On the heels of yet another dismal first quarter, Sears Holdings Corp. announced it is exploring options for its iconic private brands Kenmore, Craftsman, Diehard.
The retailer stated in its first quarter earnings report, released this past Thursday that it was exploring options to expand not only its private brand products but also it’s home services businesses.
“As we continue to evaluate opportunities to accelerate our transformation and drive growth, we recognize there is significant potential to further develop our Kenmore, Craftsman and DieHard (KCD) and Sears Home Services (SHS) businesses, Accordingly, our board of directors has decided to explore alternatives for KCD and SHS. Our iconic KCD brands are beloved by the American consumer and we believe that we can realize significant growth by further expanding the presence of these brands outside of Sears and Kmart.”
The brands have been shopped around to retailers a number of times over the years, and are available in varying levels at Ace Hardware, Orchard Supply and Costco among others. I can certainly understand why Sears would want to push the brands to stand alone national brand status and sell more products more places, they need the cash and there is little hope it will come from Sears or Kmart. However, I am skeptical that there is a lot of benefit for any retailer competitor – why breath lifeblood into a competitor?
The list of retailers who might consider an acquisition of the brands is intriguing.
The two largest could be a market changer.
Amazon: The online powerhouse could easily add Kenmore, Craftsman and Diehard to bring brands to their stable and take share in the competitive appliance and tool categories. If they leveraged learnings from their Kindle private brand team the opportunity is huge. It seems like a long shot but it could be just what the brands need to continue to grow.
Walmart: Growth at the world’s largest retailer is always challenging – the purchase of Craftsman and Kenmore could be the bold move they need. Turn the Walmart Auto Center into a Craftsman Car Care Center and convert that corner of the store into a Craftsman tool store-within-a-store giving the tool buyer a great shopping experience and significantly more convenient doors to shop. Then there is Kenmore the appliance move, convert all small appliances to Kenmore, add major appliances and push into electronics with Kenmore and a curated national brand set. The purchases would dramatically shift share of the appliance and tool market in the U.S.
Lowe’s: If the price is right this could be just what Lowe’s needs to strengthen their tool game and compete to win against the Home Depot. The move would give them a significant advantage in tools with a brand that far exceeds Kobalt in trust, awareness and penetration. The purchase of Kenmore would catapult them into private brand appliances, a category they have mostly avoided with their private brands. Kenmore and Craftsman could drive significant traffic to Lowe’s.
Home Depot: The big win for THD would be Kenmore and appliances, they would essentially buy market share. Although Craftsman could help their tool department, they are already a very strong player and would not reap the same benefits as Lowe’s.