to the end, and wiser, smarter retailers have been eating their lunch for years. There are a host of classic retailers who no longer exist, and more will follow, and online has changed the world — for better or worse.

I question my own existence and hopefully I can stick around going forward, but consolidation in all retail and food service is leaving many empty stores in the dust. As many have said here before, “retail ain’t for sissies,” and boy is that true.

Hope all of my fellow retailers have a successful holiday weekend, as we sure could use it. Take care and be safe.

Mel Kleiman
BrainTrust
5 years 11 months ago

Sears should reinvent itself. Do what they still seem to do best — become a place for hard goods and get out of soft goods. Get rid of the big stores and build on the appliance store model that seems to be working for them.

Naomi K. Shapiro
Guest

Mel Kleiman said my thoughts succinctly, so I’ll just copy and paste them in…

“Sears should reinvent itself. Do what they still seem to do best — become a place for hard goods and get out of soft goods. Get rid of the big stores and build on the appliance store model that seems to be working for them.”

Kai Clarke
BrainTrust

Sell, sell, sell. Sears cannot grow the value of their existing key brands, which only points to a future that is in decline (as it has been) for Sears. By selling now, Sears can capture this inherent value, and then better invest the profits to better manage change at the remnants of the chain. Sears is clearly a store concept that has had its day in the sun, and the sooner it moves forward in a different direction, the better.

David Slavick
BrainTrust

Eddie monitored all 3 brands. They are a documented corporate asset. Putting it out there that these 3 iconic American brands are for sale makes perfect sense. When I joined SHC in July ’08, soon thereafter the stock was at $120 with $54B in sales and 4,400 stores. 8 short years later and we all know what it represents to shareholders today.

There remain a lot of brilliant dedicated employees at SHC. The Chairman values every dollar spent or acquired. Other than these 3 brands, physical store real estate and the Shop Your Way Rewards program I developed and managed for many years, what is left? The quality of Craftsman is not what it once was. Kenmore is a product manufactured by another famous appliance brand, nothing unique. DieHard still has quality equity. All could support new product extensions. A retail powerhouse with strong manufacturing depth out of China is my bet to pay ESL off.

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Braintrust
"These brands have stories that are authentic and legit, and it would be a darn shame to let them die out ..."
"I remember my days at Ohio State, studying Sears in our marketing class. It is a great story, but like the Pony Express, it is close to the end."
"Boy, that’d be suicide."

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