Brand Challenges Ahead

Consumers may again take a liking to two dimming franchises, Sears and Kmart, if the merged partners start sharing the best of their brands, marketing executives and brand-image specialists said Wednesday. <BR><BR>At Kmart, that refers to apparel and...

Consumers may again take a liking to two dimming franchises, Sears and Kmart, if the merged partners start sharing the best of their brands, marketing executives and brand-image specialists said Wednesday.

At Kmart, that refers to apparel and home labels such as Jaclyn Smith, Thalia Sodi and Martha Stewart Everyday, and for Sears, hardware and appliance monikers such as Kenmore and Craftsman.

Such an initiative could win over new customers as well as lure back former shoppers who have strayed to such competitors as Target, Kohl’s, J.C. Penney and Wal-Mart, the experts said.

“This [deal] has huge potential to spur a shift in who’s shopping where,” said Marshal Cohen, chief industry analyst at market researcher The NPD Group. “More than half of consumers — 52 percent — who shop at discount stores shop at department stores, but the 48 percent who do not may be drawn in to buy Kmart brands at Sears.”

And although Kmart and Sears already have a significant number of customers in common, Peter Levine, executive creative director and head of brand creation at desgrippes/gobe, suggested the creation of brands to be shared, coupled with a reallocation of brands to be carried by both, could present the once mighty chains with “a chance to reinvent the store experience.”

A marketing strategy based, in part, on brand sharing, will not be as straightforward as a simple dual offer of labels, however. To be effective, the effort would command a brand audit, both to eliminate underperforming labels and avoid cannibalizing already strong brand businesses, noted Peter Arnell, chairman and chief creative officer at Arnell Group, a marketing agency and product design unit of Omnicom.

“Through the merger, there will be an audit of brands, and I imagine they’ll prioritize what should stay and go,” said Arnell, who in 2002 sought to refresh the Kmart shopping experience with a redesign of store elements, including fixtures, signs and logos. “I anticipate a deep culture change that will impact what the customer can find on the selling floor.”

For example, Levine said, though Sears’ Canyon River Blues denim brand would work well in Kmart’s environment, Kmart already does a good job with Route 66. A more symbiotic transfer could stem from a Sears Mart, a store-in-store at Kmart that would feature an assortment of Sears brand appliances.

This story first appeared in the November 18, 2004 issue of WWD.  Subscribe Today.

At the same time, Sears, which has struggled to establish a strong apparel presence since the late Nineties, with the failure of its Benetton USA launch and poor performance of Lands’ End at its stores, could get a boost from the addition of the Kmart apparel brands, observers said.

Among the Kmart brands seen as most readily transferrable to Sears is Martha Stewart, which, Arnell said, could be offered under a slightly different name at Sears, say, M for Martha Stewart.

Nonetheless, C. Britt Beemer, chairman at America’s Research Group, cautioned: “The blurring of merchandise could be a challenge. If Sears and Kmart blend their brands too much, the companies will lose their distinction.”

Also, little impact is anticipated to come from Kmart’s ownership of both store nameplates.

“Everyone knows Banana Republic and Old Navy are owned by Gap, but they retain their own identities — and I expect the same here,” Arnell forecast. Desgrippes/gobe’s Levine also expects the impact on people’s perceptions of the store names themselves to be minimal, although he was less sanguine than Arnell, stating, “I wonder if it’s going to play out as anything more than the combination of two down-and-out players that have been lost.”

Still, that combination is one likely to result in the negotiation of ad deals between Sears and Kmart — and better rates for both — particularly in TV commercials and Sunday newspaper inserts, Beemer predicted.