http://money.cnn.com/2004/11/17/news/fortune500/sears_kmart/index.htm?cnn=yes Consumers could be getting mall-based alternative to discounters in $11 billion merger deal NEW YORK (CNN/Money) - Kmart is buying Sears, Roebuck & Co. for $11 billion in a deal that will marry two of the nation's oldest, but troubled, retailers into the No. 3 retail chain. The deal, announced by the retail chains Wednesday morning, is meant to merge the best of both companies' brands. The new company will be known as Sears Holdings and be based at Sears headquarters outside Chicago. But both names will continue to be used on stores. Kmart's strength is clothing and home accessories, with such brands as Thalia Sodi, Jaclyn Smith, Joe Boxer and Martha Stewart Everyday products. Sears' has long been known for its Craftsman tools and Kenmore appliances, and while it's struggled in clothing and other soft lines, it bought Lands' End, and developed youth-oriented Apostrophe brand, to try to fill those holes. For consumers, the deal means being able to get appliances and other hard goods at Kmart and more clothing at Sears -- and could mean better deals as the chains try to compete. Sears is still the biggest retailer of major appliances in the United States, although it has been losing customers to competitors, according to Marshal Cohen, chief retail analyst with market research firm NPD Group. "Imagine going into Kmart and buying a Sears Craftsman tool set, or buying Kmart's Martha Stewart home products at Sears," Cohen said. "To Kmart shoppers, Lands' End may not mean anything, but now it will." The new company will continue to operate both Sears and Kmart stores but "several hundred" Kmarts will be converted to Sears, Sears Chairman Alan Lacy said at a news conference announcing the deal Wednesday. The companies currently operate about 3,500 stores combined. "Sears has had a very different problem from Kmart," Lacy said. "Our service and products are as good as our competitors but they're not where are customers are. This now gives us the opportunity to grow off-mall locations closer to the customer. It's all about growth." "We'll have work to do ahead converting Kmart stores into Sears where appropriate and (to) bring some of Sears' products into Kmart. The idea is to make the stores more competitive while staying focused on the customer," Kmart Chairman Edward Lampert told analysts and reporters Thursday. "Kmart never had appliances and had no reputation for service," said Kurt Barnard, an independent retail analyst. "That's an honor that belongs to Sears. And Kmart has a reputation for low prices, which Sears never has had." But Barnard and other analysts said the combined company will still face stiff competition from more successful names in retailing, and that store closings were likely. The merger should help the new company compete against Wal-Mart Stores (Research), the world's largest retailer and an aggressive discounter, as well as Home Depot (Research), the home improvement chain that ranks as the country's No. 2 retailer overall, and Target (Research), which will lose its place as No. 3 to the combined Sears-Kmart. Investors applauded the deal. Sears (up $10.34 to $55.54, Research) stock soared 22 percent while Kmart jumped about 17 percent in late morning trading. For more on what the deal means to investors, click here. The companies expect cost savings of $500 million a year. Tilted in Sears' favor Sears has been too slow to expand away from mall locations, industry analysts said. "If there are indeed hundreds of Kmart conversions into Sears, the company will dramatically accelerate its off-mall presence, a category which has been its downfall," said Lois Huff, retail analyst with Retail Forward. Sears opened its first non-mall store only 14 months ago, Sears Grand, in a bid to battle back against the "big box" chains like Wal-Mart, Target and Best Buy that have moved rapidly into free-standing stores in cities and suburbia. "The benefits to Sears consumers is more product choice and shopping convenience. Kmart's apparel brands like Joe Boxer and Thalia Sodi have lower starting price points, so consumers could see some downward movement in prices in the apparel category." said Huff. "The winner in this deal is Sears. It has the brand heritage and the better brands," she added. "The Kmart stores that continue to exist will be the ones that Sears passed on either because their locations weren't desirable or they weren't profitable. If the company keeps them, they could be converted into value stores in the same category as Dollar General," she predicted.
Man I thought K-Mart was going under a few years back, Sears must be even doing worse than them. Man makes me yearn back to the days of Gemco, Fedco, Woolsworth and Montgomery Ward.
This is not true. The N. Shepard Sears and the Main Street Sears are free standing stores and have been around all my life (35 years).
Dude, I second that. That store in Dallas off of Alpha and the Tollway is sweeeeeet. Stuff I can't afford, but can salivate over...
The problem is, they target a niche market that can afford high end household goods. The one over here near Willowbrook, which is an upper middle glass area, shut down after less than a year after it opened.
From what I got from the article, it's not a question of Sears' poor performance. The people from Sears feel that they don't have enough access to consumers because they're limited to shopping malls. Hence the part about K-Marts being converted to Sears. K-Mart gets to ride Sears' success, and Sears gets to open "new" locations and have better accessibility for consumers. Works out for everyone.
