What does Amazon see in Sears?
A recent deal with the e-commerce giant sent Sears' stock price soaring by nearly 20%, but critics are skeptical about whether it will be a saving grace.
Sears has been on the path of decline for years. For many, it's more a question of when the company will fold, rather than if. But CEO Eddie Lampert isn't letting it go down without a fight.
"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 recent letter to shareholders. "I want to be clear about that."
As part of that transformation, the once iconic retailer is expanding a partnership with today's most emblematic retailer: Amazon.
The e-commerce giant will begin selling and installing tires, both DieHard branded tires and others, at Sears 2,100 Auto Centers nationwide. 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.
The Amazon deal boosted Sears stock price by as much as 19% following the announcement, but critics are skeptical that the deal is good for anyone besides Amazon. On the topic, the discussion forum RetailWire asked its BrainTrust panel of retail experts the following questions:
What do you make of the growing collaborative activities between Amazon and Sears?
What is Amazon’s end game here?
Here are nine of the most provocative and insightful comments from the discussion, edited by Retail Dive for length and clarity.
1. Grasping at straws
Max Goldberg, President, Max Goldberg & Associates: Sears grasps at straws while Amazon gets bigger. At this point, Sears is a rounding error vis-a-vis Amazon. As Amazon continues to grow, having the Die Hard, Kenmore and Craftsman brands can’t hurt. For Sears, this is a lifeline, but not enough to save company.
2. A good experiment
Camille P. Schuster, PhD, President, Global Collaborations, Inc: The locations of Sears offers the potential for Amazon to provide mechanical services. In addition, Amazon would then have the potential for using those locations for pick-up delivery. For Sears there is the potential for changing its business model to one of offering services. A good experiment.
3. In a word: Desperation
Mark Ryski, Founder, CEO & Author, HeadCount Corporation: In a word – desperation. I suspect that Amazon sees the Sears Auto Centers as a way to offer mechanical services to Amazon customers with very little downside. Sears will take anything it can get, and collaborating with Amazon gives Sears a small boost. But that’s all it is, a small boost. After everything Sears has been through (and continues to go through) it’s hard to see how this is anything but a Lampert lark. Sears has lost its credibility and this move won’t make much difference.
4. Testing the waters for an acquisition?
Phil Masiello, Founder and CEO, Hound Dog Digital Agency: Believe it or not, Sears.com still has about 1 million site visits per day. So, there is still something valuable in the website assets. Amazon has laid out its plans to own fashion, furniture and appliances online. So it is not surprising that they started selling Kenmore appliances last year. Kenmore is still a viable brand in the consumer’s eyes.
This new venture could be a good test for Amazon to get into a new category of Auto with an installation offering. This could also play very well into Amazon’s physical store effort. Amazon could be testing the viability of these brands for an acquisition at a later time.
5. Clever idea, Amazon
Paula Rosenblum, Managing Partner, RSR Research: It’s a clever idea for Amazon, actually. I don’t think they have the ability to sell tires en masse without a specific place that has agreed to install them. For Sears … I can’t see this deal supporting the moribund company for long.
6. Eying its prey
Ken Lonyai, Consultant, Strategist, Tech Innovator, UX Evangelist: When I hear "Amazon and Sears" I think of Amazon like a cat, seemingly innocently playing with a mouse, right before it kills it.
7. Sears is still 'a hot mess'
Neil Saunders, Managing Director, GlobalData: Behind the irrational stock price rise, there must be some assumption that either Amazon will save Sears or that it may want to buy Sears. I don’t buy into either theory.
Amazon is simply partnering with a retailer that has something to sell and a service to offer — as it does with loads of other merchants. To be fair, in this instance Sears can add genuine value as its auto centers are not at all bad. However, this venture does nothing to change the fact that Sears is broken economically, that its core retail business remains a hot mess, nor that it has very little idea how to extract itself from its difficulties.
8. It won't 'save' Sears
Dick Seesel, Principal, Retailing In Focus LLC: This is a better deal for Amazon than for Sears, so the jump in Sears Holdings' stock price is hard to justify. It provides Amazon a brick-and-mortar partner in yet another product category where it can gain share, and adds the last of Sears’s key brands (along with Craftsman and Kenmore) to the growing Amazon portfolio.
If Eddie Lampert’s long-term aim is to monetize the few key assets of Sears Holdings, this will help him meet his goal. But it’s misguided to think that this deal somehow "saves" Sears as an ongoing retail entity.
9. Just what the doctor prescribed
Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC: Good move for Amazon, and can’t hurt Sears. I get it. Sears needs an infusion of sales. Amazon may be exactly what the doctor ordered.
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