Sears extends partnership with Amazon as 'transformation continues'
"The reality is, transformation is an ongoing process and we are not done," said CEO Eddie Lampert.
HOFFMAN ESTATES, ILLINOIS – Part of Sears Holdings plan for transformation now includes an expanded partnership with Amazon to sell and install tires, both DieHard branded tires and others — at Sears Auto Centers nationwide.
The deal marks the debut of Sears' branded DieHard tires on Amazon. Customers will be able to use a Ship to Store function that is now integrated into Amazon's checkout process by selecting tires, the Sears Auto Center location and the preferred date and time for installation. The auto center will then follow up and confirm the date and time of the appointment.
There are 2,100 Sears Auto Centers to choose from and a "standard installation fee" will be applied.
The partnership is an extension of one struck in July 2017, when Sears began selling Kenmore appliances on Amazon and connected its smart appliances to the Alexa voice assistant platform. "Kenmore is now distributed nationally on Amazon with over 250 products and we are exceeding customer service level expectations," said Tom Park, president of Kenmore, Craftsman and DieHard brands at Sears Holdings, in a statement.
DieHard products began selling on the platform in December, with the assortment expanded in February to include automotive batteries. Tires will be rolled out in coming months along with the installation option.
Sears said it will also launch a new line of Kenmore smart appliances on Amazon and through Alexa, further extending its relationship with the e-commerce giant.
The Amazon deal boosted Sears stock price by as much as 19% following the announcement, made during the company's annual meeting with shareholders at its Hoffman Estates, Illinois headquarters. And while the partnership represents one piece of Sear's plan for transformation, there is still much do, emphasized Chairman and CEO Eddie Lampert.
"The reality is, transformation is an ongoing process and we are not done. I still firmly believe that, together, we can transform this company," Lampert wrote in a letter to shareholders. "I want to be clear about that."
To this end Lampert and Sears will continue to build omnichannel capabilities that link its ever-dwindling store base with online — 72% of online transactions are considered "integrated retail," according to the company — and grow the Shop Your Way membership program. "This is what gets me up every day," he told annual meeting attendees. It's the "clear strategy driving our transformation."
"Shop Your Way is fueling our transformation, 2017 was a year of great success for members who earned $800 million in Shop Your Way points," Robert Naedele, chief commercial officer, Shop Your Way told attendees. Members who engage with the program do so at greater rates than shoppers who do not. They buy more frequently, refer friends and become brand advocates.
But Shop Your Way has yet to make a big impact in the same way a partnership with Amazon has. Lampert said the ways in which people shop and make decisions have changed irreversibly, and that shift "is only going to accelerate."
Yet Lampert remains optimistic about Sears' future, in spite of its many problems.
"We must continue to take actions to right-size the company, increase liquidity and capitalize on the value of our brands in order to get the runway and flexibility we need," he said in the letter to shareholders. "Our hard work continues in 2018, and we remain focused on strengthening our financial position, continuing our operational momentum, and putting our company on the right path for the future."
The company is focused on enhancing liquidity, strengthening its balance sheet, addressing pension liabilities, creating value from assets and optimizing Sears' cost structure, Lampert said at the meeting.
Lampert's ESL Investments hedge fund expressed interest in buying Kenmore from Sears. The firm in April sent a letter to Sears Holdings suggesting that it divest the Kenmore appliance brand and the Sears Home Services home improvement business and that unit's PartsDirect division. ESL valued the home improvement and parts direct brands at $500 million but did not put a value on Kenmore. Lampert and ESL have been loaning Sears money to keep liquidity flowing.
It's been 13 years since Lampert combined Sears and Kmart into Sears Holdings — 2018 marks Sears 125th anniversary — and the road has been more complicated and difficult than anticipated, admitted Lampert. "I thought that Sears and Kmart combined had an opportunity to be a great retailer and great company," he told one shareholder, who asked Lampert for investing advice. "I would say, pick easy problems."
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