Struggling retailer Sears has negotiated a deal to sell its Kenmore appliances on Amazon.com, sending its faltering stock price up by as much as 19 percent on Thursday.
Alexa D’Angelo of the Los Angeles Times had the news:
But as a deal announced Thursday between Amazon and Sears illustrates, times have changed. In an attempt to win back the customers it has lost to online rivals, Sears will begin selling its Kenmore appliances on Amazon.com, including smart appliances that can be synced with Amazon’s voice assistant, Alexa. The partnership will begin in Los Angeles before expanding to other markets.
It’s a move that can be seen as both a step forward for the 124-year-old retailer and an acknowledgment of its current predicament. The company has closed more than 250 Sears and Kmart stores in the U.S. and conceded in March that there is “substantial doubt” it can stay alive after years of bleeding red ink.
On the one hand, the deal shows that Sears is attempting to reach a wider customer base — a premise that sent shares soaring more than 10.6% to $9.60 on Thursday.
“This is the first real bit of good news for the company in years,” said Craig Johnson, president at Customer Growth Partners, a private equity investment and advisory firm with a focus on specialty retail.
Lauren Thomas of CNBC.com noted that Kenmore appliances will work with Amazon’s Alexa:
Sears said a new “Kenmore Smart” skill for Amazon Alexa will allow customers to control their appliances — changing the temperature on an air conditioner without leaving the sofa, for example.
Appliances have long been Sears’ bread and butter in the retail world, but lately the space has become more crowded, with players like Best Buy, Costco and J.C. Penney looking to take a larger slice of the market. As Sears has struggled with heavy debts and slumping sales, these players have been gaining ground in the category.
Shares of Home Depot, Lowe’s and Whirlpool — other providers of home appliances — were all falling more than 3 percent Thursday morning after Sears’ announcement.
In partnering with Amazon, Sears is looking to expand its reach and grow the Kenmore nameplate. However, the move is a double-edged sword, because it also gives shoppers another reason to avoid heading to a Sears store.
Appliances are one of the categories that have helped draw customers. Just last month, Sears opened a store — the first of its kind for the company — that only sells mattresses and appliances. Plans are also underway to open additional freestanding Sears stores dedicated to these two categories — what Sears has called “two of its strongest.”
Lauren Zumbach of the Chicago Tribune reported that Kenmore has lost appliance market share:
Both Sears and Kenmore have seen their share of major appliance sales in the U.S. fall in recent years, according to according to Louisville, Ky.-based Stevenson TraQline.
During the 12-month period ended in March, Sears accounted 21.8 percent of major appliance sales in the U.S., down from 30.1 percent four years ago. The Kenmore brand’s major appliance market share fell from 16.7 percent to 10.3 percent during the same four-year period.
“This will significantly expand distribution and expose the brand to new customers, and we’re hopeful it will lead to a lot more sales,” said Kenmore Brand President Tom Park.
Sears declined to comment on the terms of the deal.
The partnership could also help Amazon grow its share of all sales of major appliances, which stands at just 1 percent, according to Stevenson TraQline.
