Posts Tagged 'Sears'

Sears to sell Kenmore through Amazon

“If you can’t beat ’em, join ’em” seems to be the theme of Sears Holdings’s latest decision. It will be selling Kenmore-branded appliances through Amazon, as the online giant expands its footprint into new categories. Here’s my take, from RetailWire:

If Sears’s goal now is to monetize its assets, then the decision to sell its Kenmore brand through Amazon was a good one. Kenmore, after all, is the strongest brand left in the Sears toolbox. And the Alexa tie-in is smart, too, no matter whether it originated with Amazon or Sears (or its appliance suppliers).

But the move raises a white flag, too: It signals that Sears’s own physical and online footprint is barely relevant anymore. If you can buy a Kenmore dishwasher from Amazon (including delivery, installation and warranty service), why would you bother finding a Sears store as it continues to shrink its store count?

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Sears opens appliance/mattress stores

RetailWire panelists discussed Sears’ plans to open stores specializing in nothing but major appliances and mattresses. While this may have been a solid strategy 20 years ago, count me as a skeptic given Sears’ issues today:

It’s hard to picture anything solving the Sears problem at this point. The company just announced the closure of a mall anchor here in Milwaukee (after closing another anchor over a year ago), leaving it with just one full-line store here. I’m sure the story is being duplicated around the country, at the same time that Sears has been closing (not opening) appliance-only franchise stores.

Sears’ legitimate franchise in appliances is evaporating as it continues to shrink its footprint and sell off its key brand (like Kenmore). The appliance space is crowded with competitors, now including major investments by Amazon and JCPenney. And who needs another place to buy mattresses, especially given the growth of online sales?

JCPenney: “Less bad than most” again

JCP reported 2nd quarter results that were modestly better than other department stores’ sales trends, and measurably better in operating profit compared to their own past standards. This continues to point toward operating improvements but it’s a long way from a true turnaround until the sales trend becomes more robust. Here are some thoughts I posted on a recent RetailWire panel discussion:

Marvin Ellison has noted the sales gains in JCP locations where Sears has closed, and it’s not surprising. Even those Sears stores that are still open are often woefully light on basic inventory, especially in Penney’s sweet spots like sheets, towels, socks and underwear. And the play for Sears’ appliance business is clearcut, even though JCP also has an opportunity to make its own home stores more productive.

But some of the credit for JCP’s modest operating improvements is coming from other initiatives that Mr. Ellison is spearheading — cost reductions, improved supply chain management, better IT managment, and (most important) new merchandising leadership. Given these changes, and the tailwinds coming from Sears and Macy’s store closures, JCP investors probably have a right to expect faster growth after 2016.

Some complementary thoughts on the major appliance business

Here are two back-to-back comments (from RetailWire)…first, about JCP’s accelerated move into the major appliance business and second, about Sears’ plan to expand free-standing stores:

If JCP moved up its announcement about major appliances to counteract a speculative “news story,” they are giving the New York Post more credit than it perhaps deserves. I take it as a positive that the test program is working, and that Penney is moving fast under Marvin Ellison’s leadership. As to “why appliances?” — the collapse of Sears represents low-hanging fruit for JCP, which has space to burn in its home store.

There is a Sears Appliance and Hardware store in the Milwaukee suburbs — I’m not clear whether it is owned-and-operated or a franchise outlet. (There is also another appliance store that is definitely franchised.) So I’m a bit surprised to read about this as a “new” concept, unless what’s new is the direct ownership by Sears.

The question with Sears Appliances is whether a rollout of freestanding stores can offset the bleeding of its core business, and the continuing amount of excess square footage that the company operates. But Sears’s appliance business has probably not been compromised by the overall collapse of the brand — so it’s not a bad idea on its own merits.

JCPenney re-enters the appliance business

JCPenney recently announced a regional test of re-entry into the major appliance business, which they exited at least two decades ago. RetailWire panelists had a chance to weigh in on the merits of the strategy; here’s my take:

I’m not sure whether the JCP appliance test is intended to take share from Sears right away. However, it’s useful for Penney to take advantage of Sears’ accelerating decline and its increased pace of store closures. It’s worth finding out now (instead of after the demise of Sears) whether this is a viable category in terms of driving sales and profits, and in terms of the unique logistical challenges of the business.

Meanwhile, even without the Sears factor, many JCP stores have productivity issues today, especially with too much space in the home store. This presents Penney with an opportunity to fix the problem, provided that the appliance business can deliver incremental margins in a competitive category.

Black Friday 2015 observations

Many RetailWire panelists and others have commented on the relative lack of mall traffic, on the day after Thanksgiving. While some of this can be blamed on the rapid growth of both e-commerce sales and Thursday openings, I still lay part of the blame on merchandise content. In short, the lack of newness in women’s apparel is hurting sales right now, and not just on Black Friday:

One mall doesn’t make a big sample size, but the Simon mall that I shopped on Friday morning is anchored by Macy’s, JCP, Sears, Bon Ton and Kohl’s. So it’s a good place to look for areas of common ground. I noted the same thing that many observers saw nationwide: Mall traffic was not impressive around 10am on Friday, at what should be the height of “doorbuster” sales.

Yes, the growth of omnichannel, Thursday openings and weeklong “doorbusters” (instead of for a few hours on Friday morning) have all affected After Thanksgiving volume. But these tactics didn’t just start in 2015…they have been gaining strength for the past several years. So how to account for the visible dropoff on Friday? I believe it still comes down to merchandise content, especially in the women’s apparel areas that have been troubled all year. In my observation, this was consistently the quietest area of the stores.

That being said, it’s too early to write off the weekend (or the season) until somebody adds together the brick-and-mortar numbers with the e-commerce sales and what is likely to be a robust Cyber Monday (or “Cyber Week”) this year.

How does “the Internet of Things” translate into retail sales?

The “Internet of Things” is a buzzword that I don’t fully understand myself. I believe it relates to devices that can be interconnected via wifi network and controlled remotely via mobile device. (Everything from thermostats to security systems to slow cookers…you’ve seen the ads.) On a recent RetailWire forum, panelists weighed in on Sears’ move into this business. Here’s my comment on their “Connected Solutions” strategy, especially in contrast to Target’s decision to open pop-up stores:

I shopped a Sears store recently in the Milwaukee area, and they were in the process of setting up an extensive “Connected Solutions” shop adjacent to the electronics department. (The merchandise hadn’t been set up yet, but the sales associate explained the idea to me.) I think Sears’ approach — integrating it into their existing stores — actually makes more sense than the idea of a pop-up store. Target certainly has enough real estate in its stores to roll out the idea faster, especially with their decision to take a more “curated” approach to the grocery business.