Skip to content

Sears & the Perilous Nature of Selling Private Label Brands into Other Stores

29/06/2011

So we all know how Sears/Kmart is just not making it happen. It seems to be a beast that’s trying to get it’s groove back while coasting on its massive inertia. It also doesn’t help that the owner looks at the business as giant real estate investment.

The lastest plan Sears has is to create profitability by selling its amazingly successful private label brands in other stores – instead of using them to create a basis for driving sales into their own stores. In some ways I imagine that this could work out, but there are a lot of reason why this would be folly, at best.

One of the first things to think about is that this will be the first time Craftsman (or Kenmore or Diehard) will have to compete against other brands.

You could say that they’ve always have, but if you take it store by store, Craftsman has never had to compete at the shelf level. There has never been another brand that’s hung right next to a Craftsman product where a customer would hold both and decide between them. You came to Sears to buy a Craftsman tool. The world is different when people go to a brand neutral store like Ace where Stanley and even Ace have their brands.

Hmmm, I don't see any Craftsman packaging there, do you?

Why does this matter? While Craftsman has a strong brand (and that may be enough for a while), they will now have to compete on features and perception in direct comparison with other brands. If they fail at this, then all they’ll have left is to compete on price – a dangerous place for any company to be.

Sears will now have to work to make their packaging and marketing amazingly more effective. If you’ve ever compared Craftsman’s packaging to say, Stanley, you can see that the design work has gotten soft due to the lack of in-store competiton. This re-treatment will be costly. Hopefully, they’ll decide against creating two lines of packaging for Sears and then for others.

I think the real question is what does Sears get out of this? It’s one thing to plow Craftsman into Kmart, a wholly owned subsidiary. It’s quite another to spread your private brand equity around to any other store that wants to carry it. Sears stands to gain a lot more product sales, sure, but at what cost?

Allowing other stores to carry your flagship products destroys any reason for consumers to visit Sears stores. If I can get Craftsman tools at Ace, why should I drive to Sears to buy them, right? What’s the problem? Sears still gets a sale, right? They do certainly, but what they lose is shoppers in their store…shopping for other things and impulse buying, No longer do you have someone coasting through clothing to get to tools. There’s a reason why you can get into the mall through Sears and Sears seems to have forgotten it.

My thinking is Sears essentially looses its anchor brand draw to its stores, losing Sears store traffic and now has the added burden of converting a non-competing store brand into a national name brand. What happens to Sears, now?

Advertisements
2 Comments leave one →
  1. 30/06/2011 15:32

    Having family work for Sears Corp. I’ve heard various analyses of their decline. But definitely one thing that has stood out is the draw of their well known brands to get people into the stores. Without that and the increasing competition in the tool space (there seems to be a large number of similar quality brands in addition to cheaper imports) the move doesn’t seem too smart.

    Unless they don’t care about the stores and plan of getting rid of the stores eventually.

  2. michael G Cox permalink
    07/09/2011 17:17

    Great observation, position and read Eric.

    Best

    Michael Cox

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: