Is Sears turning away from retail and evolving to manufacturer?

Sears announced recently it's intent to begin to distribute it's private label Craftsman tools to Ace Hardware. Interesting because retailers use private label brands as a draw to try and create brand equity and loyalty for their stores. Good move or not? 

Next. Sears is completely revamping and relaunching Kenmore products, their appliance private label brand. Craftsman and Kenmore brands have great brand equity; however, Sears as a retailer does not (nor does K-mart really). Makes me wonder if Sears has a long-term strategy to get out of the retail business and become a manufacturer? Or sell the brand names? 

It is clear they do not have a great differentiation strategy or equity beyond the value of those private label brands. I have been fascinated by the Sears quagmire which is to me: Major mall square footage they need to fill but have brand equity for products to fill half the store. They are left to do something with the additional space and fill it with products that do not turnover, marginalizing their GMROI (had to throw that in). I regularly ask students, 'What does Sears stand for?" They go blank. One student said 'Craftsman tools are awesome'. 

So the fact that they are allowing distribution of Craftsman to other retailers is interesting. It may add incremental revenue in the short-term, but, certainly will start to erode a reason to go to Sears for tools over-time. Given the spending on updating and upgrading Kenmore may mean similar intentions with that brand. Can Sears as a retailer sustain this strategy?

Let me know what you think.
Jackie 

Posted by Jackie Kuehl at 2/25/2010 2:22 PM
Categories: sears, retail marketing, brand strategy, private label
Tags: retail marketing sears brand equity
 

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