Sears Holdings (NASDAQ:SHLDQ) chairman and CEO Eddie Lampert seems to be having a run on good ideas this year. In addition to the sale of the Craftsman tool brand, licensing out the Kenmore name to third-party gas grill makers, and rebranding its auto service centers under the DieHard nameplate, he's now opening new Sears stores dedicated solely to appliances and mattresses.

Unfortunately, like many of the other ideas he's proposed lately, it's probably too little, too late. So many retailers are plugging into the appliance trade that pricing is gutting profitability, and that's an outcome Sears can't afford.

Shopping for a washer and dryer

Image source: Getty Images.

Making the most of what's left

It's been long argued that Sears should get rid of apparel, which has been among the retailer's worst-performing departments and concentrate on its best-sellers like appliances and its Craftsman tools.

It wasn't that long ago that the Kenmore brand dominated the appliance market and owned a 40% share. Now, though, it's dwindled to less than 13%, and appliances from Samsung, LG Electronics, GE (though it's now owned by China's Haier Group), Whirlpool, and Electrolux all surpass Kenmore.

Sears was also once the place where America shopped for appliances, but it too is fading fast, having lost the top spot to Lowe's and Home Depot several years ago, and it's quite possible Best Buy will leapfrog over it this year, knocking it back to fourth place. There are new entrants in the market, too, or re-entrants, in the case of J.C. Penney (OTC:JCPN.Q), which after a 30-year hiatus, has brought back appliances to its home department.

Appliance sales continue to enjoy strong growth, widening 4.2% last year, but it's coming at a cost.

Appliance repair from Best Buy

Image source: Best Buy.

Profit centers evaporating

Sears Hometown & Outlet Stores (NASDAQ:SHOS), which Sears spun off in 2012, and which has dedicated appliances stores, still suffers from declining sales and profitability. In its fiscal first-quarter earnings report last month, the retailer said revenues tumbled 16.5% to $488 million as comparable-store sales fell 7.3% due to the "hyper-competitive pricing in the home appliances category."

It noted that in its Hometown division, appliances did better than the average, but that suggests they were lower year over year, while in the Outlet unit, they did worse because the promotional atmosphere by rivals on new, in-box appliances made the prices on its own out-of-box inventory unattractive.

However, it's in the process of converting hundreds of its Hometown stores into All American Appliance stores. Almost two-thirds of its Hometown stores have been converted to the new format so far, bringing the total to 548, and it plans to convert an additional 125 to 130 stores by the end of the year.

In short, there's already an appliance retailer that is closely affiliated with Sears that isn't doing all that well, even if appliances are doing better than the rest of the goods offered. And hasn't Sears done this sort of thing before with its Brand Central stores?

There's also the growth of the online channel for appliances that Sears ought to be concerned about.

NPD Group says consumers spent $4 billion online last year for major home appliance, up 38% from the year-ago period. Although Lampert has invested considerable sums of money in digital technology for Sears, it has done nothing to stop the slide in sales. And if Sears Hometown's experience is any indication, which has been below its own internal expectations, online appliance sales won't be going Sears' way, either.

Couple laying on a mattress

Image source: Getty Images.

Not taking it laying down

All of this doesn't even touch upon the mattress aspect of Sears' new stores. Mattress Firm, for example, is the country's biggest mattress retailer, and it had almost 3,500 stores before it was acquired by Steinhoff last year. It was rolling up the mattress industry under its umbrella before getting acquired itself.

Mattresses are also a highly competitive industry, and making a profit isn't easy, which is why Mattress Firm was able to buy up so many rivals.

And there is a surprisingly vibrant online mattress sales contingent growing, too, especially with the so-called bed-in-a-box phenomenon from retailers such as Casper; Target recently became the lead investor in Casper in a $170 million round of financing. It will begin featuring Casper beds in about a third of its stores.

There is no shortage of competition for Sears Holdings plans, and while these unique stores play to its strengths, the decline in the value of the Sears name and that of its brands indicates that this effort will come up short.

A decade ago, Sears could have made a strong go of it, but now it seems like the last gasps of a dying retailer. Appliances and mattresses together in one store is a good idea, but it's one that has come too late to make a difference.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.