Brandweek article on the Sears Kmart merger

Sears and Kmart: A match made in hell



Tom Dougherty writes and article for Brandweek on the Sears Kmart merger.

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By Tom Dougherty

Sears and Kmart need a good deal more than a walk down the aisle to ease their retail woes, which neither entity has yet to I identify. The real issues facing the new partners are brand issues, and I suspect that the merger of two dinosaur cultures will do little to revive their businesses into a robust and healthy enterprise. (Read a new article on the rebranding of department stores here)

Talk centers on physical store locations and the consolidation and fat trimming the new management team plans to whole-heartedly pursue. But there has been nothing said about the real problem, and that problem comes down to brands.

The sad fact is, the Sears and Kmart brands are non-existent to the consumer. Under old brand models that measure equity and value, such as BusinessWeek’s Top 100 index, the two partners have achieved brand equity. However, old school thinking that confuses corporate identity with brand meaning is not the answer-it is the obstacle. Sears and Kmart do not suffer from lack of awareness or from lack of physical locations.

What is missing?

the Sears Kmart merger won't fix either brand

Kmart and Sears. Really?

What they lack is “mind location,” and I fear that they either do not recognize or fail to acknowledge this deficit. Sears occupies a position in the consumer’s mind as a “mall of brands,” while Kmart is simply location driven. When the retail market today evaluates their space, they see it divided by discount retailers like Wal-Mart, Target and Kmart, and traditional retailers such as Macy’s, Sears and the like. In other words, retailers view their market space and brand meaning as a reflection of who they are as retailers and not who the consumer believes they are as customers.

What really matters is the brand face, which is a reflection of who the consumer believes they are when they use a particular product or service. Certainly the corporate identity for Wal-Mart and Target is built around “best prices,” but customers shop at these two titans for very different and telling reasons. Wal-Mart customers, for example, believe they are smart enough to know they can buy comparable merchandise at better prices because they are smart enough to sacrifice 10 minutes of an “industrial experience” for perceived value.

The Walmart brand is not about cheap; it is all about smart. Target’s brand is similar in construct to its rival Wal-Mart, but provides the value of a “civilized” experience to their customers, delivered via stylish brand names like Michael Graves and Isaac Mizrahi. The Target brand is about smart as well, but Target has wisely segmented the market to include experience into the brand face. The Target shopper is not a “discount” shopper, but a smart shopper (like Wal-Mart) who believes “civilized experience” contains significant value.

Retail Destinations

Both Walmart (read how to beat Walmart here) and Target provide consumers with appealing shopping destinations, and can exist independently and out of the mall setting. Caravans of shoppers bursting at the seams with cash and credit will make their way to these super centers. Both of these retailers occupy a first and foremost place in the belief system of the customer resulting in brand awareness, connection and success. MIA: Brand Relevance Sears and Kmart lack this brand relevance. They occupy a physical location, but the customer is hard pressed to place them anywhere in their minds or belief systems.

The Sears Kmart merger is doomed

Two broken brands don’t make a whole

For all its associations with designers like Martha Stewart, Jaclyn Smith and Joe Boxer, Kmart never owned a brand. Kmart had corporate identity representing cheap: cheap prices, which indicated poor quality. Sears, on the other hand, has represented a stable of brands, some distinguished, others not. In many ways, Sears was its own mall. You went to this “mall” to buy an appliance (Kenmore) or a tool (Craftsman) and, maybe while you were there, you bought from the “softer side of Sears” too. Unless you had specific goods in mind, Sears did not enter the consideration set.

This is what Sears/Kmart needs to change in order to grow and prosper. Without a new and robust brand, we will see them flounder and stumble regardless of how many locations they cull or consolidate. You cannot save your way to wealth-or brand greatness. A Commitment to ‘Needs’ It is time to openly acknowledge that the Sears and/or Kmart brand, as it is presently defined, simply does not work.

Things have changed in retail

The old brand arts only worked 40 years ago because the market was uncrowded and USP (unique selling proposition) was in fact selling. The market confused a marketing tactic with brand equity and mistakenly defined the brand by their own corporate identities. In fact, a brand has never been about the company, product or service; a brand has always been about the customer target or demo it influences. The brand belongs to the customer because it is purely about the customer, reflecting their beliefs and identity.

Hard as it may seem, the solution for the newly betrothed Sears/Kmart will be to challenge everything in the past and present in order to create a brand that causes the customer to covet it as a powerful beacon of self-expression. New management needs to commit to forming a new brand that the customer needs and literally feels incomplete unless they have it – much like they do with a coveted Nike sneaker or a Louis Vuitton bag. When the customer thinks of the new brand, they need to affirm emphatically that, “Yes, I need to be that.” Only then will the marriage work. (Read an in-depth study of the retail space here)

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