Like its previous agreement to sell Kenmore appliances on the e-commerce site, this latest move is a welcome effort to expand the availability of the failing retailer's most popular wares beyond its own stores, but it's not really going to help.
The world beyond Sears
After years of refusing to allow its top brands to be sold outside of its Sears and Kmart ecosystem, Sears Holdings Chairman and CEO Eddie Lampert finally relented this year and made deals to expand the universe of where consumers may find them. In addition to the agreements with Amazon, separate deals were made with manufacturers and distributors Cleva North America and Dorcy earlier this year to make and distribute Kenmore appliances and DieHard batteries to retailers around the world.
As consumers are increasingly not shopping at Sears stores, a sale through Amazon or elsewhere is better than none at all.
But sometimes late is just too late, because the value of the brand has deteriorated. By the time Lampert allowed Kenmore to be sold in other outlets, the brand's market share had dwindled from over 40% to less than 13%, while appliances from Samsung, LG, and Whirlpool have all surpassed it. DieHard has fallen as well, and though the decline is not as dramatic, from 7.5% down to 5%, its market influence is significantly less.
Simply because those appliances and batteries are now available on Amazon doesn't mean people will suddenly buy them in appreciably higher numbers. Consumers haven't been holding off on purchasing them because they were only available at Sears; they've moved on to other brands because they forgot they were even on the market. Lampert was on much firmer ground rebranding Sears auto service centers as DieHard Auto Centers Driven by Sears.
Hastening Sears' downfall
NPD Group says online appliance sales grew 38% in 2016 to $4 billion. Sears may be finally getting into that market in a big way by joining with Amazon, but selling appliances and batteries online will only serve to further cannibalize sales from Sears stores. And comparable-store sales are already in free fall at Sears and Kmart. Last quarter, they tumbled by mid-teen percentages at both, primarily because home appliance sales dropped.
And now Lampert is seeking to narrowly target the appliance and bedding markets at his new focused concept stores that will sell only those two products. He risks undermining whatever potential success they may engender by making them also available at Amazon.
It is true that Lampert coming around to innovative sales and marketing tactics is a welcome change from his intransigence in years past, but because Sears has fallen into such a state of disrepair, it's doubtful this change of heart can amount to much.
The last ounce of value
Sears was forced to sell the Craftsman tools brand to Stanley Black & Decker (NYSE: SWK) to generate a much-needed cash injection for the business, and also to help the retailer meet its pension plan obligations.
Previously, it spun off Land's End, Sears Hometown & Outlet Stores, Orchard Supply, and more. Last year Lampert set up real estate investment trust Seritage Growth Properties, to which he has sold Sears' real estate -- again, to raise cash.
All that Sears has left of any value is Kenmore and DieHard, and though Lampert entertained the idea of selling them off as well, he's instead chosen the path of better marketing and licensing deals. While that is the better option if he's really trying to salvage Sears' ability to function as a retailer, it doesn't mean it will be a successful endeavor.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.