Last week I wrote about Sears' decision to sell its DieHard batteries outside of their stores, a first for the midwestern organization. Since then, I've seen a few articles questioning the move. For instance, BNET issued an article last week from Mike Duff titled, "DieHard with a Vengeance: Sears Deal Risks Brand Backlash." the Chicago Tribune published an article yesterday titled, "Sears retools brand plan, will sell Craftsman at Ace stores" from Sandra M. Jones.
Duff's article states, "For Sears, the new deal allows them to make more money from its brands, something that CEO Eddie Lambert has promised. But the concern is that by making a brand like DieHard less exclusive, Sears may be diluting its private labels. These days, private labels are a key reason people go to Sears. In a years-long study of retail private label reputation among consumers, Sears brands consistently ranked at the very top. If consumers can get Sears products elsewhere, or believe there is a decline in quality as a product becomes more widely available, consumers have less reason to shop the stores. That is why some observers were concerned when Sears moved some of its signature brands into Kmart, for example."
He mentions other organizations, such as Safeway, which sell their private label brands to non-competing stores. But those are non-critical products, unlike the DieHard line, which is a centerpiece for Sears.
And now I see that they're doing this not just once but twice, with their Craftsman producline..
Jones questions the move just as much in her article, writing, "By June, Ace plans to promote Craftsman products to its 4,500 Ace stores, independent dealers that are part of a cooperative. Sears has been talking to midsize hardware store chains across the country for the past year about carrying Craftsman products in their stores, holding discussions with Oak Brook-based Ace, Do-It-Best Corp. of Fort Wayne, Ind., and Tractor Supply Co. of Brentwood, Tenn., to name a few, according to people familiar with the discussions. The move follows an edict made two years ago when Edward Lampert, Sears' chairman and majority shareholder, publicly raised the possibility of selling Sears' exclusive in-house brands through rival retailers. Lampert grouped Sears' marquee brands -- Kenmore appliances, Craftsman tools and DieHard car batteries -- into a separate brand business unit in 2008 and hired former Procter & Gamble Europe executive Guenther Trieb to run it."
She follows up by stating that this is counter to what many other brands are doing, citing organizations like Wal-Mart, Kohl's and Home Depot, who are instead BUILDING their private label brands as a way to attract shoppers and differentiate themselves.
What do you think, particularly in light of the fact that the response from Wall Street has been underwhelming...is this a smart strategy? Is it short-term gain or are there long-term legs to what Sears is doing?