Sears keeps shrinking, threatening business that depends on scale
After another round of store closings, Sears is shrinking to the size of a regional grocery chain.
The department-store behemoth that once blanketed the U.S. and Canada with more than 4,000 stores and sold everything from ready-to-assemble houses to Christmas trees will now operate just 182 stores. This ranks Sears’s scale with the likes of Weis Markets Inc., which owns grocery stores in Pennsylvania and New York, and quirky specialty retailers like Crocs Inc.
The sharp reduction of store count exacerbates doubts about whether the company can compete – not just with merchants like Target Corp. and Walmart Inc. that have eroded its sales for years, but also with the likes of Home Depot Inc. and Lowe’s Cos., which have muscled into the appliance space Sears used to dominate.
“From a logistics perspective, supply chain, buying power, sourcing – all of that – it’s going to be even harder to maintain optimal competitiveness, brand competitiveness, but also price competitiveness,” said Michael Osborne, CEO and president at consulting firm SmarterHQ.
The Sears bankruptcy case is still dragging on, with the estate filing complaints Thursday against almost 200 vendors and professionals to claw back payments that Kmart Holding Corp. made up to 90 days before it declared bankruptcy. Some of the complaints demand amounts between $20,000 and $50,000 from defendants that include an air conditioning company, a honey maker and a law firm.
Sears is cutting not just the number of stores but also their size, aiming to operate smaller locations that are focused on bigger-ticket home purchases. To that end, Edward Lampert’s Transform Holdco LLC repurchased the remaining stake in Sears Hometown and Outlet Stores Inc. this year. Those stores feature appliances and lawn and garden goods.
Sears furnished generations of households with its Kenmore refrigerators, stoves and dishwashers. But leading retailers like Home Depot and Best Buy have greatly expanded in the category, while the Kenmore brand has been on the block for years.
“It’s going to be a difficult journey” for Sears to compete in appliances, said Farla Efros, president of HRC Retail Advisory. While the brand used to be strong, “many more players have entered the marketplace.”
While Sears has a chance to occupy a niche space in the market, “I am not convinced it’s still relevant and necessary,” she said in an email.