[Note: This article is pure speculation]
The rituals of starting college. My son AJ, our youngest son, started college this fall and he’s getting ready to move into his dorm. Think of all the exciting moments to look forward to — fall college football games, selecting a major and hoping you get your classes, finding out who your dorm roommate is going to be, going to your first (yeah right) college party, and the biggest of all, getting a refrigerator for your dorm room. My wife and I decided to buy one close to our house, guessing that in AJ’s college town, the selection would be slim by the time we got to it. Where else do you go to get a dorm-sized refrigerator, but to Sears, the American retail icon, albeit a bit down on its fortune.
I’ll be honest, it had been years since I had been in a Sears. We (correction my wife) started by going to Sears.com and doing some product research. It was Saturday night and what else did we have to do? After figuring out which model she wanted, she was able to easily select a “pickup in store” option. But it was not clear since we were buying on a Saturday night and the messaging stated, “pickup that day”, if we could pick up on Sunday morning, so she waited until Sunday to actually purchase. This was the first of several “not quite perfect, but pretty good” customer experiences I will comment on in this article.
On Sunday morning, back to the website, purchase the refrigerator, select the store and approximate time you’d like to pick it up, and finish the order. Shortly, a long and slightly confusing email with well hidden information on the store address was sent confirming the order. Then less than 30 minutes later, a second email was sent — your item is ready to pickup. We are off and running to the Sears at the Costa Mesa Mall.
Costa Mesa Mall is a huge place. Huge — one of the largest malls in America. There were no special instructions in the email or signage in at the mall regarding where pickup was so we stopped at the first Sears sign we saw. We went in and talked to a really great clerk who told us we needed to go to the next mall entrance over. Back to the car, and 15 seconds later we are at the pickup location — we think as there is no overt “SEARS ORDER PICKUP HERE” signs. We walk in the area, and the next challenge awaits us — the self-service kiosk.
As you can see from the picture, the kiosk needed to be explained with the pink note. We quickly entered our phone number, our order was found, and we were abruptly told to wait. We turned around and saw a monitor with my wife’s name listed and other’s customers (full names??) listed. This was great as you could see they were getting your order and where you were in the queue.
Waiting only about 30 seconds, a friendly associated walked out from the warehouse with our order and we loaded it into our car. He said they do about 20 orders on an average day.
So although there were a few imperfect details, all in all, this was a great experience. But why would this dinosaur of American retail founded in the 1893 as a pure catalog company be a great acquisition for Amazon? Let me count the ways.
The Case for Amazon’s Acquisition of Sears
Amazon and Sears are already effectively partnering in many manners, including
- Private Label Opportunities — Sears Holdings has many brands which might be of interest to Amazon. Kenmore appliances, DieHard batteries and Craftsman Tools are the most recognizable brands. Amazon already has massive private label business (~80 brands) and this is a big pillar of growth and profitability going forward.
- Sears Tires — Amazon and Sears earlier this year started a ship-to-store program allowing customers to buy tires (any tires) at Amazon and have them delivered to one of 47 Sears Automotive centers for installation and balancing. In August they announced expanding nationwide in all 50 states. One could envision an expansion to purchasing car parts or other services at Amazon and having the service work done at Sears.
Beyond these current “partnership” approaches, additional points of leverage could be using these auto service centers to provide maintenance for the thousands of “Delivery Service Partners” vans (they just ordered 20,000 vans) which will be leased by independent fulfillment businesses. Sears PartsDirect could be a nice addition to the existing Amazon tools business. Providing replacement parts and services for home appliances, lawn mowers and tools, the integration of this business would be a nice fit for Amazon. I expand on the Sears Home Maintenance strategy below. I don’t know how to think about Kmart. I don’t think it fits the upside opportunities I see for Amazon for the Sears businesses.
But Sears has many more assets that could be leveraged, and Amazon could, with some dusting off and some “Amazon Way” improvements and scaling, could have great payoff for Amazon. The Sears Home Maintenance business would be a great jumping off point for an Amazon-owned home services business. With the “connected home” with Echo and Ring products being a key enabler, Amazon could fix your microwave, install a new router, put in home security and deliver a new supply of paper products all in one stop. Think Geek Squad meets your appliance home repair person.
The Sears physical and primarily mall-based stores and fulfillment network could be a nice addition to Amazon’s growing physical store strategy. After rationalizing many of the stores and for the remaining, redesigning the in-store experience, they could be both a valuable fleet of mall-based stores and customer pickup locations. Whole Foods only has 480 locations and is limited to essentially food. A reconfigured and refreshed Sears could be a retail play for Amazon’s apparel, home and electronics brands.
Finally, one of Amazon’s risks is “too much of a good thing” type of risk. Keeping the brand of Sears gives Amazon another non-Amazon brand to help avoid too many Amazon signs.
Would Eddie Lambert be willing to cut his losses after 10 years of a battle that has no end in sight? Would Amazon be willing to invest the capital not just for acquisition but for a massive refresh for everything at Sears? Would this be the end of a “Life, Well spent “(trivia — that is Sears current tagline). Would Kmart be part of the deal? The only fact I know is this. — Amazon is relentless in reducing friction and delivering a refrigerator into every dorm room.
Now, about what might be stocked into that college dorm refrigerator???