US News: Sears Opens Its ‘Essentials’

Last month Bob Vereen reported on the controversial merger between Sears and Kmart. This month, Bob looks at a new store format for the company – Sears Essentials…

Since the merger of Sears and Kmart, the company has wasted no time in starting the process of re-branding. How effective will the new Sears Essentials be as a format to revive the lagging retail fortunes of Kmart and Sears, the two divisions of Sears Holdings Corp.? Will this format become a genuine competitor to Wal*Mart, Target, Home Depot and Lowes?

Caption: The Sears Essentials store front features a blue and white color schemeAHJUSNews01July05

Perhaps the very future of Sears Holding – the company which was created by the merger of Kmart and Sears – will depend on the success of this new division. The rationale behind the concept is to try and rejuvenate sales in some marginal Kmart locations by merging some aspects of Sears’ powerful brands with Kmart’s traditional lines.

The first Sears Essential store held its grand opening in Palatine, Illinois, a Chicago suburb, on June 18 this year, although it remained open to the public while undergoing the transformation. It is a store of approximately 100,000 sq ft, and its inventory now includes the powerful Craftsman brand of hand and power tools, lawn and garden equipment, and well-known Kenmore appliances. Other prominent brands now in its inventory include DieHard car batteries, as well as other auto care needs, along with Weatherbeater and Easy Living paints.

What is it like? As it opened and despite some face-lifting, it is a bland store, with no exciting merchandising innovations. It lacks the style of Target and the massed merchandise appeal of Wal*Mart. If it hopes to appeal to males with its powerful Craftsman products, it lacks the inventory assortment to make it a strong competitor against Home Depot, Lowes, or even local hardware stores. And strangely, they have positioned them in the very rear of the store. It is, in many respects, similar to the merchandising assortment and inventory strategy used in another Sears test unit – Sears Grand – because it includes a fairly extensive assortment of boxed and canned food products.

AHJUSNews02July05Caption: The floor plan of the first Sears Essentials store

Its “Home Improvement” department, jam-packed with Craftsman products and Sears’ paints, however, is tucked in the far right corner of the store, against the back wall. Its 8,500 sq ft of space does not include as many hardware, plumbing or electrical items as does a typical Kmart store – certainly not enough to satisfy any weekend or after-work DIY project needs. Another 3,000 sq ft is devoted to lawn and garden – mowers etc, and this area adjoins an outdoor garden area. Compared with a typical Kmart, it substituted a huge Craftsman assortment for the skimpy Stanley and Black & Decker assortments of Kmart, and sharply cut back on the variety and space devoted to hardware, electrical and plumbing.

According to some knowledgeable industry observers, Sears Grand units are turning out to be “product-sellers”, not destination stores. In other words, men will come to these more convenient locations to buy Craftsman and other Sears brands, rather than travel longer distances to a mall, and women will have a more convenient destination to check out Kenmore appliances and other home wares. This might well be the company’s strategy for Sears Essentials, too.

Reportedly, Sears is pleased with the sales of many of its big-ticket Craftsman items in the few Sears Grand stores now operating. Bringing the product closer to the consumer appears to be paying off, though the company has not embarked on a fast growth strategy for Sears Grand, and has already closed several of its Great Indoors formats due to lack of sales. From a soft goods standpoint, Sears Essentials will probably rely on the appeal of Sears’ basic categories, coupled with Martha Stewart’s styles to bolster sales in those categories.

Caption: A strong paint department – but no staff were in evidence to help with paint selection and mixingAHJUSNews03July05

In early press announcements, Sears officials stated that management felt it could open up to 400 Sears Essentials in former Kmart locations over the next four years. A Sears’ employee involved in the conversion process says management has upped that number to as many as 900 conversion locations. However, even that number pales in comparison to the thousands of locations owned by its two mass merchandise competitors and the two big home centre chains – Home Depot and Lowes.

Meanwhile, at the same time that the first Sears Essentials was opening, management was also adding Craftsman brands and major appliances to another Chicago-area Kmart store, this one in the Norridge section of Chicago, on South Harlem Street near Montrose – the second stage of its integration of the two companies. However, instead of placing the majors and strong Sears brands in the rear of this Kmart, both categories sport a prime upfront location – the location in which they are positioned in Sears Grand.

Caption: One part of the dominant Craftsman tool section, which replaces Stanley and Black & DeckerOLYMPUS DIGITAL CAMERA

Both the remodelled Kmart and the new Sears Essential sport new color schemes. The Kmart has ditched the traditional bright red and blue that have identified the chain for years. Blue is still evident, but it is more of a pastel blue, very similar, in fact, to the shade used by Lowes, one of its home centre competitors. And, surprisingly, the second color is also a familiar one – an orange similar to that of Home Depot. Perhaps, it will only be industry professionals who will notice that the “new look” of orange and blue is reminiscent of the color schemes of Home Depot and Lowes!

How much business does Sears expect to do out of this first Sears Essentials? It is interesting to note that it has only seven checkstands, whereas the revamped Kmart has fourteen. Is that a sign of diminished expectations? Only time will tell.